Manager of the JO Hambro Capital Management UK Growth fund Mark Costar is dismissive of company comp...
Manager of the JO Hambro Capital Management UK Growth fund Mark Costar is dismissive of company complaints that rising oil prices and increasing commodity costs are putting pressure on profits.
He said: "In this part of the market cycle, good businesses should be able to grow and bad businesses will find excuses, whether it is oil prices or material costs. Good businesses will manage their way through that."
In general, he believes fund managers do not have the expertise to make macro calls, whether on the future price movement of a barrel of light crude oil or the UK housing market.
Costar seeks to diversify away from these risks, holding a stake in BP, for example, to ensure he has exposure to the energy market without staking returns on its continuing outperformance.
Instead, he is finding his typically 50-60 holdings across market sectors, although maintaining his bias towards the areas in which he is most comfortable: support services, telecoms, technology and financial services.
Costar, who ran £2bn of assets at Insight, saw his fund close to new investments at £350m in May this year.
He said: "It means I can concentrate more on investment management. The optimal size of the fund is up to £500m, so we are allowing for further organic growth through outperformance."
As well as macroeconomic calls, Costar dismisses the approach of growth managers who look for a catalyst for a growth stock to achieve its value.
He said: "I do not look for cheap stocks with a catalyst as that is simply trying to be too clever and scientific.
"Instead, I look for companies where I understand the business model. There has to be the potential for structural growth in the industry and management who can exploit that."