Industrials keep Merrion Investment Managers out in front in Rehab race

MERRION INVESTMENT Managers continued to lead the way in the Rehab Great Investment Race last month. This is the second month of this year’s initiative, which aims to raise money for Rehab.

Five Irish investment fund managers are given €100,000 to invest over a 12-month period, with all proceeds going to Rehab’s autism services. Overall, the fund now stands at €550,565, up €29,402 on November.

Looking at the individual performances of the five fund managers, Merrion Investment Managers topped the list in December, with a return of 13.9 per cent on the month, bringing the total return to date to 26.8 per cent.

According to Alex Kinsella of Merrion Investment Managers, the fund continued its strategy of focusing on industrials and basic materials.

During December it invested in the basic materials sector through an ETF (exchange traded fund), with the holding up 9 per cent on the month. In addition the fund invested in specific stocks, taking positions on industrial materials company Arcmittal and transport company TNT which were up about 4 per cent.

Irish Life Investment Managers (ILIM) managed to move up to second place in December with a return of 6.4 per cent on the month, slightly outperforming Kleinwort Benson which was up 5.3 per cent.

However, Kleinwort Benson is still in second place overall, with a total return of 14.7 per cent to date compared to Irish Life Investment Managers’ return of 7.2 per cent.

ILIM’s strong performance in December was down to a number of stock-specific decisions during the month, according to fund manager Seamus Magner.

The decision to invest in financial software company Norkom – which was the target of a takeover bid during December – was prescient, generating 3 per cent on the month. The fund, which has a strong focus on Irish and UK equities, also made 1 per cent on British property development and investment company Hertical Bar. In addition, DCC was sold during the month, while the fund also bought and sold an SP 500 ETF, yielding a return of 2 per cent.

Kleinwort Benson, whose performance dipped slightly in December, is still in second place overall in the race.

The fund has seven holdings, each of which was in positive territory in the month. Two holdings stood out in particular, according to fund manager Noel O’Halloran.

“The investment in Brazilian oil company Petrobras paid off. We held it on the belief that oil would hit $100 a barrel. That did not quite happen in the month, but did shortly after. Overall the stock was up 13 per cent on the month.”

Fuel company Oxford Catalysts, which develops technology for the production of clean synthetic fuel, was another good performer, up 15 per cent.

Rehab’s own investment team saw a pick up in performance in December, moving into fourth place last month, though it is still at the bottom of the table in terms of overall performance.

“My main preoccupation in December was to get back onside and try to recoup the shortfall from the poor start in November,” said fund manager Frank O’Brien.

While the fund did succeed in getting back on track, it was not helped by weakness in the UK market and in sterling at the very end of the year. The fund has since added Next and Ericsson to the list of stocks in its portfolio, and maintains its focus on large capitalisation, quality companies.

AIB Investment Managers was in fifth place last month, though its return of 1.4 per cent was an improvement on November’s performance.

“We concentrated positions a bit more during the month,” says fund manager Joseph Harrigan, “though our lack of exposure to the euro hurt us, particularly towards the end of the month as the euro strengthened.”

The fund maintained its focus on emerging markets, investing in companies such as Chinese company Hollysys Automation Technologies, but it lost on Chinese herbal shampoo maker Bawang.