When value-conscious Temple Bar executives bought Marks & Spencer shares, some questioned their common sense.
While M&S shares have almost tripled from 90p to 250p in the last 16 months, this is no longer the case.
“The market has gone from hating Marks & Spencer two years ago – people were saying you’re absolutely crazy to own this – to actually liking it,” Ian Lance, co-director of Temple Bar, told This is Money’s Investing Show.
But Lance adds that these strong gains are coming from a low base and the Temple Bar team believes that Marks & Spencer is still closer to the start than the end of its recovery journey – with more returns for shareholders future.
In the first episode of a new series of the investment fairIan Lance joins Simon Lambert to explain the investment philosophy that has enabled Temple Bar to generate an 80% return since he and Nick Purves took over as CEO of the company at the end of October 2020.
Lance believes this investment strategy still has a long way to go, saying the UK market is as undervalued as it was in 2008.
He admits the duo benefited from lucky timing in taking over the trust just before the Covid vaccine rally began. Still, he points out that their value investing style doesn’t just involve buying the market, but picking individual companies that are undervalued.
Temple Bar looks for the “cheapest stocks, with the best prospects” and Lance explains why the tight portfolio of around 25 companies includes M&S, BP and Royal Mail owner IDS.
He also explains Temple Bar’s contrarian support for carmaker Stellantis – and why he prefers to own the conglomerate that owns Peugeot, Vauxhall, Fiat and Alfa rather than Tesla shares.
But that doesn’t mean value investors can’t venture into the tech world, according to Lance.
He details how he once owned Microsoft shares because they fit into the value investing philosophy and explains whether Facebook’s parent company, Meta, managed to reach that bracket when its stock price fell in 2022.