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David Kimberley
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Updated 23 Feb 2024
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This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.

Many aeons ago, this author went to see a politician, who shall remain nameless, give a talk in Westminster. Although I wasn’t a big ‘fan’ per se of this person, they always seemed less robotic than their peers. However, from the first syllable that they uttered, it was immediately apparent that this person was not someone you would trust.

This may seem almost a given but it’s always striking how much of a difference it makes meeting someone in person. Changes wrought by the pandemic may have convinced us otherwise but the reality is that face to face meetings will never be the same as virtual ones, even if the Zuckerbergs of the world would like to convince us otherwise.

This was something Paul Major, manager of Bellevue Healthcare (BBH) noted when we spoke midway through last year.

Paul noted that, despite pandemic restrictions being lifted for over 12 months, there was yet to be a return to ‘normal’ when attending manager meetings or industry events. Simply put, a lot of people were staying home.

However, Paul argued that this was actually a key way of gaining insights into how a company was doing. Things as small as a CEO’s facial expressions or how other employees reacted to specific statements provided clues that would be impossible to detect if you were either listening remotely or not showing up at all.

This is arguably one of the key benefits conferred upon investment trust managers. Individual investors may be able to show up to AGMs and so on, but they are not going to have the same sort of contact with senior management that a large investor will.

Time, effort, and specialisation is another component of this. For example, the large research team working for Ashoka India Equity (AIE) carry out in excess of 1,000 company visits per year.

The reality is that, even if you had the access, an individual investor simply wouldn’t be capable of doing this, unless they wanted to spend all day every day meeting with company management. Many of the AIE researchers are also sectoral specialists, so they can really understand the finite details of a given company’s activities – and whether or not they’re good for shareholders.

Manager meetings are even more vital in some cases, given the sparsity of information available about the companies within a particular universe. For example, the BlackRock Frontiers (BRFI) team travel extensively to get a better, on the ground picture of the companies they invest in. This often includes separate meetings with local officials, suppliers, and competitors to get a clearer overview of the company’s position.

Clearly this does not mean managers are going to perform well just by rocking up and having a chat with a company’s head of finance. But given how much we focus on discounts, valuations, and future earning potential, it’s worth keeping in mind that the underlying companies that investment trusts invest in are run by flesh and blood people. They are ultimately the decision makers and the ones influencing whether or not your portfolio is going to perform well.

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