M&G’s Dobell eyes consumer space
Tom Dobell is seeing an increasing number of opportunities in the consumer space for his £8bn M&G Recovery fund.
Mr Dobell, who has managed the top-quartile fund since 2000 and is only the third manager in the fund’s 43 year history, said he did not really worry about where a company sat within a sector, “it is more about what the company is doing”.
However, Mr Dobell noted that one area they were seeing opportunities coming through was the consumer space, where he has been “light for a while”.
“We are beginning to see more opportunities and activity in that area that appeal to us and some of the new holdings we are looking at are in the consumer space.”
Mr Dobell has recently purchased insurer Homeserve, which he bought into as the company experienced problems at the end of last year, and also owns Inchcape and airline Easyjet.
However, he said he remained cautious on financials, a stance he has maintained for a while.
“Banks have been run for the benefit of themselves and not for shareholders,” he said.
“The only one I would cross the road for is HSBC.”
He said he found it “difficult” to understand banking businesses adding “I don’t understand the accounting of these banks”.
“I can find 50 companies before I get to the banks,” he said.
“They are going through a fairly protracted, painful stage.”
In terms of market capitalisation, the manager said he was quite active in the small and mid cap space.
The fund has a 21.7 per cent exposure to mid caps and 3.3 per cent in small caps.
While only 23.9 per cent of the fund is made up of companies that sit in the AIM market, Mr Dobell said this really took half the work.
“It can be a bit like chasing cats but it can be lucrative if we get it right,” he said.
“We stay with them until they get promotion into the FTSE which can take seven or eight years.”
The rest of the fund, roughly 50 per cent, is made up of large caps, including oil giant BP.
Following the oil spill in the Gulf of Mexico in 2010, Mr Dobell said he dramatically increased his position in the company.
He said there was still quite a lot of work to be done at the company, with the management “still in probation”.
“Leadership has been underwhelming and they are still going through the US legal system,” he said.
“But this is a classic recovery stock and over the next five years we are sure they will justify shareholders’ recent sleepless nights.
“We expect more from BP and it is one that we are watching pretty carefully.”