I was expecting the UK's most successful stock market investor and fund manager to regale me with fascinating anecdotes and strong opinions about investing. But for all his world-beating accomplishments, Anthony Bolton is modest, genial - and, dare I say it, slightly underwhelming.
As Fidelity's other great investor, Peter Lynch, in the foreword to Mr Bolton's new book, describes him: "Conversation with him is 99 per cent light and maybe 1 per cent heat, because he is 'cool' in the very best, most 'British' sense of the word - passionately unflappable, intensely calm."
Anthony Bolton is tall, with a firm handshake and a nice smile. He doesn't get really animated at all during the interview. But it's precisely this "British cool" that has made him into Britain's most successful investor.
Over 28 years, he delivered a market-beating annualised return of 19.5 per cent in his Fidelity Special Situations Fund (compared to 13.5 per cent for the FTSE All-Share Index). In monetary terms, that means if you had given him £1,000 in 1980 it would have been worth £148,200 when he retired from full-time investment management at the end of 2007.
Staying detached
"I'm a fairly unemotional sort of person," he says. "Being unemotional is very important." In fact he warns me to be wary if I meet a very emotional fund manager. He thinks very emotional people generally make poor fund managers. "Good fund managers should be humble (humility is an attribute that many portfolio managers lack) and happy to make mistakes; mistakes are an integral part of the job," he write in his book, Investing against the Tide.
Subtitled "Lessons from a life running money", his book offers amateur investors an insight into Mr Bolton's stock picking strategies. In it, in addition to his successes, he lists his most memorable mistakes. These include investments that went wrong in Sportingbet, GCAP, Premier Foods and iSoft. Regrets also include not owning enough mining shares, particularly Xstrata, BHP Billiton and Anglo American.
At the rare times when his investing career was not going so well, he admits feeling mildly uncomfortable. "It affects me but it very rarely got into my personal life."
He agrees that other investors might get depressed when performance is struggling, but "if you think you have the midas touch that's just as dangerous," he says.
The title of Mr Bolton's book reflects his contrarian approach to investment, "being happy and often more comfortable, swimming against the prevailing flow".
Being comfortable with feeling uncomfortable is key: "Many of the best investments I've made have felt uncomfortable at the time I've made them (including my more successful market calls). Often by the time an investment is 'comfortable', particularly in the recovery/turnaround field, it's too late," he writes.
He describes the job of a fund manager as "a job of remorseless intensity day in, day out". "Investment is all encompassing - you think like a fund manager - even on the high street you're thinking 'Is Tesco doing better than Sainsbury's?' or 'How is WHSmith doing?'. I've always been one for working very hard and when you're not doing it it's very important to relax."
| ANTHONY BOLTON'S CAREER... |
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Anthony Bolton's city career started in 1971 when, after leaving Cambridge with a degree in engineering, he joined Keyser Ullmann as a graduate trainee. In 1976 he moved to Schlesingers, where he became an investment manager. In 1979, aged 29, he was recruited by Fidelity, the international fund management group, as one of its first London-based investment managers, a move that proved to be the launch of a long and successful career. He retired from full-time investment management at the end of 2007. He now acts as a mentor to analysts and younger fund managers at Fidelity, as well as being involved in overseeing their investment process. He is married with three children and lives in West Sussex. In his spare time he composes classical music. His personal investments are mostly in Fidelity funds. "I have every confidence in my successors," he says. He also owns properties and shares in Fidelity itself. His favourite investment books are those by Peter Lynch and Warren Buffett. He also likes to read commentary from Jeremy Grantham and Bill Miller. |
Be selective
So what is his advice for Investors Chronicle's readers? "A private investor doesn't need to own lots of stocks. Warren Buffett says 10 stocks. I think I would go for a bigger spread but no more than 20. I couldn't have run very big funds without back-up from analysts. I couldn't follow 200 stocks on my own."
Also, he says you have to do quite a bit of work. "Don't invest on a hunch or a tip," he warns.
It is important always try to get the informational advantage - something that is very difficult with the amount of information now in the public domain. Mr Bolton thinks it has become harder for fund managers to have the informational advantage. "We try to know lots of little things about companies," he says, reluctant to go into detail.
So how can private investors compete? "If you are a retired doctor buying oil shares you're not using your knowledge. Why not invest in healthcare or biotech where you have some knowledge?" he suggests.
Private investors aren't going to be able to call up the management of FTSE 100 companies for a chat, but Mr Bolton suggests there is no reason why they shouldn't be able to talk to the management of start-ups. "You could find a small company and do your research and ring up the company and have a discussion."
But you have to find the style that works for you. "I stuck to a style that worked most of the time. I'm suspicious of someone who does lots of styles," he says.
Value is rarely fashionable
He believes that being a value and contrarian investor like himself is "less risky" than other styles. "All the evidence supports that it is better than other investment styles. But the trouble with value shares is you have to buy unpopular shares - that can be a career risk and you can lose your job - so not many fund managers do it," he says.
It also means that there are periods where you will underperform. "In recessions and momentum markets, I had bad times," he says. One of his worst periods of underperformance was in the early 1990s. "That was the only time our chairman came and talked to me about managing the fund and whether I should relook (sic) at how I do things. You have to relook at things and the reverse side of everything. He gave me the time to continue - but I'd had a decent run."
Whether investors would have had the tenacity to stick with him after this three year blip is another question. He says: "Often the best time to buy a good manager is after they've underperformed for a while. You could get a good three year record purely from luck. Over three years, luck tends to be less important. I'm very suspicious of managers with less than three years on a fund unless they have a good pedigree."
So if he was starting out today, would he have done anything different? "If starting today, I would have made the Special Situations Fund, global, not just UK. I would also have liked the ability to short shares - I came to it late in my career. At its heart everything would be the same."
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