Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

What has Richard Pease bought & sold recently?

What has Richard Pease bought & sold recently?

Henderson European Growth manager Richard Pease says he ‘would not race to go into Europe’ at current valuations.

‘I would say it is quite hard work to see an old or new company and say “this is fantastic”. You really have to analyse it now. It is not easy to find bargains, so you have got to buy things that aren’t looking their prettiest at this very moment.’

Pease cites mining equipment manufacturer Atlas Copco as an example of a stock he has been buying. He notes that although it has not experienced much growth over the past three years due to concerns about Chinese spending on resources, revenues from service contracts have proved robust.

Pease also highlights MTU Aerospace as a similar stock, for which he expects to see strong revenue growth coming through in two years’ time. ‘I have ended up with these sorts of things rather than a bank, utility or extreme cyclical,’ he said.

The Citywire + rated manager believes companies that operate in a niche, have sensible management and are cash generative will continue to outperform over the long term.

‘It will be bumpy. I think it has been too easy, but having said that, the direction of travel over the next three years will be positive,’ he said.

Pease targets companies that have defendable niches; operate in consolidating industries where there are higher barriers to entry; families or founders have significant stakes; or those with exposure to structural and emerging market growth.

The fund manager, who has traditionally avoided banks, took a recent position in Nordea Bank in his Henderson European Special Situations fund. It now stands as a top 10 stock. Pease was tempted into the company after the board was replaced, barring one person.

‘We think Nordea looks interesting on that basis because the dividend yield is increasing all the time and they are making better returns on their equity,’ he said.

It is a move that has so far paid off, Pease noted. ‘We took a 3.5% position in Nordea, which is up 10%.’

He also remains positive on his holdings in fragrance producers Givaudan and Symrise.

On ‘cash cow’ Givaudan, he explained that ‘to make something taste and smell good costs 1%’ and this is an investment that large good companies such as Nestlé are willing to make to maintain their reputations.

‘There are very real barriers to entry in that business. The emerging market story is catching up but in the mature market, it is about healthier eating. We want organic stuff and actually it is quite technically clever to achieve these things,’ he said.

‘You can see quite a sensible long-term growth in the mature market and emerging markets for a very long time. I can’t see it stopping any time soon. We are very happy as long-term shareholders.’

Global healthcare company Novo Nordisk gives him access to consumption trends and healthcare growth in emerging markets. Pease refers to it as a ‘bit of a play on the Chinese getting fat’ through Novo Nordisk’s diabetes products.

Although he acknowledges long-term holding Schindler, which manufactures elevators, has ‘missed the Chinese boat’, he says it is still a ‘good potential margin story’.

Lubricant maker Fuchs Petrolub and Kerry, which supplies food and beverage ingredients, also remain top picks.

Over the three years to the of December, the Henderson European Growth fund has posted a 26.2% return versus a 25.8% rise by the FTSE World Europe ex UK index over the same period, according to Lipper.

Meanwhile, Pease’s European Special Situations fund is up 29.2% versus the benchmark over the same timeframe.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Richard Pease
Richard Pease
32/85 in Equity - Europe Excluding UK (Performance over 3 years) Average Total Return: 52.92%
Citywire TV
Citywire TV
Citywire TV
Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

1 Comment Play Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Our much anticpated new series is here! We hand a black cab driver a tenner and grill the manager of the 125-year Merchants trust until the meter runs out.    

Play Europe bulls, a retail boost and why a little inequality can be a good thing

Europe bulls, a retail boost and why a little inequality can be a good thing

This week’s Investment Pulse looks at whether investors should be bullish on Europe, the surprise rise in UK retail sales and if a little inequality is a good thing.

Your Business: Cover Star Club

Profile: meet the duo at the heart of Hargreave Hale's succession plan

Profile: meet the duo at the heart of Hargreave Hale's succession plan

For the first time in the company's history a non-Hargreave is now at the head of the north west broker and asset manager

Wealth Manager on Twitter