EFG Asset Management (UK)
Investors should look to identify quality managers that not only successfully select stocks and/ or themes, but also demonstrate skill in managing a portfolio. The latter point may be equally, if not more, important than the former in these markets. Unique themes or stocks can be ineffective if they aren’t managed or traded with diligence and skill.
The Odey Absolute Return fund, managed by James Hanbury, is a great example. With a unique high-conviction long book, his returns this year have been excellent, demonstrating stock selection, conviction-sizing skill and trading acumen. For Odey, a volatile declining stock, over the medium to long term, can still be an absolute performer and significant alpha generator.
Elsewhere, the KIS Pegasus fund, managed by Federico Riggio, is a good example of a thematic manager. Riggio meticulously constructs special situation opportunities and themes as a core position with various hedges, which led to our analysis of a low stock hit ratio. However, successful stock selection and sizing of the core name, while limiting the hedge losses, results in very compelling win/loss ratios across these themes.
In both these examples the common denominator is under-researched companies. The funds’ performances this year are testament to the managers’ stock selection and portfolio management skill.