ONSIDE / INTERVIEW
UNIQUE, MAINSTREAM
AND FOCUSED
Six months after taking over as CEO of Seneca Investment Managers in
Liverpool, David Thomas shares his investment and business strategy with
Michael Taylor. Please enjoy the full transcript of the interview...
What attracted you to the business?
Principally the commercial opportunity of developing one
of the few independent fund managers outside London, as
well as the Seneca network that is backing this business, and
the seriousness of the people involved, both on the executive
team and on the shareholder register.
Peter Elston’s recruitment as a chief investment officer was
a big plus. We’ve always had an excellent team of fund
managers. With Peter’s input, we’ve refined the investment
process to focus clearly on multi-asset value investing.
There’s something called a “Googlewhack,” where you key
in a sequence of words surrounded by speech marks, and you
only get one result. We’re quite close to that with “multi asset
value investing”. You should try it. It tells me we’re doing
something different, and in fund management you have to
behave differently to get better results than the crowd.
Essentially it means buying things low and selling as assets
become expensive. There are plenty of people who do value
investing in equities. We are distinctive in applying a value
approach not only to equities, but in every decision we
make across a broad range of assets.
What are the different asset classes you primarily
focus on?
We focus on four asset classes: UK equities, overseas
equities, fixed interest and alternative assets, which is really
a catch all for ‘everything else’.
In UK equities we tend to look for value in mid-cap
businesses; in overseas equities we invest through third party
funds where they share our appetite for value opportunities.
We invest in fixed interest products such as bonds and gilts,
but we’re very selective in this area, because it’s done so well
for many, many years. In alternative investments we invest
in specialist property, green infrastructure, aircraft leasing
and some private equity, like AJ Bell. We look for income
streams that are strong and reliable.
There has never been a busier, noisier time. How
do you overcome the information overload and
make sensible rational decisions?
We’re very focused on looking beyond the day to day
chatter. Our investment decision making drives a real desire
to get something at a low value, a bargain essentially. If you
follow the fashions you will inevitably commit money at
the wrong time. Many investors buy after things have gone
up, even at a peak because they are drawn in by the chatter.
If you do that, it’s almost impossible to make money and
quite easy to lose it. For us it’s a combination of letting the
numbers tell us about valuations and drilling down to find
quality assets that we’d be happy to own.
There’s a lot of academic research, which underpins our
approach from as far back as the 1930s. Much of our
industry ignores this, but people have identified some pretty
reliable guides to future performance; for example the level
of income yield in equities, or real interest rates in bonds. We
find patterns in valuation that we apply to our investment
decision making.
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