Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Tim Steer: why i'm still shorting Admiral

Tim Steer: why i'm still shorting Admiral

Tim Steer, manager of the £425 million Artemis UK Growth fund, says increasing claims and lower margins are the big factors behind his decision to keep his short on motor insurance firm Admiral

Steer believes Admiral's has grown its business ‘aggressively’ over the last few years, which is part of the reason the firm has produced lower margins recently.

Steer said: ‘One recent shorting success is Admiral, the fast-growing motor insurance group. It has started to insure more risky clients, so there have been more claims such as whiplash. We’ve made a reasonable amount of money in 2011 shorting this stock.'

As a result of an increase in claims due taking on riskier clients, this has meant there is less money flowing into company earnings.

The share price of Admiral has dropped from highs of around £18 in March 2011 down to a little more than £8 just before March this year. Shares have since staged a revival and now stand at £11.57.

The fund, which can have a maximum of 10% of NAV in shorts, currently has a total short position of 4%.

Steer uses a ‘Market’ screening tool to identify the top stocks, but also the stocks to avoid with the shorting opportunities presenting themselves in the form of stocks which fall t to the bottom of the list.

‘It differentiates us from the people we compete with,’ said Steer. ‘We short because there is something odd, different or unusual about accounting.’

Steer’s growth strategy tends to target stocks which have big overseas earnings potential, with some of his top overweights in the fund including ElementisAggreko and Croda International.

He said these stocks exhibited growth rates of 8%, 6% and 8% respectively in 2012, and are forecset to achieve rates of 6%, 16%, 10% in 2013, although analysts have yet to upgrade these latter numbers.

He is also bullish on North America, which Steer said is picking up in the run-up to the election, while the dollar is likely to strengthen.

Artemis UK Growth has returned 72.5% over the three years to 23 March, compared with the benchmark’s 64.9% return.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
1 Comment Play CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

Do not miss the first two minutes of this film as Richard Buxton shares how he has been challenged by a client for owning shares in a certain company.

Play CEO Tapes: the huge opportunities for asset managers

CEO Tapes: the huge opportunities for asset managers

From tech disruption, retirement and poaching, the CEO discuss the opportunities for their businesses in this episode.

Play CEO Tapes: 'we're just a bunch of white dudes sitting here'

CEO Tapes: 'we're just a bunch of white dudes sitting here'

In our brand new series, eight CEOs discuss how the industry could do a better job for female fund managers.

Read More
Wealth Manager on Twitter