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What has Richard Pease bought & sold recently?
by Danielle Levy on Feb 06, 2014 at 12:07
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%.’
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