JPMorgan Claverhouse beat the FTSE All-Share index over 2014 by a narrow margin – delivering a total return on net assets of 2.1% vs. the Index’s 1.2%. The return to shareholders was 4% however as the fund’s discount narrowed from 3.4% to 5.4%. The total dividend for the year was upped from 19.5p to 20.0p.
Their best performing stock in 2014 was Dixons Carphone, the electrical retailer, bought in late 2012 as Dixons Retail. Other successful stocks included premium dividend yielder, Imperial Tobacco; United Utilities, which rose in value by over 40% during 2014. They also benefited from their holding in the growth pharmaceutical stock, Shire. They also say that, in 2014, avoiding the losers added considerable relative value. Not holding Tesco was a positive relative contributor as the food retailer announced multiple profit warnings, an accounting scandal and cut its dividend. Tesco’s share price fell by over 40% during the year and the management team were replaced. Claverhouse also benefited from not owning the low yielding oil and gas major, BG Group, which consistently delivered disappointing results, even before the sharp fall in the price of oil during the second half of 2014.
By contrast, not owning the utility group National Grid was detrimental to performance as this relatively defensive stock outperformed the lacklustre equity market, delivering a return of over 20% in the year. Their holding in Barclays was unhelpful, as its share price fell in response to ongoing concerns about potentially adverse regulatory issues, despite its cheap valuation. Their long term holding in Rio Tinto, the leading global iron ore producer, was adversely impacted by falling commodity prices, especially during the second half. The portfolio did, however, benefit from being underweight in the poorly performing mining sector throughout the year.
The Board has done something innovative this year by appointing a “Board Apprentice”. The Chairman said: “Last year the founder of a not-for-profit company, Board Apprentice, approached me to ask whether Claverhouse would consider appointing an apprentice to shadow the Board in order to gain experience of the workings of a company at Board level. We considered this approach and discussed it with JPMAM and were in favour of the initiative. Accordingly we asked Board Apprentice to let us have CVs of candidates who were interested in a board apprenticeship at an investment trust.
The Board reviewed a number of CVs and asked the Chairman-elect to meet with a number of candidates. On his recommendation, the Board have invited Sharon Mavin to join with us as our board apprentice for 12 months from the date of the AGM in April. Sharon is an academic and is a Professor of Organisation and Human Resource Management from the Newcastle Business School, Northumbria University. She has been involved in issues relating to diversity, senior women at work, and is leading research in support of the Davies Report (2011) on Women on the Board in the UK. The appointment is strictly for a 12 month period to give Sharon further experience and it is not intended or expected to lead to a directorship of the Company. As apprentice Sharon will not be a Director of the Company. However, she will have access to all of the papers that are seen by Directors (save in the unlikely event of such secrecy or conflict of interest such that papers will be withheld) and it is intended that she will attend all Board meetings as an observer. She will not be paid, although the Company will reimburse travel costs and incidental expenses.”
JCH : JPMorgan Claverhouse appoints Board Apprentice