Firing line  

‘If you manage the liquidity, there are a lot of bargains’

‘If you manage the liquidity, there are a lot of bargains’

Richard Penny, manager of the Crux UK Special Situations fund, says: “It was a good idea to move and it was a very good idea to go to Crux.”

In January 2018, Crux Asset Management announced it had poached UK equity fund manager Mr Penny from Legal & General Investment Management, where he had spent the previous 15 years running two funds.

In the press release, Crux cited his “exemplary skill as a fund manager” and his expertise in managing mid and small-cap UK equities, which would “complement and strengthen our investment proposition”.

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The L&G UK Alpha Trust, which Mr Penny managed from 2005, had been in the top quartile of the IA UK All Companies sector for performance from 2009 to 2011, he recalls. 

Taking the plunge

But Mr Penny was leaving a well-established investment management company where he had built a track record, to join Crux Asset Management, which had been launched only four years earlier by European equity manager Richard Pease, formerly of Henderson Global Investors and New Star.

Why was it such a good idea to make the leap from an investment management behemoth to a much smaller boutique asset manager at this point in his career? Mr Penny says he had two reasons: “It was going incredibly well at Legal & General with the funds I was running. 

“But I invested in small and mid-sized businesses – I quite like entrepreneurial businesses, I like it when fund managers invest in their own funds. It wasn’t entirely that sort of structure [at LGIM], even though they were very kind to me.

“If you wanted to set up your own business in today’s environment from a regulatory and compliance point of view it would be incredibly difficult. But Richard Pease happens to be pretty much the best investor in the UK – and the business is derisked from a financial point of view.”

He adds: “It was those two factors really. It was right for me, after being at Legal and General for 15 years. 

“Hopefully people will recognise that I’ve done quite well with a couple of funds and I’m really keen to do it again. I’m still young enough that I want to put another 15 to 20 years on the board.”

Launching the fund

While Mr Penny started at Crux in June last year, it was only in October that he began investing his UK Special Situations fund.

His definition of a special situation is a company that is “properly undervalued, that will give us good upside”.

“We’re not different in that regard,” he admits. “However, let me just say how we build the fund.

“It’s concentrated, so we’re going to be between 30 and 60 holdings. We’re 40 [holdings] at the minute and it is high active share. It’s not just buying the top 10 stocks in the market.”