Companies  

Firing Line: Angel Agudo

Fidelity’s Angel Agudo, is the fund manager of a somewhat unconventional American fund.

The portfolio, he said, invests in companies that have had something “weird” happen to them. To put it more technically, the fund invests in companies that are undervalued, either because they are out of favour or little value is given to their recovery potential.

It also falls under the investment firm’s ‘special situations’ category. This type of investment vehicle is difficult to define because what constitutes as an unconventional investment differs between managers.

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Mr Agudo said: “Every fund manager believes that every holding in their fund is special. I have certain biases. I have a value tendency, and I do not shy away from trouble. In fact, it is almost a must for a company to go through difficulties for it to be included in the fund. Is that a special situation? Maybe not for some people.”

The strategy arguably rose to prominence under now-retired celebrity fund manager Anthony Bolton, who earned plaudits for delivering exceptional returns to investors in his more than 28 year tenure at the helm of Fidelity’s flagship Special Situations fund.

Mr Agudo said: “Has he been successful and is he someone to look up to? Yes. My dream is to look back in 20 years’ time and see that my investors have made tons of money towards their pension, their child’s school fees – whatever it is.”

Mr Agudo, a Spanish native, boasts impressive performance himself. According to FE Analytics data, the American Special Situations fund has returned around 166 per cent over the five-years ending 31 August 2016.

He said his approach to running money has remained constant, and is typified by low portfolio turnover. At the moment, the portfolio is heavily skewed to the technology sector.

He added: “In the technology sector, you have a lot of companies that are quite resilient, have good balance sheets and massive cash flow conversions, but there could be some form of controversy surrounding the technology they provide in the future - and that is where the opportunities lie.”

The top position of the portfolio containing 52 holdings is Oracle, which, along with Cisco and EMC, could be considered as “boring” investments in the technology sphere. Mr Agudo said.

Seldom does he invest in what he labels “sexy” conglomerates such as Apple, Alphabet or Amazon – although the fund includes a holding in Microsoft.

He said: “If a company has done very well and everybody knows about it, it is difficult to get a substantial upside because its good performance would be reflected in its valuation. Some people are very good at finding compounders, but that is just not what I do.

“In general, the companies I have invested in have gone through a tough time – either people have not liked the business model, there have been issues with management, or the company is cyclical but it is the wrong time of the cycle. The bet I make is that these problems are transient, not structural, and in four or five years they will be solved and the company will make significant money.