Recent market volatility has created buying opportunities for the manager across several areas, including financials, property, emerging markets and commodities, he said.
Mr Yeaman, who is also investment director at Saracen, said he tried to take a step back and look at the UK equity market from a “business as usual” perspective.
This approach helped him identify companies offering good medium- to long-term value.
Despite banks having struggled to find favour in 2016, Mr Yeaman said the fund had been doubling its position in Lloyds Banking Group in the past quarter, from 1 to 2 per cent.
He called the bank “a stable business” due to its position in the larger end of the small and medium enterprise and the larger companies space, as well as its intention to increase dividend payments.
“It’s not just Lloyds that is out of favour – banks in general are very much out of favour at the moment. We aren’t preoccupied with share prices on a day-to-day basis,” Mr Yeaman said.
He also increased a position in building products supplier Tyman as markets turned against it.
The company took a hammering in January, falling 25 per cent in nine trading days. This led the manager to add 1 per cent, taking the total holding to 5 per cent.
The FTSE All-Share index lost 7.2 per cent over the same period.
While Tyman’s European business was “a bit sluggish”, Mr Yeaman said the UK and North American sectors had fared much better.
“Tyman for us is a geared play on recovery in the US housing market. The majority of its profits come from the US and Canada, and we think there is still a lot of self-help within this company,” he said.
Emerging markets investment manager Ashmore was added to the fund’s portfolio during the last quarter of 2015 at a 2 per cent weighting.
Mr Yeaman defended the position, and said that it was still a “financially strong” company, despite its focus on an out-of-favour region.
“The chief executive, directors and staff own about 50 per cent of the business, so their interests are very much aligned. They have a lot of cash on their balance sheets, so we know the dividend is going to get paid and it has a good yield at present,” he noted.
The manager also said Rio Tinto was financially strong, despite the declines in commodity prices.
He began buying shares in the business in August last year, bringing the fund’s holding to 2.2 per cent.
“We’re not calling a bottom in the commodities cycle at all, but we think this is a very strong company financially,” he said.
“The gearing in Rio Tinto is at the low end of management expectations. It’s about 20 per cent geared and it’s still making good margins, even while commodity prices have been falling quite sharply.”
While Mr Yeaman gorged on out-of-favour stocks, he did sell Close Brothers, citing valuation. He said he was nervous about the impact that volatility in the market could have on broker Winterflood, which Close Brothers owns.
The Saracen Growth fund has returned 1.5 per cent in the past year versus the Investment Association UK All Companies sector, which lost 2.6 per cent, data from FE Analytics shows.
The vehicle delivered 32.8 per cent over three years compared with its benchmark’s return of 19.5 per cent.
| FUND POSITIONS |
25% Fall in Tyman’s share price as the fund added to its holding |
2% Proportion of Saracen Growth fund held in emerging market manager Ashmore |
