The Investor 90

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The quarter was dominated
by the prospect of the UK
referendum.When the result
was declared, it sparked
upheaval in UK and European
markets, increased volatility
and raised uncertainty about
interest rates.The UK is likely
to cut rates by the end of the
summer and the anticipated
US rate rise may be delayed.
In the UK, domestic stocks
suffered but export-led
companies performed better.
The uncertainty affectedAsian
stock markets and sparked a
flight to safe-haven assets and
currencies.Markets were
looking ahead to the US election
and the UK’s handling of Brexit.
Oil continued to recover, rising
above $50 a barrel.China’s
efforts to rebalance its economy
towards domestic consumption
are likely to be a further drag
on global growth while
investors are increasingly
disillusioned with Japan’s
Abenomics programme.
IN THIS SECTION
24 Viewpoint
Howard Gleicher, Aristotle Capital Management
26 Unit Trust Portfolios
28 Fund manager commentaries
24 | THE INVESTOR
Howwouldyoudescribeyour
investmentprocess?What
methodsdoyouuse tochoose
companies to invest inand
howdoes thisvaryfromother
portfoliomanagers?
We focus primarily on the business
– it’s a different mind-set to many
other investment managers, who are
mainly trading in stocks and shares. It
means we are willing to take a variety
of paths to get to the stage where
we will invest. It’s a time-intensive
process: we have 12 investment
professionals looking at businesses
across the world but have only 40
investments in our
also have a very low stock turnover
of three to five years, on average.
Each person is incentivised, not to
find new stock ideas but to focus on
what is important: understanding the
business.There is always more work
to do on that.
At various points in history,
there have been times when others
[investors] were so enamoured by
individual businesses that they would
buy a stock just because they thought
someone else would buy it from them
at a higher those times, we
may not be able to get the necessary
value, so we would not invest. For
example, 20 years ago all investors
Viewpoint
HowardGleicher,
AristotleCapitalManagement
Ignoring the market and looking for sound
businesses with long-term prospects at
attractive prices are key to the fund’s success
wanted to be in technology,media
and telecoms stocks.Our approach
then led us not to invest in them but
to invest in consumer stocks such as
Kellogg’s or General Mills, which
people were ignoring but which were
wonderful businesses.
We do not spend much time trying
to understand the stock market.
The fundamentals of a business do
not change with their share price:
prices can get very far away from
the underlying value of the business.
Because we only invest in around
40 companies from the thousands
available, it seems there are always
more than 40 that we could invest in.
Your investmentprocess
aims toidentify ‘catalysts’
thatdrivethegrowthof
businessesyouown.Canyou
provideanexampleof this?
We are looking for companies where
change is going on. For example,we
followedMedtronic, a manufacturer
of medical devices, because it was a
market leader, but did not invest until a
few years ago when there was a change
in the got to know the new
CEO,Omar Ishrak, and believed he
would be able to take the business to
a new level so we felt able to invest. If
you had just looked at the stock price,
FUND MANAGER VIEWPOINT: HOWARD GLEICHER, ARISTOTLE CAPITAL MANAGEMENT
NORTH AMERICA FUND