Anthony Bolton, the doyen of UK stockpickers in the 1990s and 2000s, has started to invest again in a personal capacity, as tumbling markets exposed opportunities he said favoured knowledgeable private investors as much as professionals.
The former star fund manager, who ran Fidelity’s Special Situations fund for 28 years until 2007, warned that the coronavirus had “stopped the party” in stock markets and triggered a level of physical restrictions on individuals that “none of us has experienced in our lifetimes”.
Mr Bolton acknowledged that his cautious mood last year, when he increased his personal cash holdings against a background of high valuations in equity markets, had led him to miss out on much of the share price growth of 2019.
But in spite of the present “dreadful” economic outlook and little clarity over how long the disruption would last, he said, opportunities for UK investors were beginning to appear after big falls in the stock market.
“I’ve started to invest. I will say to people I think at these prices there are really interesting opportunities. I wouldn’t necessarily invest all your money at the moment, if you have money to invest — and many people don’t. The key message to investors is don’t get more bearish as the market goes down.”
When he ran Fidelity Special Situations, which in its heyday was the UK’s largest open-ended fund, Mr Bolton won a reputation as the fund manager with the Midas touch, before he emerged from retirement to lead an ill-fated foray into China.
Now 70, he remains a non-executive director at Fidelity International, but stepped back from running money in 2014 to concentrate on his interests in music, composition and philanthropy.
Mr Bolton declined to identify the companies and sectors he had invested in, but said the “extraordinary measures” taken by governments would heighten the support offered to key businesses. “There’s almost an element of governments competing. If we save the [UK] airlines, the Germans are not going to let Lufthansa go bust,” he said in an interview with the FT.
Investors should be ready for governments to take a different approach to bailouts than they did in the 2008-09 crisis, he said, when shareholders found their equity written off following banks’ rights issues.
Coronavirus and your money
“I think it is slightly different this time. If we do see some sort of rescue for BA, I’ll be very interested to see on what sort of terms it will be. People have to be open to the possibility that it’s not going to be as draconian for shareholders as it was in the global financial crisis.”
When seeking ideas on where to put their money amid the economic wreckage, he said investors might look to private equity for pointers, with its high levels of cash. It was also worth monitoring the behaviour of insiders, such as directors buying up extra shares in their businesses, he added.
“Look through the stocks that have been hit hardest and ask — is it justified? In predicting the future in these conditions the private investor is in as strong or as weak a place as the professional investor.”
Giving his thoughts on the longer-term outlook for investors, he said he feared the possibility that regulators might address liquidity concerns by, for instance, mandating that every small company fund should keep 20 per cent of its assets in cash. He added that worries over the liquidity concerns in the current shutdown should not be conflated with liquidity issues that led to the collapse of former star manager Neil Woodford’s funds, which had invested in small unlisted companies.
“There were some quite exceptional things that happened with Woodford. To change a system that has worked well for many, many years would be a mistake,” he said.