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Performance review: Henderson Rowe optimistic on finding value in a binary world

by Elsa Buchanan on May 14, 2014 at 15:16

Performance review: Henderson Rowe optimistic on finding value in a binary world

Henderson Rowe investment manager and director Giles Rowe is running with a value tilt in an environment he considers too driven by wildly opposing investor sentiment.

‘We have been in this very binary market for a long time with all sorts of horrible scenarios on either side, and I think one focuses on them too much because they are unpredictable,’ he said. ‘If you had gone underweight on every single bear call last year, you would have missed the market rally.’

Rowe is leaning toward the optimistic camp, believing concerns around central bank policy failure are overblown.

‘The authorities are not completely mad, so if they are going to cut back on [quantitative easing] intervention, it will be because the economy is showing signs of being able to take it,’ he said.

‘The Japanese have done a lot of the groundwork for us, and have shown us what can happen when you get it wrong.’

In the firm’s average balanced portfolio, default allocation is split 50/50 between holdings in exchange traded funds and direct equities selected from the firm’s buy list of 200 stocks.

Rowe’s 30% UK exposure is equally weighted between small, mid and large caps. Top picks include Pennon, a water utility and waste management company, which he said has a ‘very secure’ business in the South West as well as expanding recycling and energy arms.

‘Although it’s a tough market, it’s got a secure base and a growth source and is up 20% this year,’ he said.

In a similar vein, Rowe points to Ricardo. The company, which provides engineering services to the automotive industry, has found new avenues of growth assisting manufacturers to meet emission control regulation.

‘It’s a great business and has had quite a run-up. There was a sale note when it hit 800p and it’s now down below 700p, but we are holding on to it because it’s a great story,’ he said. At the time of writing, the stock was trading at 673p.

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