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Six special sits to back as markets swing between optimism and despair

by Emma Dunkley on Nov 09, 2012 at 11:04

Six special sits to back as markets swing between optimism and despair

Alex Breese, head of UK equities at Neptune Investment Management, says he has moved money away from quality growth stocks towards value, hunting in areas of the market that are out of favour.

The manager of the Neptune UK Special Situations fund said he is starting to feel ‘quite cautious’ on some quality growth stocks, citing Aggreko as an example.

Quality growth is broadly trading on more than 20 times earnings, prompting Breese to search elsewhere.

‘We’ve taken money out of these areas and moved it into more value areas of the market,’ Breese explained.

‘Over the next two to three years, we expect the UK market to oscillate between optimism and despair, but there will be opportunities to pick up good quality companies, with good dividend yields.’

The manager said Booker Group is an example of a turnaround story that he held in the fund within his top 10 positions but has recently sold it in the view it has been 'priced for perfection'.

‘We first bought it in 2008 – it’s under new management led by chief executive officer Charles Wilson,’ said Breese. ‘Market perception of companies can change. In 2008 it was seen as a low growth company on eight times earnings.

‘Today, Booker is a serial outperformer driven by a strong management team.’

The manager, who has outperformed his typical peer by delivering 26.4% over three years versus the average of 24.2%, added the firm also recently acquired Makro which has provided a boost to business and is looking to replicate its UK business in India.

Another stock Breese owns is Wolseley, to tap the UK and US housing recovery.

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  • Neptune UK Special Situations A Acc GBP
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  • Booker Group PLC
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  • Wolseley PLC
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  • Redrow PLC
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  • Aggreko PLC
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  • Alex Breese
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