Rated Fund 2014-2017. Learning from the past in order to predict future winners
This relatively small £30 million fund is a past winner of Money Observer's Best Smaller North American Fund award. Manager Richard de Lisle specialises in investing in smaller US companies, which he prefers because of their tendency to outperform larger businesses over the long term.
But he starts off by identifying the sectors he believes will do well, bearing in mind the strength of the dollar and other trends in the US economy, and also by comparing the present with similar periods in the past. He then looks for individual companies that he believes will succeed in that environment.
In contrast to most managers who attempt to work out companies' future prospects, de Lisle describes his basic investment approach as backward-looking. He prefers to look at a company's past history rather than speculating about its future.
He justifies his approach by pointing out that if a company has been doing what it says it will do for the past 20 years then its culture must be strong. So when buying stock he likes to read the company's annual reports from 10 years ago before reading its current reports.
When assessing companies he says that sales per share are the most important variable as far as he is concerned, though there are other desirable characteristics too. He also likes businesses with low amounts of debt, the capacity for dividend growth and high levels of insider ownership. Once he has bought into a company he likes to hold it for the long term.