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Andy 'Wiggins' Brough goes back to basics to transform performance
by Emma Dunkley on Nov 06, 2012 at 12:05
The manager reduced the size of his £1.2 billion fund from 78 holdings to 52 at the start of the year, while concentrating the top 10 stocks to more than 40% of the fund.
‘We’ve gone back to basics – it’s one of the reasons we’ve got better,’ Brough told Wealth Manager.
‘Maybe the fund got too big at £3 billion – the market has turned out to be far less liquid. And I didn’t think industrials and consumers would fall to the prices they have,’ he added.
Brough, who sported Bradley Wiggins-style sideburns during the interview, said going back to basics and cutting holdings has so far this year boosted performance and will see him return to form, much like Wiggins, who came back to win the Tour de France this summer.
‘Hopefully the course ahead isn’t going to be too steep for the Wiggins approach not to win,’ said Brough.
The manager has a triangle approach, where he invests in A stocks, trades B and avoids C stocks.
He said A stocks are those that have pricing power, quality management and a very strong business franchise, while B stocks are those that have had a change of management strategy, withdrawal of industry and the potential for re-rating.
Brough said Elementis is an example of an A stock, as there has been a huge increase in drilling for shale gas in the US, while the firm has a cash-rich balance sheet. Even though the company share prices went down around 5% in a day a couple of weeks ago, Brough emphasised investing in this firm is for the long-term.
He also owns Sports Direct, which he said has seen its major competitor fall into financial distress. The firm has invested significantly in the internet, which now amounts to 15% of sales.
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