1st December 2023
Investment magazine articles where fund managers would write about their ‘typical’ week used to be a regular feature in past years. Those seem to be a thing of the past now, perhaps because managers’ weeks have become more boring and there is nothing worth sharing, readers couldn’t care less about what managers did or quickly saw through that these typical weeks were, in fact, atypical (managers don’t jet off to San Francisco to interview Bill Gates every week – or ever!). These articles sprang to mind after my and Ben Conway’s trip to Edinburgh last week and given we had an atypical week last week, I thought I’d resurrect the theme.
Monday. The week began with me waking up with what I could only think was laryngitis. My throat was sore and when I talked, I sounded like a cross between Barry White and Sean Dyche. That’s fine, I thought, it’s probably a 24-hour thing and I’ll be back to 100% by the time Wednesday’s flight to Edinburgh comes ahead of our 9 manager meetings and the AIC Dinner.
Tuesday. I’ve lost my voice. Do I still accompany Ben to Edinburgh and do these meetings together where we do our best Penn and Teller impression? Other colleagues, Ben and Dan can’t step in due to existing commitments and we always make sure the desk is covered anyway (the importance of a well-resourced team) so either I cancel or go. In the meantime, I decide to stay at home that day to have the best chance of recovery for the trip. I tune in remotely to two meetings, staying firmly on mute (not that it made any difference being mute anyway). First up was our first formal meeting with the new Chair of Hipgnosis Songs Rob Naylor who says all the right things and finally we feel in safe hands after a very rough ride for all shareholders this year. The second meeting was a catch up with Josh McCathie, the relatively young fund manager of Downing UK Mid and Small Cap Income, who we are backing in our Distribution fund and is doing a good job so far in a very cheap and unloved part of the UK market. This meeting proved to be the first of 4 UK equity fund manager meetings this week – have we said we think UK equities are one of the stand-out opportunities in financial markets today? I take it easy for the rest of the day, leaning heavily on my fund manager colleagues to fulfil the rest of the day’s obligations.
Wednesday. A chesty cough emerges which combined with the sore throat and the prospect of getting on a plane and mixing with lots of people in Edinburgh prompts me to rummage through the medicine cupboard for a Covid test. Thankfully I find one that is in date and thankfully the test is negative. I comfort myself that it is almost definitely laryngitis, which isn’t contagious, so I won’t be classed as a super spreader. After a very straightforward journey from Exeter to Edinburgh via Bristol, fully loaded with paracetamol and ibuprofen I’m feeling ok. Ben and I meet up in the evening with one of the UK’s most highly regarded property managers, Marcus Phayre Mudge, manager of TR Property Trust, for a rambling chat about the market and swapping notes on the best and worst companies and REITs in the sector. He is quite optimistic on the outlook citing the sector’s historic record of being the fastest to recover once interest rates have peaked.
Thursday. Feeling better. On the way to our first meeting of the day, Aberforth, we get caught, without coats, in the heaviest and most horizontal rain ever, and we thought the rain was heavy in Devon! In our wet clothes, we received further reinforcement that UK small caps are extremely cheap, before catching up with the managers of RM Infrastructure Income, where we managed to get dry by sitting in their warm sunlit office overlooking the magnificent Castle. We moved on to Artemis’ office, via the shops so Ben could buy a Christmas present for his son, where we met with Ed Legget and Stephen Snowden, for updates on their respective UK Select and Corporate Bond funds. Despite operating in different markets, both report the extent of the valuation dispersion within each market is what is getting them both excited as active stock/credit pickers. Further meetings that day allowed me to rest my voice while Ben tells anyone who is interested about the work, he and his campaign group are doing in trying to change the current OCF disclosure rules. The evening was in the National Museum of Scotland for the AIC Dinner where it was fantastic to see so many familiar faces from the investment trust industry. I was brilliantly hosted by Baillie Gifford and Ben was well looked after by Numis. I’m almost at the end of Movember, so it was nice to hear complimentary comments about my moustache which I’m tempted to keep a bit longer. Hearing stories of some people going off to a nearby jazz bar until the early hours made us feel very thankful that we were back at the hotel by midnight.
Friday. The drugs picked up from the pharmacy yesterday are working and allowing me to participate in the meetings of the day with Teviot and Amati, which was just as well as Ben seemed more interested in Teviot’s office wall panelling than what the managers, Barney and Dan, were saying. If, prior to this trip, we haven’t already been convinced, after the Teviot meeting, we had become fully paid-up members of the UK small caps fan club. But it isn’t just UK or small caps or value that is interesting, Mikhail Zverev, manager of the Amati Global Strategic Innovation believes his growth fund is ridiculously cheap relative to the prospective growth available. At the moment, not enough market participants care to look beyond the Magnificent 7 stocks in the US that are crowding out all other assets, even though fundamentals are better elsewhere. I’m exhausted by the end of the trip and even though I love Edinburgh, which was looking especially beautiful with the Christmas lights, I can’t wait to get home to bed, which meant I was pretty rubbish company for the long journey back to Exeter.
Some weeks, like last week, are more exciting than others, but definitely not typical. This week, I’m back at the desk all week catching up, writing up last week’s notes and getting annoyed at some of the investment trusts (well one in particular) that somehow continue to disappoint. However, that frustration is offset by our optimism about the prospects for returns over the coming years, reinforced by the excitement of the managers we met last week who we have known for years and trust their opinions on their specialist asset classes.
Daniel Lockyer – Senior Fund Manager
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