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Dampier in cru clash on private prospects

Advisers have rallied behind Hargreaves Lansdown head of research Mark Dampier after a row developed between himself and cru chairman Jon Maguire.

Maguire sent an open letter to Dampier this week, calling on him to explain com- ments he made in a Sunday newspaper about the CF Arch cru portfolio. The fund is one of the few to make positive returns in the past year, with a performance of almost 7 per cent.

Dampier questioned the long-term success of the fund as it invests in private equity, which he says is not immune to a downturn.

In the letter, Maguire said the pre-IPO market has some “absolute diamonds backed by owners of businesses who understand that you do not sell into public markets when your profits are enjoying vertical take-off”.

The letter said: “I would like you to answer me one simple question: What year would you have bought shares in Hargreaves Lansdown? From incorporation to listing, name me the year.

“The business started a its incorporation value of £1 and sold for £500m, not bad value in my opinion. Since May 2007, Hargreaves Lansdown has lost 20 per cent of its share price.”

Dampier says: “He is right that firms do look better pre-IPO but I stand by my remarks. Private equity has not done badly in recent times but share prices will vary as seen in 2000-2003, and with private equity you do not get a market valuation and a gap in knowledge.”

Chelsea Financial Services managing director Darius McDermott says: “The fund invests in a number of Arch strategies but before I rec- ommend it I need to know what is going on in the fund. It has done well but we are neither positive or negative on the fund.”

Perception Support director Phil Billingham says: “IFAs owe a duty of care to their clients to look carefully under the bonnet of any potential investment. I would not invest in this fund until I fully understood the investment mechanism, the current asset allocation, how internal valuations are carried out and the situation in terms of liquidity if there are significant net outflows.”


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