Since 2000 it has been managed by Alastair Mundy, who recently presented at our office.
Mr Mundy is a contrarian investor who buys the shares of cheap and out-of-favour, but financially sound UK companies on his belief that share prices revert to mean over time. This strategy has proved successful in the long term, with Temple Bar’s underlying assets in aggregate outperforming its benchmark – the FTSE All Share Index – by 22 percentage points over the past 10 years.
However, since 2014, year on year it has lagged the benchmark. Mr Mundy’s long-held view is that equity markets are overvalued; ultra low interest rates have led to a herd mentality, with investors taking on increasingly higher levels of risk to generate a return on their money, to the point where Mr Mundy fears we are heading for a significant correction. Consequently he has been retaining high levels of cash which, together with a holding in gold – held on the basis its value cannot be distorted by the actions of central bankers – has dragged on returns at a time when equity markets have been on a persistent uptrend.
Consequently, Temple Bar shares have moved from trading at a premium of 2% to the underlying assets in 2014, to a discount of 10% at the time of writing. Looking forward, its defensive positioning should benefit it in the event of a market correction, although the timing of any such event is difficult to predict.
_____________________________________