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Eight star fund managers you can buy on the cheap

Sam Benstead from interactive investor, 11th May 2022:

The stock market rout this year has created a rare opportunity to buy shares in investment trusts run by star managers at large discounts to the value of their investments.

Headline bargains include a 38% discount on Pershing Square Holdings run by Bill Ackman, a 10% discount for Smithson Investment Trust, part of Terry Smith’s Fundsmith group, and a 6.5% discount for Nick Train’s Finsbury Growth & Income.

In the technology sector, Polar Capital Technology is trading at a 14% discount and Allianz Technology Trust Ord is at a 12% discount. Both are managed by veteran tech investors with excellent track records.

Baillie Gifford trusts, which buy fast-growing companies that are often unprofitable, are also under pressure. Scottish Mortgage is at a 5% discount and Edinburgh Worldwide is at a 15% discount.

Value investors can also pick up a bargain by buying Alex Wright’s Fidelity Special Values at a 6% discount…

Ewan Lovett-Turner, head of investment company research at stockbroker Numis, said periods of share price weakness for highly regarded managers were often a good time to pick up shares. Purely on a discount play, he thinks Pershing Square stands out…

James Carthew, head of investment company research at QuotedData, believes Scottish Mortgage’s discount presents a buying opportunity as the board is very proactive at buying back shares to keep the discount narrow.

He said: “This is a good opportunity to drip-feed money into the trust. The discount won’t get much bigger and shares are 50% cheaper than they were at their peak last year. While James Anderson, who managed the trust for more than 20 years, has retired, there will be no change in the investment strategy.”…

Another area that Carthew likes is the technology sector, which he argues at current discounts presents a bargain. Polar Capital Technology is particularly attractive, he says, as the manager Ben Rogoff had been moving into safer businesses and taking advantage of lower prices to buy well-established and growing stocks.

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