While the manager holds stocks that he acknowledges every UK income manager owns such as BT and ITV, these were purchased when the companies were in the doldrums, and Colwell says he has benefited from their re-rating, but will not up his exposure.
Instead, Colwell told investors he is putting money to work in what he calls the “men behind the ball”. He explained: "With the markets doing so well, increasingly we’re seeing more value away from where the markets are focused, and those stocks that have been left behind."
He equates this approach to film director Quentin Tarantino (pictured), seeing the potential in stars that have faded and been written off by everyone else. He is looking for those stocks "where the market is seeing real structural headwinds and the name of the game is to try to address whether those structural issues are more than compensated for current valuations."
Colwell has recently bought into AstraZeneca, National Grid and Morrisons. Of the latter he said: "Everyone obsesses about the threat of internet shopping and the lower margins on that business compared to the core business. I’ve seen the management a lot recently and they have a good, clear strategy for a tough market."
He also bought a large amount of Imperial Tobacco, when he expained: "All the 50-page sell notes came out on the issue of e cigarettes and how that would threaten their core business."
