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The eclectic approach powering this US fund to the top of the pile
by James Phillipps on Oct 08, 2013 at 14:51
‘These banks have very loyal customer bases and benefit from a sense of ethnic and regional identity. In the US, some of these communities have been established for more than 100 years and you can play it if you can identify what different people will buy.’
The baby boomer theme is at first glance a more well-trodden path, but de Lisle is again taking a different approach, saying the conventional ways of accessing the theme, such as through healthcare or mobility scooters, are expensive, because ‘everyone knows them’.
His more esoteric slant is to look at what commonly happens as a result of spouses outliving each other and the effects of the broader breakdown of the nuclear family.
‘We go for the more obscure,’ de Lisle said. ‘People turn to pets when the nuclear family breaks down or they are living in urban isolation – they become more important.
‘Most pet plays are incredibly expensive, such as pet scanners, but we have a great stock in Oregon that makes dog kennels and the play on pets is one of the great demographic themes.’
The company, Jewett-Cameron, started out as a timber yard but then diversified, using some of its wood to make dog kennels, and its share price has doubled since the start of the year.
De Lisle’s largest holding, at 8.53% of the fund, is MWI Veterinary Supplies, which he has owned for six years, in which time its share price has risen fivefold.
Originally an animal feed delivery company, it now distributes medicines to vet practices across the US and has recently expanded overseas into the UK, which de Lisle said is a fragmented market that is ripe for consolidation.
MWI’s long tenure in the fund is not atypical. De Lisle puts his average holding period at four years, while his average turnover is 50% a year, a figure that is distorted because he will trade around his positions, both top-slicing and buying into dips.
The fund has a small cap value bias and the manager emphasises the advantage of building long-term holdings rather than trading heavily.
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