Buy, Hold, Sell: CFP SDL UK Buffettology fund

This fund – which launched in 2011 and aims to replicate the investment style of Warren Buffett, arguably the greatest investor of his generation – has seen its assets rocket in value from £42 million to £150 million over the past year. Manager Keith Ashworth-Lord endeavours to ‘find quality businesses’, and runs a concentrated portfolio of 29 holdings.

Ashworth-Lord expects to never have more than 35 holdings in his portfolio. On top of that, he says two-thirds of the holdings he bought at launch are still in the fund. His style follows Buffett’s principle of buying shares in good businesses for less than they are worth and holding these shares over the long term – ideally forever – without much trading.

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‘I don’t try to do anything clever such as top slicing or bottom fishing or any of that,’ says Ashworth-Lord. ‘I just buy things and stick with them; as long as the story is intact and the business is performing to expectations, I’m happy to sit there forever and a day and hold it. I have the investment activity of a sloth.’

The fund has returned 26.4 per cent over one year to 3 July, ranking it in the first quartile among its peer group of 261 in the UK all companies sector. It is also top quartile over three years, having returned 54 per cent over the period, more than double the sector average return of 23.2 per cent.

BUY: MJ Gleeson

Ashworth-Lord made this purchase last September, the first time he has picked up shares in the housebuilder. His average purchase price is 599.66p a share. At the start of July the share price was 625p.

MJ Gleeson specialises in building affordable homes in the north of the UK for the bottom 20 per cent of income earners. ‘It builds homes for people who would typically be in social housing but are looking to get on the ladder,’ Ashworth-Lord says. To this end, the company works with councils to make brownfield sites suitable for housebuilding.

The homes typically sell for around £125,000. ‘Most of the business is in the north of the UK and the Midlands. Another part of the business also does some land trading in the south of the country. They will work with a landowner to get planning permission.’

Ashworth-Lord thinks the company is well placed to prosper, given the shortage of affordable housing in the UK, a deficit the government is trying to address. MJ Gleeson is likely to ‘ramp up’ the number of homes it builds each year, which currently stands at 1,000. He says: ‘The company is leaning into everything the government is trying to do to make affordable homes available to those in lower income brackets.’

HOLD: AG Barr

The soft drinks company, best known for its ‘Scottish’ drink IrnBru and also Rubicon juices, remains a sweet investment, but Ashworth-Lord is ‘not a strong buyer at this level’. His hold rating for the stock is not the result of its valuation becoming overstretched – Ashworth-Lord believes the company ‘is not particularly expensive’. He is simply awaiting developments before making his next move.

There were fears that AG Barr, along with its competitors, would suffer once the sugar tax is introduced next year. But the firm has moved quickly to ensure its products are below the 5 per cent sugar content threshold that will trigger the tax. The company was ‘one of the first to get its house in order over the sugar tax,’ Ashworth-Lord says.

‘When that comes in next year, its prices will look favourable.’ Ashworth-Lord argues that there is plenty of scope for future growth, particularly in the south of the UK, where Irn-Bru has little market share. ‘Next year could be the year we see major interest in AG Barr and the share price starts to respond,’ he says.

He first bought a holding in January 2013, and has topped it up 42 times since. His average purchase price is 532p.

SELL: WYG

This consulting company is involved in private and public sector projects in the engineering and construction industries. ‘There’s nothing fundamentally wrong with the company,’ says Ashworth-Lord. The reason he has been ‘selling an awful lot’ is that the business depends on EU funding in places such as Turkey and the Balkans, and the next round of project funding in 2019 may well coincide with the UK leaving the EU.

The company has subsidiaries in continental Europe, but these could find themselves out favour, and that’s a risk he is not prepared to take. He has therefore decided to sell out of this position following a ‘Brexit audit’ of his portfolio.

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