For someone who has had a successful career, there was always a lingering frustration within Richard Pease.
The European equity fund manager had for some time wanted to set up his own business but did not feel he had the required skillset to do so.
‘I didn’t want to have any red tape on my shoulders, my wife will tell you I cannot run a tea shop!’ Pease (pictured) confessed to Wealth Manager.
‘I don’t have the patience or mentality to do these things – you can unintentionally not fill in the right form at the right time and that would be a disaster.’
He had almost given up hope of fulfilling this dream when he joined Henderson, following its opportunistic swoop on his former employer New Star, after John Duffield’s firm came unstuck in the financial crisis.
‘I had never worked for a big operation like Henderson and I’m not really a big company man but [Henderson CEO] Andrew Formica was very nice and allayed my fears and I was very grateful for that. [But] I did not think I’d ever get my act together and that I’d eventually collect my carriage clock from Henderson and that would be that.’
However, around a year ago Pease got lucky. Several of his most trusted allies over the years suddenly became available, giving him the opportunity to finally take the plunge. This led to the establishment of Crux Asset Management, which opened for business three month ago.
‘I have been absolutely lucky to get what I think is my dream team,’ Pease said.
The team includes former Thornhill director Alistair Reid, who serves as CEO and chair Charles Ferguson, a solicitor who established the successful eponymous legal practice back in 1997 before selling it.
Other key members include distribution boss Mark Little and marketing head Giles Kidd-May, who Pease worked alongside during his New Star and Jupiter days.
More recently the firm hired Karen Zachary - who has also worked with Pease in the past - as chief operating officer.
Pease also lavishes praise on the investment team he has established, which includes James Milne, who he has managed money with for a decade, and Roland Grender, an analyst and son of top GAM fund manager Gordon Grender.
‘James has got all the strengths I haven’t got. He got top results in the world in his accountancy exams and is very clever – a real code-breaking geek,’ Pease said. ‘I’ve had well over a 100 interns during my career and never come across one as good as Roland. I would have hired him on the spot at New Star seven years ago if I could have. He picks things up very quickly and takes me into the 21st century.’
Pease’s Henderson contract allowed him to take his £1 billion European Special Situations fund with him if he changed firm, giving Crux a ready-made competitive foothold.
The boutique had a landmark moment in its short life earlier this month when it launched what it described its first ‘all new’ fund.
The FP Crux European fund will typically invest in between 40 and 50 stocks, targeting ‘best of breed’ firms with a global reach. The fund has more of a large cap focus than Special Situations, with two thirds of the portfolio directed to the larger end of the market.
In reality though, there is nothing especially new about the fund as it is based on a successful formula dating back to the early 1990s, when Pease first launched the strategy for Jupiter before taking it with him to New Star and then Henderson. The philosophy has steered him well ahead of his peer group over the last 10 years (see graph below).
‘I’m not going to do something gimmicky, I want to do something I know I can do,’ Pease said.
This is certainly an interesting time to be launching a fund, with fears over a meltdown in China, sliding commodity prices and the Greek debt crisis, combining to cause widespread panic across markets.
For Pease though the recent severe volatility has presented him with opportunities. ‘From talking to management, I don’t believe what’s happening in China is going to derail the story. I don’t think it’s a message to run to the hills [but] an opportunity to get some really good companies quite a bit cheaper than you could a few weeks ago.’
While quantitative easing is predicted to boost risk assets in Europe, Pease is reluctant to build his thesis around this concept. ‘Maybe the overall economy does need the “drugs” to make sure it does not go in the wrong direction, but I don’t want to rely on drugs and I don’t believe any of the companies I invest in rely on the drugs.’
The auto sector is likely to feature in the new fund. ‘We’d certainly like to have some of the car service companies such as Continental, which looks very inexpensive, and Volkswagen, as it’s so bombed out because of the Chinese concerns.’
Pease has also identified value in a select batch of banks and insurers, including Nordea, Swede Bank and Zurich, which are all yielding around 6%.
‘I think I will have an interesting cash cow element on the European fund from insurers and banks,’ he said.
After nearly three decades in financial services, Pease is as happy as he has ever been, which is good news for his followers.
‘My life hasn’t changed much – the postcode’s changed and the scale of the operation has changed. [But] the good thing from my point of view and even better from an investor’s point of view is that I’ve got nothing to do with the management. It’s a bit more fun and a bit more personal.’