Fund manager’s diary

Wednesday I have been talked into attending Scottish Country Dancing lessons for beginners and tonight is the first night. My fellow pupils are an enthusiastic bunch and we warm up by holding hands and skipping into open spaces. I begin to feel quite queasy. We are soon into the first reel. I attempt to follow Morag, our instructor, but I am utterly bewildered. Worse still, I begin to improvise in a doomed attempt to blend in. Morag corrects me as the rest of the class looks on.

Later, Rosanne, my Scottish fiancée, tells me that I “gallop” rather than reel, and that my dancing is “offensive to the Scottish nation”. Not an evening entirely wasted then!

Thursday I’ve been working flat-out on my research paper, “Technology: valuing the cyclical upside” – my own quantitative analysis, in which I assume that company performance during the past economic cycle will have a predictive power in the current cycle.

Friday I present my findings to the rest of the investment team. We conclude that current valuations generally imply unreasonably high expectations of a rebound in revenues and profitability, but with the Fed on hold at 1%, the bubble could get bigger before it’s pricked. We decide to develop a ‘Quant’ screen based on the same methodology, which we can apply to other cyclical sectors.

Saturday It’s a wonderfully crisp and sunny winter’s day and we are off to Kempton Park for some horse racing, which may provide some useful reconnaissance for Cheltenham. We miss the first race and I sit out the second as the odds on my selection, the German-bred favourite Caracciola, at 3-1-on, prove prohibitive. It is beaten into second place anyway. This proves an ill portent. With the exception of Ziggy Zen, making an extremely promising debut over hurdles in the last race, it’s the bookmakers’ day (again!).

Sunday The bear market in the US dollar is likely to have some important consequences – the possibility of my golf handicap falling into single digits is one of them. With the greenback at $1.85, golf clubs can be imported from the States for a fraction of UK Pro Shop prices. I have taken advantage of this and purchased a Srixon XX10 driver, so effective that it’s been banned on the US tour.

The driver reached me on Friday and I finally get to try it out on the range today. I am a little nervous as I pick up the club for the first time. I address the ball: stand up straight, coil, recoil, bang. Straight down the middle, the ball is still climbing as it goes past the 300-yard marker. Now that’s what I call a great investment.

Monday This day brings the latest fund performance figures and I am delighted to see that my fund, Neptune European Opportunities, is first out of 106 in its peer group year to date. Only another 50 weeks to go! Rob, our Industrials analyst who has just passed CFA Level 1, helpfully suggests that I should now lock in my out-performance and buy the index.

Tuesday I attend a lunch presentation given by D/S Torm, a Danish shipping company. All shipping markets (oil, container, dry bulk, LNG) are booming and Torm’s management tells a compelling story. Last year they bought a secondhand Panamax bulk carrier for $11m. Since then dry bulk rates have risen from $10k to $45k per day. In just 11 months they’ve already earned more than $11m profit on the ship, and its residual value now exceeds its purchase price. There is a palpable sense of excitement in the room. One investor leaves early – to place his buy order, I later learn.

Barry Norris is manager of the Neptune European Opportunities fund. His diary runs from January 14-20.