Andrew pilots fund away from UK to take advantage of weak pound
TURN back the clock a year and the consensus was that the looming EU referendum was going to be a win for the Remainers. It was on this basis that the former managers of Miton UK Value Opportunities – George Godber and Georgina Hamilton – had spent time and effort on arranging the contents of the fund’s portfolio to benefit from the ‘no change’ scenario.
When they left last year the pair passed the reins to industry veteran Andrew Jackson. But he joined just four days after the June referendum and was left to rearrange furniture that was not entirely suited to the post-Brexit market.
At that point the fund, which is just four years old and is UK focused, included a strong smattering of property shares and related companies such as kitchen specialists. There was an expectation that a win for Remain would inject fresh vigour into the UK housing market.
Jackson was unfazed and did not act in haste to reposition the collection of 60 or so stocks. He simply held on to the companies that were knocked back by the Brexit decision and sold them ‘when the share prices came back’. One such holding was joinery group Howdens, which he sold in full in March.
Meanwhile, he has been picking shares of firms of all sizes that are less domestically focused and which will benefit from sterling’s persistent weakness since the vote.
Among his picks are software group Micro Focus International. Because it has big overseas exposure it should benefit from falls in the pound.
Jackson says: ‘Its business is to ensure old IT systems are fit for purpose today. It’s not sexy but it is important work. We paid about 1600p for the shares in July and they are now about 2400p.’
Jackson tries to find similar value elsewhere in the market. A current favourite is Dart, which he describes as ‘the biggest company you have never heard of’. It is the parent of Jet2.com, which began life flying flowers from the Channel Islands to London in the 1980s but bloomed into a low-cost package holiday firm servicing holidaymakers from the Midlands, the North of England and Scotland.
Jackson expects big things of the company. He says: ‘We bought the shares in September for 360p and now they are 623p.’ He is optimistic that there is more growth to come since the company has recently opened for business at Stansted airport in Essex, which has a large catchment area for package holidaymakers.
Jackson has stuck to some of the old favourites selected by his predecessors, not least JD Sports. This has been a stock market darling for some time, despite the pressures on production abroad from weaker sterling. The profitable sports goods retailer accounts for 3 per cent of the portfolio – its biggest exposure.
Darius McDermott, of broker Chelsea Financial Services, praises the fund. He says: ‘Jackson has done well and the turnaround has been strong, given he was handed a domestically orientated portfolio at just the wrong time. His immediate changes were to introduce more internationally focused stocks, which helped considerably as the pound weakened.’
He describes Jackson’s pragmatic process as a strength because he focuses on the company first and valuation second. McDermott says: ‘It’s a solid UK multi-cap fund.’