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This week in Investment

Some people are obviously just too good at their jobs. Take the £3.7bn Jupiter income trust manager Anthony Nutt for example.

Nutt has been sending out warning signals this week about the future state of the UK market and bemoaning the present rate of FTSE takeovers by foreign firms and private equity groups which means he is losing companies from his 100-stock portfolio hand over fist.

Nutt lost at least 12 stocks in this way last year and so far in 2006 the list of merged or acquired stocks includes Corus, Gondola, McCarthy & Stone and AB Ports.

Talking of port stocks, Nutt has also lost Mersey and P&O in recent times to a wave of consolidation in the sector.

Nutt believes that the wall of private equity money and foreign corporate cash will eventually blow over and when it does will leave a harsher environment for value stock pickers of mainly unattractive investment sectors in the UK.

Nutt is one of the best at finding value and had a great run but he sees it getting progressively hard to find. He admits to being envious of his core European fund colleagues who have a far greater universe to invest in.

It is not that Nutt is purely picking stocks he feels will be the subject of corporate activity, but that these primarily foreign predators are drawn to the same attributes that he sees in them, namely strong cash flow, pricing power and good balance sheets.

While there is a steady stream of stock flotations coming through on the London market to replenish the companies being taken out, Nutt believes most of these are either immature or of a speculative nature and consequently is seeing his UK value stock universe dwindling away.

There have been recent noises from Jupiter about whether or not Nutt will launch a global version of his income trust at some point in the near future.

The group signalled that it was mulling the idea when it launched Philip Ehrmann’s China fund and the new wider remit Sicavs for Elena Shaftan and Philip Gibbs.

All three new vehicles will be taking a fair amount of Jupiter’s time and effort right now and a global income launch for Nutt would need to pull in even more effort.

But while the group has ruled out a launch in the near future, it is unlikely to put it off forever.

Nutt’s comments about the value stock opportunities available to colleagues with wider remits and his belief in the likelihood of a harsher UK market landscape in the future should ensure that it won¹t be too long before the global plans take shape.


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