Alastair Mundy: Investor activism is a ‘waste of time’
Star contrarian manager admits one of his “worst investment mistakes” and urges investors to “just get out”.
Investors should not “waste time” trying to be activist shareholders and should just sell out instead, according to Investec’s star manager Alastair Mundy.
The manager of the £2.1bn Investec Cautious Managed fund said he had lost out in the past by taking on company management rather than simply walking away and locking in profits.
Speaking at the 2012 Morningstar Investment Conference, Mr Mundy described an investment in JJB Sports five years ago as “one of my worst mistakes”.
He said: “JJB began expanding its health clubs and we wrote to the chairman expressing concern about the company spending a lot of money. He wrote back and said we were the only people to raise that concern - so we were ignored. The share price had been falling all that time.
“If you think a management team is dangerous it is incredibly time consuming to go head to head with them. Just get out.”
Elsewhere, Mr Mundy also warned that Tesco may be disguising the degree to which its UK business is subsidising its international ventures, saying it had not made his ‘buy’ list in spite of recent share price falls.
“Tesco is a bruised franchise which is not doing well in any other market,” he said. “It has been taking advantage of its UK customers for too long. If they are all leaving to go to Amazon then I would rather trust the people. Tesco charges too much and uses it to fund miserable businesses overseas.”
Mr Mundy’s flagship Cautious Managed fund ranked in the top quartile of the IMA Mixed Investment 20-60% Shares sector over five years to May 16, according to Morningstar, with a 16.9 per cent return compared with the sector’s average 6.2 per cent gain.