Temple Bar Investment Trust is a diversified bet on British equities and looks excellent value
Max King Investment columnist
Since they took over the management of the Temple Bar Investment Trust (LSE: TMPL) in October 2020, Ian Lance and Nick Purves have generated a total return of 100% compared with 55% for the FTSE All-Share index. This is also well ahead of global indices. When the board moved the management contract, they chose to continue the previous manager’s value strategy rather than join the then-fashionable pursuit of growth.
This has proved shrewd, not just because the UK market, in which Temple Bar is focused, is short of growth stocks, but also because the trust’s contrarian reputation was worth preserving. “We are very much contrarians,” says Lance.
Although the global pendulum has hardly swung back to value investing, the UK has proved a fertile hunting ground for recovery stocks. In the face of indifference, if not animosity, towards quoted companies by government, regulators and the general public, corporate managements have been shaken out of their torpor and complacency into improving investors’ returns.
Don’t buy rubbish
Lance and Purves avoid “value traps” (companies that are cheap, but show no signs of improvement) and “mindless contrarianism” – buying into companies solely on the basis of a collapse in their share prices.
“Investors love to buy what everyone else hates, but having respect for what the market is saying is key. Don’t buy rubbish.” They emphasise the importance of discipline in value investing as it is “tricky – people are hardwired to conform”. Also, “bargains are rare, so make the most of them” and “timing is never easy, so be patient, be long-term”.
In 2023, they missed the FTSE 100’s top performer, Rolls-Royce, which tripled and has since risen by another 40%, but were invested in Marks & Spencer, which more than doubled. It is in the top-ten holdings at just 4% of the portfolio as they have taken profits. This may prove premature; contrarian investors are prone to selling too early, at the stage when recovery is turning into growth.
On the other hand, Centrica, another top performer in 2023, has declined by 25% from its 2023 peak, but “it’s still very cheap on a multiple of four times earnings with half its market value in cash”, according to Lance.
The impressive performance of Internatio
