Andrew Vaughan has ditched a trio of holdings held by his predecessor Rosemary Banyard in the £7m Free Spirit fund, since assuming control of the portfolio last year.
In December, Sanford DeLand Asset Management confirmed Vaughan as manager of the fund following Banyard's departure, as reported in April.
"Dunelm and Chemring went out on my revised interpretation of business perspective investing," he explained.
This is the investment approach adopted by Sanford DeLand across its funds, including the £1.4bn Buffettology fund run by Keith Ashworth-Lord, and is about "owning businesses where we think the performance is going to be predictable with a very high degree of certainty".
Defence company Chemring was a "beaten-up recovery situation, completely out of favour", with Vaughan adding that under his interpretation of business perspective investing "recovery situations are off limits".
On why he sold out of retailer Dunelm, he said: "I find retail very difficult to see into the future and see with any certainty where it is going to be."
But he added he completely understood Banyard's reasons for holding them and "had the highest regard for her as an investor".
His third disposal, soft drinks manufacturer AG Barr, was triggered by "a specific profit warning and then my view - I felt it was where something had fundamentally changed".
The manager has also trimmed the number of holdings to 25, down from 27 when he was handed the portfolio.
"It is quite telling that I am down at the bottom of that range. The performance has benefited from that. From my experience in a concentrated portfolio, I prefer to own a smaller number of companies that I know well," he said.
Over three years to 13 January 2020, the fund has returned 47.4%, compared to the IA UK All Companies sector average of 21.2%, according to FE fundinfo.
While the fund's objective places an emphasis on UK small- and mid-cap stocks, the manager can invest in large companies, defined as those in the FTSE 100. At the end of December, the portfolio had around 16% in large caps.
At the beginning of July 2019, in the first week Vaughan took over the fund, he bought into Bloomsbury Publishing, which now accounts for 4.3% of the portfolio, placing it among its top ten holdings.
He reasoned the publisher's move to a digital format meant "Bloomsbury can start selling a subscription model".
"Suddenly there are better margins coming through," he added.
The manager said there was a "handful of companies" he would like to own but that the market price is currently too high, so they remain on a "watch list", while he waits for a market setback.
"In order to be able to take advantage of those situations I have to have cash in hand ready to do that. One of the characteristics of Free Spirit you will find is there is a high cash balance.
"At the year end it was just over 16%," he said.