Profiting from other people's cast-offs
If you have your heart set on finding the next Anthony Bolton, despite our qualms (see: Can Sanjeev Shah fill Anthony Bolton's shoes?), Tom Dobell of M&G Recovery Fund could be a contender. Over the past five years, M&G has returned 87.8% against 60.2% for the FTSE All-Share.
And Dobell is consistent: he is one of only five fund managers (including Bolton) given an A rating by fund analyst Citywire over 50 of the 57 months since they started their rating system.
Investing in companies that are unloved by the rest of the market, he looks for those “whose recovery potential lies in their own hands”, says Paul Farrow in The Sunday Telegraph, “not those that rely on a supportive economic background”. One example is Mothercare, which he has held for more than five years, in common with many of his stocks. Back in 2002, the retailer issued three profit warnings and saw its share price fall as low as 88p. But after a successful turnaround, it’s now at 420p a share.
Although “investing in other people’s cast-offs could be deemed an odd approach”, says Justin Fearns of IFA AWD Chase de Vere in The Times, “the proof of the pudding is in the eating and the long-term results are well worth buying into”. While M&G is a large fund, at £2.5bn in March, it “remains a compelling choice for investors with a long-term (eg, five-year-plus) time horizon”, says Emiko Kurotsu on Morningstar.com. “We think Dobell’s proven, patient, contrarian strategy is well worth a look.”
Contact: 0800-328 3191
M&G Recovery Fund top ten holdings
Name of holding / % of assets
HSBC Holdings 5.55%
GlaxoSmithKline 5.43%
BP 4.93%
Vodafone Group 4.38%
Tullow Oil 4.01%
Royal Dutch Shell 3.49%
First Quantum Minerals 2.63%
Regus Group (Chertsey) 2.48%
Unilever 2.33%
Sibir Energy 2.27%
