FUND MANAGER PROFILE JAMES INGLIS-JONES
Working in splendid isolation
Architects of their own Cashflow Solution, Liontrust’s James Inglis-Jones and Gary West
take pride in their desk-bound approach to fund management. Inglis-Jones steps out of
the seclusion to outline how they differ from their peers
BY GARY SHEPHERD
There is a maxim that has
become quite fashionable
among fund managers
recently: ‘To get different
results, you need to be
doing something different’.
But whereas contrarian
fund managers are happy
to beat their chests about
going against the grain in
stock and sector picks
(though only when they
get the calls right), few
break the mould in terms
of how they go about their
day-to-day business.
For a long time, we
have been told how a visible
fund manager is a
superior fund manager,
with those clocking up the
most air miles through
company visits being
touted as the most thorough.
But, as markets have
turned and the macro
rather than stock-picking
has dominated proceedings,
attention has turned
more towards those with a
quantitative bias.
Still, Liontrust’s James
Inglis-Jones, and cohort/comanager
Gary West, stand
out in the extremity with
their hermit-like approach.
The duo are office-bound,
refuse to take any calls
from brokers, nor do they
engage with company managers;
visits to the capital
are fleeting, and it is Inglis-
Jones who meets me as
part of his duty to market
the fund.
“I sit at a desk in Devon
and I do not talk with
FUND PICKER’S VIEW
anyone apart from Gary on
investment matters,” he
explains. “I read the newspaper
and I read the report
and accounts, and that is
it. It means we have very
different portfolios from
other people.”
l Part of the Solution
MARK ROBINSON, CHIEF INVESTMENT OFFICER,
BERRY ASSET MANAGEMENT
Wading through piles of company financial statements
may seem a dull existence to many fund managers
who prefer the relative thrill of meeting company
management and relying on broker research, but James Inglis-Jones
and Gary West seem to have found a process that works. As far as
we are aware, no team in the UK Equity Income sector takes apart
company accounts quite like this duo – James tends to tackle things
from the chairman’s statement onwards while Gary takes a deep dive
into a company’s financials, looking for clues on cash flow strength.
In a slow or no-economic-growth world in particular, there is
a competitive edge in finding firms that have a low level of financial
risk – Liontrust Income’s forensic process scores well on several
measures and is why it has become one of our favoured funds for
core UK equity exposure.
The reason the pair’s funds
– Liontrust European
Growth, Income and European
Absolute Return –
differ from their peers
comes down to their Cashflow
Solution process. In a
nutshell, it is forensic
accounting, looking for
firms focused on cash generation
and management
that run their businesses in
the interests of shareholders.
Of a universe of 1,200
stocks, only the top quintile
(20%) in terms of cash
generation are candidates
for long positions, while
the bottom quintile are earmarked
for shorts.
“We take the view that
people really do not know
what is going to happen in
the future, so we do not
bother trying to predict it,”
says Inglis-Jones.
“But there are a lot of
people who do take that
approach. That is good
because it means, given
the characteristics that we
think are important about a
business, we can buy those
companies quite cheaply.
These are undervalued and
underappreciated by other
investors because they
tend to be engaged in an
exercise of forecasting.”
l The unexpected
This brings up very different
results than you might
expect. For example, top
holdings in the Income
Fund include Ashmore,
Drax and Scottish & Southern,
not necessarily household
names for the UK
Equity Income peer group.
22 PORTFOLIO ADVISER [www.portfolio-adviser.com] JANUARY 2012
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