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Fidelity's Himsworth happy with Train comparisons

‘If we are talked about in the same breath as Nick Train, then I’m happy,’ says Leigh Himsworth, manager of Fidelity UK Opportunities.

 
Fidelity's Himsworth happy with Train comparisons
 

‘If we are talked about in the same breath as Nick Train, then I’m happy,’ says Fidelity’s Leigh Himsworth.

Citywire AA-rated Himsworth may not boast the assets of star manager Train, with his Fidelity UK Opportunities fund standing at £120 million.

But performance has been strong, with the fund pipping Train's Lindsell Train UK Equity  fund over three years to the end of March, delivering 36.4% versus 30.8%. Over five years to the end of February, Himsworth's 77.2% is shy of Train's 84.7%.

Citywire AA-rated Himsworth puts his performance over the past three years down to picking companies that investors have not yet realised they ‘will want to be in’.

‘The idea is to find an early stage opportunity unidentified by the market that is well financed by a strong balance sheet and backed by strong management,’ he said.

‘In a nutshell I’m looking for interesting companies before other people get to them and this can be in any sector.’

The fund features 50 holdings, with Himsworth describing it as a ‘best ideas fund’.

‘I don’t like to replicate an idea in my portfolio, so if two companies are addressing the same issue I try and pick the best,’ he said.

Launched as the CF Eden Select UK Opportunities fund in 2011, the fund was renamed after City Financial bought Eden in 2014, then followed Himsworth to Fidelity in 2014.

Himsworth credits settling at  Fidelity as allowing him to focus purely on fund management.

A punt on gambling

Some of the ideas that have recently done well for the fund include online gambling firms GVC (GVC) and 888 (888). 

However, he admits that not every idea pays off.

‘I do make a lot of mistakes, but the ones that go right hopefully go very well for us,’ said Himsworth.

‘I look for changes that are happening and try and pick winners that benefit from these changes, I like online retailers for that reason. I’m keen on them because after the initial start-up costs they tend to not be capital intensive businesses, compared to something like a traditional retailer.

‘This allows them to compete on things like price and gives them access to a lot more customers.’

Past online retail successes he has now sold out of include UK small cap favourite Boohoo (BOOH)

‘Ultimately, what I’m interested in is protecting investors’ interests, so when an idea I’ve had plays out, I sell. For example, if I’m predicting a 10% mean reversion and that is achieved the day after I purchase the stock, I sell,’ he said

‘I do try and stick to my sell discipline, especially when I’m interested in a stock because of a special situation, because ultimately I want every stock in the portfolio to be contributing to future outperformance.’

This rigid sell discipline means that the fund’s turnover is high, although this does not concern Himsworth too much.

‘Turnover is not a number I worry about unduly. Ultimately, what I’m interested in is the return of the entire portfolio after costs, so that I can cut what doesn’t deliver that return,’ he said.

‘If the turnover contributes to a return that is better than the benchmark and my peer group, then I’m okay with that. When I get worried is if we go through a period of sustained bad performance.’

High street favourites

Elsewhere in the market, Himsworth believes that there are opportunities in traditional high street stalwarts, which have specialist businesses.

‘I don’t invest in only online retailers, if the opportunity is right and there are drivers for returns on investment then I will buy a traditional retailer,’ he explained. Fund positions include Domino's Pizza (DOM), Majestic Wine (WINEW) and Superdry (SDRY).

However, Himsworth warned that just because a traditional retailer was now trading at a historically cheap valuation, that in itself did not make it good value.

‘There is a difference between being cheap and being good value, and some retailers fall into that category, because they cannot protect their market position and have all the associated costs,’ he said.

1 comment so far. Why not have your say?

Franco

Apr 17, 2018 at 22:58

Do fund managers pay for this kind of advertisement?

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