161. Outperforming against the odds

Hugh Sergeant, manager of ES R&M UK Recovery fund, explains how his fund has managed to outperform even though his style of investing has been out of favour. He tells us why multiple holdings are good for value strategies, but fewer holdings work better for growth strategies, and discusses the reopening trade and outlook for the UK economy. He reveals why he has recently invested in Fidelity China Special Situations and Baidu and tells us why level concrete has produced the best performing stock in his portfolio.
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Finding undervalued companies that are yet to deliver on their potential is the aim of ES R&M UK Recovery fund. Manager Hugh Sergeant holds approximately 300 of these out of favour companies, where he believes the management have the capability to turn performance around. Hugh has a wealth of experience at his disposal, with a track record of beating the index over three decades of investing. We like that Hugh looks to add to his holdings at almost fire-sale prices in volatile times, which further increases the possibility of long-term capital appreciation.

What’s covered in this podcast:

  • How the fund has managed to outperform when its style has been out of favour [0:20]
  • Why value strategies benefit from having many holdings but growth strategies are better with fewer, higher conviction holdings [3:43]
  • If the reopening trade has already played out or there is more to come [7:12]
  • Why the manager has recently invested in Fidelity China Special Situations and Baidu [9:50]
  • Why sector bias has left the UK stock market unloved by good value [13:31]
  • Why the UK economy is more robust than people think [15:45]
  • The best stock in the portfolio this year [17:12]
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