Long-term holds bring Nigel Thomas stellar returns

AXA Framlington’s star manager Nigel Thomas has returned 242% over the past 10 years on his UK Select Opportunities fund , a performance he puts down to backing his picks rather than always looking for something new. He said his approach was to hold and increase his investments in the UK companies he liked, instead of trawling the markets for different firms whose return may not be any better.

‘My investment style is buy and hold,’ he said. ‘[I live by] the old stock market adage of “don’t cut your flowers to water the weeds”. So if you have good companies in the portfolio and you have cash coming into the fund, then often I add to those good companies rather than trying to search the market for some equally good companies.’

And cash has certainly come into the fund, which has grown from £65 million in 2002 to £3.3 billion today.

Thomas said he has not been hampered by the fund’s size. ‘I enjoy running a large fund,’ he said. ‘Size is not a problem; it’s getting the stocks right that is the problem.’

Backing a pick

One of the holdings Thomas believes he has right is tied advice network St James’s Place (SJP). He believes the company’s business model will stand it in good stead after the retail distribution review (RDR), and said if recent reports that Lloyds Banking Group wanted to sell its 60% stake in SJP proved accurate, he would top up his holding subsequent to that sale.

‘If SJP is spun off, we would increase our allocation to the stock as long as the price is right,’ said Thomas.

‘The SJP business model looks robust [for the post-RDR world]. The partners have equity, meaning their interest is very aligned to the firm’s performance. Cashflow is strong and I believe the overhang from the uncertainty surrounding Lloyds has held back the stock,’ he said.

In general, he owns few financials and is sceptical of banks, holding only HSBC.