Patrick Barton may have started his working life as a commercial banker but today he is better known as a fund manager who specialises in UK equities, running the IWI Oriel UK fund at Oriel Asset Management.
He is also well known for being outspoken and controversial in an industry where fund managers are generally expected to toe the corporate line.
Commercial banking is not an industry he looks back on with any particular fondness, although it was when he was working as a commercial banker for what was then Chemical Bank, now JPMorgan Chase, in New York, that Mr Barton’s career took a slightly different direction.
He recalls that between 1982 and 1985 “there were two things that happened in New York that set the foundations for wanting to get into the equity and fund management side of the financial world”.
“The first, which was not relevant at the time but became incredibly relevant, was that somebody in 1982 very kindly suggested to me that a good share to buy was something called Berkshire Hathaway. So with a very modest amount of money I bought shares in Berkshire Hathaway which, if I’m honest, at the time really didn’t mean very much to me.”
He continues: “Then, in 1985 I was put on a Stern Stewart programme, which probably invented economic value-added analysis. What it did for me, and I suspect a lot of people, was join up share prices and businesses. It linked the two in a way that I’d never really appreciated before.
“It gave me a way of evaluating and valuing businesses that I’d never had and it then started to make sense why somebody had told me to buy Berkshire Hathaway shares. So from that grew a realisation that this was a more interesting area for me than commercial banking which, if we’re honest, isn’t very hard.”
So he moved into a small fund management business within Chemical Bank in 1987. He spent two years there, before considering his next move.
Mr Barton says: “What became very clear was that if I wanted to take this seriously I needed to go to a proper equity-driven institution rather than one that had a little bit of fund management on the side of a large bank.
“So I joined Norwich Union in 1989, initially as a pensions fund manager. It had the added convenience of being out of London, which at the time, from a family point of view, made sense.”
His admission that it went “quite well” at Norwich Union is something of an understatement as he was made head of UK equities at the company only a few years later – a role he held until 1997.
“At that point, for reasons that largely escape me, I decided the right thing to do then was to go and be a sell-side banks analyst, which I did for what felt like about 40 years but was actually about nine,” he notes. “I spent four and a bit years at Credit Suisse, first as the UK banks analyst and then co-head of pan-European banks, which was a very valuable education but not a job I would recommend to anybody else, apart from a committed masochist.”
In spite of Mr Barton’s ambivalence to being a banks analyst, he remained in this role when he started at Williams de Broë and continued to do it after the firm’s subsequent take over by Evolution Securities.
He admits: “Then finally, I couldn’t take it any longer and Williams de Broë very kindly said I could go back into fund management and start up a UK equity fund, which I did.
“In September 2007, we launched something called the Williams de Broë UK Alpha fund and that fund was merged in March 2011 into the fund I now run. The Williams de Broë UK Alpha fund was the smaller of the two funds when we merged but had a rather better track record.”
In fact, investors were moved from the CF Williams de Broë UK Alpha fund into the ‘B’ accumulation units of the IWI Oriel UK fund on the closure of the CF Williams de Broë UK Alpha fund.
Mr Barton ended up at Oriel Asset Management a couple of years ago following Investec’s acquisition of Evolution. At the time, he was managing three funds roughly £100m in aggregate at Evolution.
“We were very keen to continue to run the funds exactly the way we thought they ought to be, and that was always going to be difficult in a much larger financial services organisation,” he explains. He parted ways with Investec amicably and believes it was a “seamless transition” to Oriel.
“What we liked about Oriel was it was going to provide us with an infrastructure in terms of office space, compliance, IT, which we would otherwise have had to pull together ourselves,” says Mr Barton.
“But at the same time, in spite of giving us that infrastructure they weren’t going to be imposing any kind of views on how the funds should be run or what processes we follow, so we were going to be independent but with a parent company to back us.”
The acquisition of Oriel Securities by Stifel Financial earlier this year may present opportunities for Mr Barton and his funds, although it is clearly still early days.
He observes: “Stifel is much more predominantly an asset management and a wealth management business than it is a securities business. But they are, for the time being, exclusively a domestic US company in terms of their asset management business.
“My understanding is that they do harbour ambitions to develop activities outside of the US. So we sit here as something that may well provide them with some form of building block for the future.”
Mr Barton says that for now though they will continue to develop the business, with “tangible support” from Oriel.
This year, the focus has been on marketing the business, establishing some credibility within the industry and ensuring there is consistency across the brand.
He adds: “So that when we see investors [and] institutions, they see a professional manifestation of an asset management business, rather than frankly what we were when we came across from Williams de Broë, which was a [team with a] good track record of running the funds and therefore a demonstrable ability to do the job, but frankly seriously amateur in terms of presenting ourselves to the outside world – we didn’t know how to do it.”
When asked to identify a career highlight, Mr Barton suggests having his photograph taken for this interview – “I don’t think I shall ever top that”, he laughs.
Although after slightly more consideration, he plumps for his time at Norwich Union as a highlight. As head of UK equities, he oversaw more than £13bn in UK equities and 2.5 per cent to 3 per cent of the UK equity markets. But he does concede that running that amount of money is “not that much fun”.
Mr Barton elaborates: “The big problem with running a fund that size is everybody you deal with is unbelievably sycophantic because they all want you, particularly if you have a reputation as a long-term investor; all the companies want you as an investor. So they’re all terribly nice to you and tell you everything they think you want to hear.”
“And it’s a nightmare because what you need is somebody who’s going to tell you when you’re being a dick,” he asserts. “The best question when you’re in a company meeting with a chief executive and he’s pontificating on how he’s done this and how he’s done that is, ‘Excuse me, can you just tell me who tells you when you’re being a dick?’”
Mr Barton adds: “So it’s much more fun running, ideally, £250m. There’s no shortage of people to tell me when I’m being stupid now.”
CV
Patrick Barton
2012 – present
UK equities fund manager, Oriel Asset Management
2001 – 2012
Banks analyst then UK Equities fund manager, Williams de Broë/Evolution Securities
1997 – 2001
UK banks analyst, then co-head of pan-European banks, Credit Suisse
1992 – 1997
Head of UK equities, Norwich Union
1989 – 1992
Fund manager, UK equities, Norwich Union
1978 – 1989
Commercial lending officer, latterly fund manager, UK equities, Chemical Bank (now JPMorgan Chase)
