Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a874672

How table-topping UK fund puts Buffettology to work

A little-known fund that takes its cue from the legendary Warren Buffett is sitting pretty at the top of the UK All Companies sector.

 
How table-topping UK fund puts Buffettology to work

The ConBrio Sanford DeLand UK Buffettology fund has its colours nailed firmly to the mast and has proven since launch that the process of veteran US investor Warren Buffett can be applied in the UK.

While Buffett’s overseas investments have been infrequent and have had mixed results, Citywire A-rated Sanford DeLand fund manager Keith Ashworth-Lord has demonstrated the great man’s investment principles are truly universal.

Although the fund remains small at £28.3 million, its profile is rising fast after it capped consistent outperformance since launch in 2011 with sector-leading returns in 2015.

Last year, the fund was up 27.2% versus the UK All Companies sector average of 4.9%, and over four years it is ranked fourth in the peer group after returning 98.4%.

Its recent performance is in stark contrast to that of Buffett’s Berkshire Hathaway, which fell 12.7% last year.

However, Ashworth-Lord is not one to worry about short-term noise. His approach centres on business perspective investing, the blueprint for which was devised by Buffett’s inspiration, Benjamin Graham, widely regarded as the grandfather of value investing. The focus is very much on measuring individual companies’ economic value and projecting this into the future.

‘I am looking for quality companies and most are so cash-generative that they have strong balance sheets,’ Ashworth-Lord said. ‘Is a company’s earnings power good and getting stronger or is it static or in decline? You need to look ahead five to 10 years and then try and value it, and that is one area I feel I have an advantage in.’

Investment process

Ashworth-Lord (pictured) places great emphasis on finding companies with transparent financials, growing earnings, attractive free cashflow conversion and high barriers to entry. When he has identified an opportunity, he is happy to take a buy and hold approach, running a concentrated multi-cap portfolio of 25-30 stocks with low fund turnover.

‘Once I’ve got a holding in something, I will hold it forever if necessary. If the company’s operating performance is up to scratch and it is behaving as expected, then I am not worried if it has a dip in any one year, as long as nothing has gone fundamentally wrong,’ he said.

‘It is a similar approach to [Finsbury Growth & Income (FGT ) manager] Nick Train and, like him, I aspire to have one year of zero turnover.’

Ashworth-Lord said turnover spiked to 23.2% in 2015, more than double its average of around 10% annually since launch. However, this was largely due to having to handle a £3 million redemption earlier in the year, without which it would have been circa 15%.

The latter part of the year was punctuated by several months of positive inflows, leaving the fund sat on £3.7 million of cash at the end of November. Ashworth-Lord will not be rushed into putting this money to work, but he has been taking advantage of price movements to top up some existing holdings. 

Beaten-up stocks

One such position is Rotork (ROR), which makes actuators for the oil industry, and has been ‘beaten up’ on the back of the commodity’s price slump.

‘It’s in an interregnum period, but it is a great business and it will come back,’ Ashworth-Lord said.

‘Rotork also sells its products into different industries, including power generation, and water and waste water. There is more to them than oil and gas, and it has a balance sheet like Fort Knox.

‘I’ve been buying it at 170p on a three to five-year view and believe it will do very well. If you are buying a good company, you don’t care if it doesn’t perform over the next six to 12 months.’

His largest holding is in biotech firm Bioventix (BVXP), which he describes as the ‘nearest thing to being bomb-proof’. It generates significant cashflow through its low-cost antibodies, which have a very strong market position, and it is also bringing through a new heart drug.

‘It has written down all of its research and development, is so cash-generative and is a very pure business.’

Other key holdings include Mattioli Woods (MTWL), Domino’s Pizza (DOM) and Dart Group (DTG). Ashworth-Lord concedes the latter, which owns the Jet2 airline, is ‘very un-Buffet-like’, having large fixed assets, but has strong management and has risen sevenfold since he bought it.

2 comments so far. Why not have your say?

Dennis .

Jan 27, 2016 at 17:50

Sounds like buy quality and hold is the new active startegy. Fundsmith anyone? (except that he has just off loaded Domino's as being over valued)

report this

martin hargan

Jan 27, 2016 at 17:53

Deffo Fundsmith as well as Train, thanks.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: The sterling slump: what’s next?


After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

More about this:

Look up the funds

  • ConBrio Sanford Deland UK Buffettology
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Rotork PLC (ROR.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Bioventix PLC (BVXP.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Mattioli Woods PLC (MTWL.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Dart Group PLC (DTG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Domino's Pizza Group PLC (DOM.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Finsbury Growth & Income (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Keith Ashworth-Lord
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Nick Train
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Asia shares mixed after Yellen's rate remarks

by Himanshu Singh on May 30, 2016 at 04:29

Sorry, this link is not
quite ready yet