The Lincoln Opportunities Trust fund as managed by Goldman Sachs Asset Management has done so well in...
This brings into focus the investment approach by the Goldman Sachs team that manages the fund and how it goes about deciding what stocks should be in or - perhaps more importantly - out of the portfolio.
The six-person team looking after the Opportunities Trust consists of both small-cap and large-cap specialists, with backgrounds ranging from fixed income to consultancy.
These people take on multiple roles in order to increase the efficiency of the stock-picking exercise, given the large number of companies that must be covered.
"If we can't convince our colleagues, chances are we can't convince the market," says Prashant Bhayani, Executive Director
With seven years of the team approach behind the style of management, it has proven its benefits, the team members say.
Company visits are made with at least 2 members on average, followed by intense debate.
"In terms of practicalities, it allows people in the office to act on news affecting particular stocks in the portfolio if other team members are out on company visits - and there are a lot of visits, some 200 or more per year."
In relation to the work being done for the Lincoln Opportunities trust, the team says it has already identified three reasons why opportunities are likely to grow during the coming year.
Many of the smaller companies are insufficiently covered; many of them have been sold off more than big-caps following 11 September because of liquidity concerns; and it presents a stock-picking space that can lead to significant appreciation in values.
The team maintains a watch-list of stocks that are outside the portfolio, and which can be moved in as soon as a particular factor, such as relative value, changes.
The companies being watched changes over time, as firm agreement is needed even to get on the core watch-list: some stocks were put there in October, but the factors have not fallen into place to make it worthwhile putting them into the portfolio.
Liquidity is returning to the market, but most watchers are still waiting until the third and fourth quarters for companies to prove they have really shaken off the worst of the downturn.
The top ten preferred stocks at the end of December were Amey, HIT Entertainment, N Brown Group, Luminar, Aberdeen Asset Management, P&O Princess, and Galen Holdings.
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