Fund Managers Diary

Richard Penny manages the UK Alpha Trust at Legal & General Investment Management. His diary runs from July 27 to August 2.

Monday The week begins with a meeting with an industrial company that I was concerned would not make it through the recession. All is not lost. New management have come in, removed the bottleneck from the factory, generated cash and the outlook is better. This is now worth backing should it require more money.

One of the key elements of the UK Alpha Trust is that, given it is very much a bottom-up stock picking fund, I believe the best returns come from growth companies and overlooked deep value businesses. Often I pick businesses that are not blue chip names, as this area of the market is “inefficient” and offers up more opportunities. I do hold some of the bigger blue chips that you typically get in growth funds, but the combination of the two gives me the best of both worlds.

Tuesday I was recently awarded an AAA rating, so the morning is spent filming for our website. It’s always nice to get recognised by these sorts of things, but the most important thing is that the fund’s investors are given strong performance. I spend the afternoon preparing slides for a meeting with some such investors, before a quick briefing with a software analyst who provides me with an update on some potential stock purchases. I don’t buy yet and continue to monitor the situation, asking him to update me in a month’s time.

Wednesday A property company comes in for a meeting with a proposition for me. The firm has a successful tried and tested management team and is looking at buying deals from the banking sector. There are some £20 billion worth of distressed portfolios whose values have plummeted. A deal would be arranged as a potential joint venture with a bank, and, as the numbers add up, I would look to back the new vehicle, which should yield some good returns over the next year or so.

Thursday More meetings with management teams. This time a potential buy – Wolfson Electronics. I don’t hold the stock, but with a plan for some product development over the coming months, it’s certainly one that I will look to make a decision on in the near future.

Friday The end of the week comes with another meeting, this time a more unusual proposition from an entrepreneur who is seeking backing to buy a quoted business which has gone into administration. The figures make for compelling reading and I keep the files to digest further over the weekend before I agree to invest in him and his business plan.

The UK equities team has a weekly stock meeting in the afternoon with the likes of Robert Churchlow and Tim Mann in attendance. Although we all sit next to one another, this gives us the chance to review the week and look ahead to the next which, as usual, is full of management meetings. Although this can be tiring, it really is the only way to get to know a company and ensure the stock is still right for the fund.

Saturday After a night out on Friday, I have a lazy day at home reading the papers and catching up on a bit of life admin. In the evening, I have some old university friends over for food and a few drinks.

Sunday I spend the morning doing some background reading in preparation for the coming week, and then spend the afternoon watching highlights of the cricket from earlier in the week.