It is the value approach that saw the team invest strongly in the European periphery during the 2012 crisis, at a time when most investors couldn’t see past the risk and equity teams were told to stay away.
It was a clear example of the market becoming “one dimensional in the way it looks at a particular set of assets”, Butcher explains, which created an opportunity for value hunters who saw a different future for some companies.
“When we looked at the assumptions for the next three or four years for those companies and what we felt was actually doable, there was a huge gap and that created the valuation opportunity there. If anything, it’s exceeding expectations but at the time that felt like quite a big change,” she says.
Taking a contrarian stance isn’t something Butcher and the team aim for in the way some other managers or companies do.
“You need to be prepared to go against what might be the consensus at that point. We’re not mindlessly contrarian but often, almost by definition, those big valuation gaps come when the market is looking the other way.
“We spend time trying to assess if there is a reason why the valuation might change, and if there is we will back it significantly.
“We are active managers and we want to be properly active. We don’t own anything we don’t have a strong feeling about no matter how big it is in the index. If we feel strongly about it we will have a proper overweight and back it with conviction.”
With the influx into Europe continuing apace and Butcher seeing far more upside to come on the continent, where is the value-driven fund manager seeing opportunities in the coming years?
