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Temple Bar
Managers Ian Lance and Nick Purves say value is the only place to be in what could be a multi-year bear market for growth investors
Sticking to value principles had been a thankless task in the decade to the start of this year , yet this approach – which “ has become increasingly rare in the IT UK Equity Income sector ” according to Numis analysts – has begun to bear fruit for managers such as Ian Lance and Nick Purves . Their Temple Bar Investment Trust is down 6.9 % this year , but this compares with losses of 7.9 % from the FTSE All Share index and 14.2 % from its IT UK Equity Income sector . Lance and Purves look for stocks that are trading at a significant discount to the intrinsic value of the business , often when they are out of favour among investors . “ Our ability to add value results from the fact we focus on a company ’ s medium- to long-term profit potential , whilst many other investors will typically focus on the outlook for profits in the next six to 12 months ,” the managers said . “ Investors should not forget that the purchase of an equity entitles the shareholder to a long-term stream of cashflows and that a temporary reduction in those cashflows due to an economic downturn does relatively little to alter the long-run intrinsic value .” In a recent note to investors , Lance said that we have come to the end of a 40-year supercycle and valuations in some markets look more expensive than they did during the dotcom bubble , even after their recent falls . This means equity returns are likely to be much lower than in the previous decades , but this won ’ t be true of every sector , and he is bullish on his area of focus . “ The much lower valuation of the UK versus the US could make it a better place to be , while the same
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