Webb was brought in to manage the funds by owner The Share Centre after the former manager Tom Winnifrith from Rivington Street Holdings was asked to leave following a period of poor performance.
The funds were then renamed SF Webb Capital Smaller Companies Gold and SF Webb Capital Smaller Companies Growth, from T1PS Smaller Companies Gold and T1PS Smaller Companies Growth respectively.
Yet since May, when Webb took over, both funds have continued their downward spiral. The £9.5m gold fund has fallen from -5% at the start of May to -26% at the start of October taking its year to date losses to -36.8%.
Meanwhile the £7.2m growth fund has plunged from flat returns in May to -30% at the start of October, with year-to-date losses up at -39.6%.
These numbers make the funds the two worst-performing funds over one year, according to FE trustnet.
Falling daggers
But Webb, who has more than 20 years’ experience investing in small caps (most notably at the helm of Eaglet Investment Trust), said he has picked up two funds that were falling daggers.
“The fact is the previous manager [Winnifrith] was struggling with his business and that impacted how he managed the funds. I have done the numbers on the performance to August of both the growth and gold funds and some of these holdings from 28 February to 31 August fell 93%.
“One of the worst performing stocks was Rivington Holdings, the company running the funds and they should not have been invested in it. I have never taken on a fund that has done this [fallen so sharply in such a short space of time].”
Webb said he felt the growth fund should really have been described as a special situations fund when he first took it on.
“A lot of the positions in the funds were speculative investments that have really banged down to earth over the summer and the previous manager would have chucked good money after bad. It was more important for me to really get on board with what I was holding before I could do the management job of turning them around.”
He added that he has begun to see light at the end of the tunnel and that both funds have started to look “quite interesting”.
Slowly turning around
He predicts some good numbers will come out of the gold fund in the next year, but thinks the growth fund will take longer to turn around. Webb’s biggest change in the gold fund has been to focus more on companies involved in production rather than aspirational exploring and in that process he has created liquidity in the fund.
“I am much more comfortable with the funds because we are starting to see real value, when I picked them up they were too expensive. This would be absolutely the wrong time to desert these funds.”
Webb said he had managed to secure two sizeable investments in the past couple of weeks, one of £500,000 and another of £250,000, which he thinks proves there is support for what he is doing.