Hawksmoor Investment Management has slightly reduced the equity weighting in its Vanbrugh fund as a consequence of its contrarian investment style, where it sold holdings that performed well in the recent market rallies.
The firm says it tries to take advantage of fluctuating markets by buying into areas where value is greatest and selling out of areas that have been re-rated to the extent that value has been squeezed out. It concedes that market timing is difficult so that it can often buy too early and sell prematurely but says the speed and the scale of the rallies in some of its more volatile holdings prompted some sales.
Profits were taken from strong performers Aberforth smaller companies and Impax Asian environmental. Some of the proceeds from these sales went into investment trusts that have not performed so well. Some of the cash was used to top up Vanbrugh’s initial 2 per cent holding in the British Empire investment trust.
Hawksmoor sees British Empire as a double discount opportunity because not only is the trust trading at a discount to net asset value, its underlying positions in European holding companies are also trading at discounts to their net asset values.
Fund manager Daniel Lock-yer says: “We are looking to make the most of discounts in valuation. We recognise that markets move in cycles of value, momentum and growth. The difficult thing is to time the markets, so you have to understand what you believe in and know that there is value there.”