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GAM’s A-rated Andrew Green swaps BT for Vodafone
by Robert St George on Oct 18, 2013 at 14:13
The UK’s large-cap index currently trades on an average price-to-earnings ratio of 17.4, while the multiple for the FTSE 250 is 26.9. Large-caps now account for 55% of Green’s fund.
In particular, Green (pictured) highlighted Vodafone, a recent acquisition to his fund that now represents 3.7% of his portfolio. Despite a 20% surge in its share price since late August, when it finally sold its stake in Verizon Wireless, Vodafone is valued at just 14 times its earnings. To finance the Vodafone purchase, Green exited BT – ‘perhaps a little too soon,’ he remarked.
‘We wonder whether its progress marks a turn in the fortunes of large-caps versus small and mid-caps,’ Green observed of Vodafone.
He recognised, however, that the performance of large-caps still lagged that of mid-caps: over the past six months, the FTSE 100 has risen by 5% compared with the 250’s 12%.
Yet Green maintained that the value opportunity among large-caps was attractive, especially as he suspected that expectations of a sustained economic recovery had already been priced into companies lower down the spectrum. As a precaution, he has additionally kept 11.4% of his £176 million fund in cash.
Since Green launched the fund in 1990, he has returned more than 1,600% versus 481% from the average constituent of the IMA UK All Companies sector over the same period.
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