Yahoo Finance Amazon treks, ‘Everesting’ and yoga: the hidden lives of the City’s top investors
What do ultra-marathon runners, concert-grade violinists, anthropologists and yoga teachers have in common?
At first glance, not much. But they are all the second identities of some of the City’s top fund managers – and influence how they manage money.
Investigating a company’s finances is just the starting point when evaluating shares, with many fund managers arguing that their edge over rivals comes from taking a holistic approach to stock picking, drawing inspiration from unusual hobbies.
We spoke to some of the top fund managers with extracurricular activities they argue help them better manage money.
Charles Montanaro
Hobby: anthropology
Funds managed: Montanaro UK Income, Montanaro UK Smaller Companies Trust, Montanaro Better World
Career return: 1,323pc versus 928pc average from rivals
Top stocks: Dechra Pharmaceuticals, Games Workshop
Studying anthropology at university has had a profound impact on the career of Charles Montanaro, founder of small stocks specialist Montanaro Asset Management.
He never lost his interest in the subject and for the past 20 years has swapped his laptop and briefcase for a backpack and machete, heading off to remote jungles in search of undiscovered tribes, including in the Amazon rain forest and Papua New Guinea.
He said there were many investment lessons from his background in anthropology. "Always listen to your guide. Indigenous tribes are perfectly adapted to their own environment – but cannot conceive of life beyond a jungle. In the world of investing in small firms, it pays to trust local experts," he said.
Another lesson he has learned is to pay attention to non-verbal cues. "The tribes I meet speak a language that often has not been documented, so I pay a great deal of attention to body language," he said.
"In the City, it is vital to meet the company bosses before investing and carefully watch for body language for clues. In the jungle, it keeps you alive; in the City it helps you to make money," he said.
Mr Montanaro said his anthropology adventures had also helped him keep an open mind when meeting chief executives who also broke with the norm.
For example, when he met Tom Kirby in 1995, the then boss of Games Workshop had a ponytail and wore jeans. Mr Montanaro backed him despite the company being shunned by other investors, and shares in the war games figurine maker have risen nearly 120-fold since. "He built a great business which we still own," said Mr Montanaro.
Likewise, Mr Montanaro is a long-term backer of Dechra Pharmaceuticals, whose boss Ian Page started out as a van driver. "We have backed him since the IPO in 2000. Despite not fitting the traditional mould, he has grown a business that may soon enter the FTSE 100," he said. Shares in the business are up more than 40-fold since flotation at the turn of the century.
Carl Stick
Hobby: ultra-marathons
Funds managed: Rathbone Income Fund
Career return: 274pc versus 186pc average from rivals
Top stocks: Halfords, BHP Group, Legal & General
Income investor Carl Stick, of fund group Rathbones, is not a typical jogger: his races require days to complete and years of training just to get to the starting line.
One event next year, the Montane Spine Challenger, is a 108-mile, 60-hour battle across the Pennine Way in the Peak District. Mr Stick has completed an "Everesting" race in America that involved 17 ascents of a hill, equivalent to climbing Mount Everest.
He applies the lessons from practising the extreme sport to investing. "Endurance events take a long time. The mental technique to survive is to break a race into stages and not think about the end," he said.
"It's the same process when buying shares. You can't focus on the end point and instead have to use rules to determine what you do over short periods. This means you don't panic," he said.
For example, he said during last year's stock market crash at the start of the pandemic, his process of reviewing each company individually in light of what the next year could hold helped him come out of it in one piece.
"We dropped cruise operator Carnival and Restaurant Group from the portfolio after assessing the impact of the pandemic on their businesses, but held onto Halfords as we thought people would want to spend more money on outdoor activities," he said.
Shares in Carnival have halved since February last year, while Restaurant Group is yet to regain its pre-Covid peaks. Halfords shares are up 360pc from last year's low.
Paul Jourdan
Hobby: concert violinist
Funds managed: Amati UK Smaller Companies, Amati Aim VCT
Career return: 457pc versus 282pc average from rivals
Top stocks: Frontier Developments, Inspecs, Gamma Communications
The founder of fund group Amati Global Investors, Mr Jourdan is also a former professional violinist with a doctorate in music history, which he said made him a better investor.
"An arts doctorate is probably better than a science PhD for an investment career because it teachers you how to evaluate information from a wide range of sources, which often contradict each other," he said.
Mr Jourdan said playing music also gave him an investment edge. "Learning an instrument teaches discipline. You can always improve, which is similar to fund management, as there is always more to learn.
"When performing live you have to read an audience, and those skills can be transferred to reading managers at a company" he said.
For example, he said buying video games developer Frontier Developments was as much about understanding the management's plans as deciphering the balance sheet.
"The whole investment came about through a relationship with the chairman. In 2013 games companies were very unpopular but I met the management team and found out it was transforming into a games publisher and developer.
"That move was critical but was difficult for other investors to grasp. Meeting the chief executive was what convinced me," he said.
Nick Train
Hobby: yoga
Funds managed: Lindsell Train UK Equity, Lindsell Train Global Equity, Finsbury Growth & Income Trust, Lindsell Train Investment Trust
Career return: 919pc versus 284pc average from rivals
Top stocks: Unilever, London Stock Exchange, Diageo
Known for buying and holding stocks with strong brands, Nick Train said being a qualified yoga teaching and practising every day made him a better investor.
He told Edison, a fund research group: "It is never too late to take up yoga and the best time to take it up is now. It has become an increasingly valuable part of my life over the past 10 or 15 years. Yoga practice makes you a better person on virtually every level and I am definitely a better investor because of it," he said.
Mr Train, in charge of £18bn, sat on his hands during the pandemic and stayed loyal to his portfolio.
In July last year, he said: "In a market marked by big swings in sentiment and with, understandably, little clarity about the prospects for many businesses, we stick to a favoured adage – 'when in doubt do nothing'."
