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Why Rathbones’ Chillingworth is backing SJP ahead of RDR

Why Rathbones’ Chillingworth is backing SJP ahead of RDR

Rathbone Recovery manager Julian Chillingworth is backing St James’s Place and Aberdeen Asset Management as two companies that stand to grow in the post-retail distribution review (RDR) world.

The Citywire A-rated manager said he would consider topping up his fund’s position in St James’s Place if Lloyds completely spins off the wealth manager, and remains positive on the investment business ahead of the onset of the RDR. Chillingworth and co-manager Marina Bond have held the stock for more than a year.

‘I would look to revisit it if it is spun off from Lloyds. It has got a great business model. I saw them six to eight weeks ago and they sounded pretty relaxed going into the RDR and 2013,’ he said.

Likewise, Chillingworth, who is also Rathbones’ chief investment officer, highlights Aberdeen Asset Management as another financials stock that looks to be well positioned for the RDR.

Having held the stock for nearly three years, he has nearly tripled his initial investment – helping to contribute to a 37.6% rise in his fund over the three years to the end of November, and outpacing a 28.3% rise by the FTSE All-Share index, according to Lipper.

He is also positive about Aberdeen chief Martin Gilbert’s decision to halt acquisitions over the past few years and focus on organic growth, while praising the company’s previous acquisitions – particularly Deutsche Asset Management – and the now strong positioning of Aberdeen’s Far East Asian equity business.

‘Maybe it has been a case of being in the right place at the right time, but Aberdeen can continue as one of the leading asset managers and I think it has got a solid platform with a good mix of retail and institutional business. It will be in a good position going into the RDR,’ he said.

BP under review

His optimism does not extend to BP, however, which has proved a dampener on performance and is one holding currently under review.

‘Unfortunately it is under review. We will look to see how the Russian situation pans out,’ he said. However, he supports management’s decision to halt the TNK joint venture – pointing out that shareholders have made money from the project.

In contrast to his outlook on the oil major, Chillingworth remains positive on development and exploration stock Tullow, which he has held for three years.

‘We would always be nervous about buying a medium-sized oil company, but this has definitely delivered for us,’ he added.

He is bullish on Booker, having made four times the fund’s initial investment on the stock, and is also happy to sit tight with the fund’s investment in Daily Mail & General Trust, which he has held for four to five years.

Although the company has had its challenges, Chillingworth is supportive of the new management team and positive about their decision to focus on the business-to-business part of their operations.

‘The Daily Mail is shrinking as a percentage of its overall business. It is now a business-to-business business rather than a newspaper business,’ he said.

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Julian Chillingworth
Julian Chillingworth
44/79 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 53.87%
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