View the article online at http://citywire.co.uk/money/article/a578897
Majedie manager reduces BG holding on gas leak fears
The North Sea gas leak has prompted Adam Parker to trim his holdings in BG Group.
Adam Parker, a Citywire AA-rated manager, has reduced his holding in BG Group (BG.L), following the leak at the Elgin gas field in the North Sea.
The company, which makes up 7.5% of Parker’s Majedie Asset UK Opportunities fund, was hit as a gas leak closed operations at the site which it has a 14% stake in. The fund manager reduced his portfolio position by 1% as the news broke.
Parker says: ‘BG’s shares have already been affected, this is obviously quiet serious but it has got to be kept in context. I believe they’ve seen about a 2% reduction, or probably less, of their value.
‘Obviously we’ve all got the memories of what happened to BP (BP.L) on our minds but it’s not, I believe, as serious as that. Also BG is only a 14% holder of the Elgin field, so most likely we’ve seen the worst in this one. Though I have to confess that I did precautionarily sell a few shares when I heard about it.’
Across the four he has outperformed the average manager’s returns, in the UK All Companies sector, at every turn over the past five years, giving 106.3% over the past three years, compared to the average of 71.8%.
Parker says he has a ‘buy and hold’ approach to investing, which has proved tough in difficult market conditions.
He adds: ‘It’s always a tricky one and you have to know your companies. I get the advantage of seeing all of the companies that I’m invested in. And you’ve got to be a bit careful as sometimes you can hear people saying earnings this year or next are going to be 10% lower so you’ve got to say, ‘that might be true but I’m not going to sell the shares because I know they might go down 10% this year but they will probably go up 20% next year’.’
The UK Opportunities fund invests in UK companies, whose business is mainly in overseas markets. It has given impressive returns over the past three years of 110.85%, compared to the benchmark FTSE All-Share index’s total returns of 75%.
Parker explains: ‘I’ve got a relatively low exposure to the UK economy, I don’t hold any retailers and no construction companies. I find the interesting businesses at the moment are the UK listed ones, which often have operations in other parts of the world and you can see with BG Group, Hiscox (HSX.L) and First Quantum (FQM.L), a mining company with business operations in Africa and Australia. The UK economy, I think is going to be very dull.’
However Parker says he’s excited about holding Edinburgh-based data storage and cloud computing company Iomart (IOMG.L) as the group expects to post a minimum 70% rise in profits before tax for 2012.
He comments: ‘Iomart is a UK company but it’s an internet hosting business which is not really going to be too impacted by the UK economy. They’ve got very high marginal profitability with each new contract and that’s what has been driving their profits up really fast. Because they’re not yet at full capacity, there’s still quite a long way to go in terms of the profits and it’s got a decent balance sheet.’
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
More about this:
Look up the funds
- Majedie Asset UK Equity B Acc
- Majedie Asset UK Focus A Acc
- Majedie Asset UK Opportunities A Inc
- Majedie Special Situations A Acc
Look up the shares
- BG Group PLC (BG.L)
- Hiscox Ltd (HSX.L)
- First Quantum Minerals Ltd (FQM.L)
- iomart group PLC (IOMG.L)
- BP PLC (BP.L)
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