Temple Bar (TMPL)

Ian Lance and Nick Purves formally took the helm of Temple Bar (TMPL) in November 2020 when the management contract was won by Redwheel, bringing extensive experience in UK investing and a strong track record in value-oriented strategies. Over their nearly four-year tenure managing TMPL, they've aimed to establish the trust as a go-to for value investing, centring their strategy on identifying companies they believe are undervalued by the market, trading significantly below their fair or intrinsic values. By investing in such companies for the long run, they argue it helps build in a margin of safety which can protect against unforeseen events and offer excess investment returns when the market eventually corrects these undervaluations (see Portfolio).

However, unlike traditional deep-value strategies, the managers will not entertain cheap businesses with little to no growth prospects and steer clear of those that are vulnerable to market disruptions or cyclical downturns. Their approach is selective, and whilst valuations are indeed fundamental to their stock selection process, they want companies with upside potential, demonstrating financial resilience, sustainable profitability, and the ability to consistently generate cash, which can be returned to shareholders through dividends or share buybacks. Following strong earnings growth in the first half of 2024, the board increased the second interim dividend by 20%. The shares now yield 3.6% on a historical basis.

This combination has proven a powerful source of return for investors, contributing, at the time of writing, to TMPL’s sector-leading Performance under the managers’ tenure, with particularly strong results over the past 12 months. Financials like NatWest, Barclays, and NN Group, despite being valued at depressed multiples, have remained operationally strong, consistently generated cash, and returned it generously to shareholders, ultimately boosting their share prices. TMPL’s strong relative performance has led to its Discount narrowing towards its five-year average, though it remains wider than the sector average.