Fund Manager’s Diary

Monday After a 40-minute cycle ride in the dark and drizzle, I am rapidly cheered by news that Cemex has bid for RMC at a 44% premium to Friday’s closing price. Wolseley’s full-year figures again demonstrate strong cash generation and steady earnings growth. I am also interested in Alexon’s interims, as the company is coming to see us later. I first met John Osborn in 1995 soon after he joined, when the shares were seriously depressed. The quality of their department store concessions has since improved; requiring little capital, they can be highly cash-generative. I conclude that the shares should perform well despite a deteriorating consumer environment.

Tuesday Today resources steal the limelight, with mining and oil shares leading the market higher. First Calgary releases another positive drilling update and Adastra confirms good progress in its attempts to build a copper/cobalt mine in Congo. I have a small holding and watch developments closely. Lunch is with a small media analysis company, which looks to have interesting prospects. Later, I buy some Wolseley after watching the shares drift from yesterday’s highs.

Wednesday Few announcements of direct interest to the fund today. Two companies come in to see us. Investing across the UK market, I can be bombarded with company meeting requests – as a general rule, I limit myself to two per day so that I can prepare sufficiently. Experience also tells me that too many meetings can lead to a company being judged by the quality of the presentation rather than a proper assessment of the business. In the afternoon, the team meets for our weekly formal investment discussion. Information is shared and ideas tested throughout the day, but this meeting inspires valuable free thinking away from the market noise.

Thursday Another raft of company announcements shows contrasting high-street fortunes between Halfords and Boots: neither is currently held in our concentrated portfolios. A construction analyst comes in to explain why housebuilders should perform well despite a poor outlook for house prices. This marries with my view, but is at odds with the market consensus. I have time to grab a sandwich before a quarterly conference call to one of our investors. Hardy Underwriting gives us a typically robust presentation; I remain convinced that this is the best insurance company in the UK market. In the evening, I attend the retirement party for Charlie Peel, co-founder of Peel Hunt. Several former colleagues from Mercury Asset Management are there and I am struck by how many have since set up successful new businesses.

Friday Morning coffee is spent with the management of Caffè Nero, visiting us after impressive results. The company has a young but enviable track record, although on balance the valuation is probably up with events. Later it is lunch with Anglo American, whose array of operations provides a fascinating barometer for several industries. The FTSE 100 provides a strong backdrop today as the index powers on to a 27-month high, some 50% above the lows of March 2003.

Weekend I always try to find time to read The Economist and weekend press, together with a few of the meatier recent brokers’ notes. It can be quite a challenge between ferrying the children to parties, football and rollerblading. This weekend it is my eldest son’s 10th birthday and we are off to the cinema with six of his friends. The new local Topps Tiles means I can check on a holding, pausing briefly to test “the best espresso this side of Milan”.