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Peter Higgins 00:17
Hello, and welcome to this Investing Matters podcast. My name is Peter Higgins and today I have the absolute privilege of speaking with Andy Brough, whom a fund manager friend of mine, rightfully recently introduced me to him as a legend. Andy is the head of the small and mid-cap team at Schroders, as well as a lead and co-fund manager of several funds within that team.
Andy, how are you? And welcome mate.
Andy Brough 00:42
Yeah, welcome. Yeah, thanks for the invite.
Peter Higgins 00:45
Good to have you here, Sir.
Now, Andy, I want to start this conversation with you by asking you initially about you gaining your economics degree, and you started your career in accounting, and you went on to be a chartered accountant at Price Waterhouse, do you want to share with us your greatest learnings from that time as a chartered accountant, please?
Andy Brough 01:04
Well, it's quite interesting. When I left university, one in four people who qualified went on to become chartered accountants, we sort of populated the whole industry, my sort of generation. And I was very lucky in accounting to work with some visionary people who really kind of taught me how to look at numbers, appreciate how to put together where the problems could lie. And that still be in really good stead of actually looking at companies over the last 35 years.
Plus, when I left university, I never knew this job called fund management existed, where you get to gamble with other people's money, and they pay you lots of money to do it. So I can see why is incredibly popular. But I think having that grounding as an accountant, and the ability to look at numbers, and understand them is absolutely key to being a good fund manager.
Andy Brough 01:59
You did touch on a really important point there in a sense of being able to look at the numbers and differentiate the good numbers from the bad numbers and that seems to be getting more and more as a key bit of due diligence, especially for large institutions, and essentially private investors are trying to do it, look at which funds to purchase like your own.
Andy Brough 02:18
Yeah, it's quite interesting. If you look at its take one of my largest holdings Frasers, everyone has a view on Mike Ashley. But the view they probably don't have is it's probably not the most conservative accounts in the London market.
As he said to me, he said, I own 70% of the company, why am I going to diddle myself, and you can trust that someone who’s bonus depends on the share price in another company and they don't have many shares, they're now going to be one of a better phrase pushing the envelope in terms of recognising profits. And it's quite interesting when you look at if you go read the last statement from Revolution Beauty, a classic case of a company actually stuffing their supply chain, Aston Martin, etc. Because the people involved sold a lot of shares and they tried to meet market expectations, rather than saying we're in this for the long-term.
And actually, that is the sort of company we want to be invested in. We're aligned with the management and the owners.
Peter Higgins 03:17
Yeah, I'm going to be talking about some of the holdings you've got a bit later on. But yeah, that's a very, very good point regarding numbers and alignments and skin in the game, etc.
Now, I want to go back a little bit, chartered accountant Price Waterhouse, move to Schroeder's in June 1987 as an equity fund manager, how did that transition come about?
You've already looked at the numbers and involve yourself with companies but you made the transition from Price to Schroders, ’87.
Andy Brough 03:41
Yeah, I think at the time, a lot of people who left accounting went into the glamour area of corporate finance.
Unfortunately, my accent didn't quite cut it to get into corporate finance, and the recruiter, that well, there's an analyst job at Schroders on the fund management side. And so I went for a few interviews and you know, I still wake up in a cold sweat with some of the answers that I actually gave the people at the time and still can't believe to this day that I've actually made it in.
And so I started off and I was analysing five sectors I used to the brewing sector, leisure, textiles, media, and printing.
Meeting such characters is Robert Maxwell, etc. And let's learning and then after about 18 months, they said okay, we'd like to put you in charge at the small companies team, because we thought that's one area is an area where you can do the least damage. And that was it so solid, don't that'd be managing money for 35 years.
Peter Higgins 04:42
Brilliant. No, I love that Robert Maxwell thrown in as well just to put a bit of sauce on there.
Now. Andy, please can you share with us because obviously Schroders is a massive, massive company to share some of the depth and scale of Schroders which, as some people know was founded in 1804. So it's been around for a long time.
Andy Brough 05:00
Well, it's hard to believe that I think in 1989, the Schroders Group turnover was a million pounds, a million pounds. And that company, and this is by the way, it's my fourth Schroder office, we've gone from having a small office, it's an old jury, we've always been in about 250 metres of the offices, to this huge place on London Wall is the businesses sort of growing and transformed as huge success overseas great franchise. And it's always moved with the times, I touched earlier saying alignment of interests, the family who own circa 40 odd percent.
I've always said, we're taking a long-term view here, we're building up in China and India and emerging markets, and now we're into private assets and all these other areas. And we've always moved, as the markets have moved, and it's a real luxury being part of an organisation, but are they prepared to take a long-term view and sort of recruited internally, indeed, our current CEO started off as an analyst for Schroders left to go to a couple of other places then come back, and it's become CEO, so very much embedded in the culture of the firm.
Peter Higgins 06:06
Excellent. And until recently, you had Bruno Schroder in the business as well, and sadly passed a few years ago.
Andy Brough 06:13
Yep. And we have a café, which turns into a bar in the evening here, a little restaurant, and it's appropriately named Bruno's.
Peter Higgins 06:06
Brilliant, I didn't know that I'll have to pay a visit at some point. Thank you for sharing that with us. Now, Andy as you touched on, you started managing other people's money or money, as you say, in 1989, January 89, to be accurate.
Now, how did that feel at the time, were you daunted we were excited, we like come on, I’m up for this.
Andy Brough 06:38
Well, it's quite different in terms of the information, because in those days, we had a unit trust institutional, UK smaller companies fund, which I still run, and the valuation used to arrive once a week.
So you could then see how many shares you got, if you were selling out of a holding, you had to phone someone up to make sure you didn't sell too many. And I remember that portfolio very well, because all the front pages obviously, were the largest holdings work, they were ranked in sort of holding size. And there were quite a few property stocks in there. And 1989, the property sector collapsed. And these shares just halved in value.
And what I believe is a fund manager is, that fund managers’ Achilles’ heel is which sector cost them a lot of money to start with. And for me, it was property. And so that's why I've actually have no property holdings now, was l daunted? I think it was, as a fund manager, you've got to remember that it's not your money. It's a great temptation to think I've got this stake in this company, I've got this, I've got that, at the end of the day, it's not your money, you're trying to make better for your clients. And so you've got to always remain humble and confident and not arrogant.
Peter Higgins 07:48
Absolutely agree with you on that. And the fact that you've reiterated the fact that you are the custodian of other people's money.
Now, I want to touch on this because it is something that can curtail someone else's career, when they start to manage someone else's money. And immediately the market has a little bit of a hiccup.
Now, you'd only been in, you know, in the hot seat for nine months Andy when the US markets were impacted by the Friday the 13th, mini stock market crash of October 13 1989.
As a young fund manager, what were your memories of that first sort of what's going on?
You're looking around for the rest of the team going, what's what's this?
Andy Brough 08:24
I think what it could have taught you was that if you're in stocks, where hope is the large basis of the valuation, so we're going to be game changers, the internet is going to be amazing, or whatever it was back in the day, then then that is quite an easy way to lose money.
So it's all about people talk about fundamentals. But you've got to be in companies that fundamentally have got some sort of growth prospects, where they can deliver a rising stream of dividends from a rising stream of earnings. And the first shock you get when the market suddenly collapses when you're managing money is a shock.
Now, don't forget, three months, four months after I joined Schroders, we had the ‘87 crash.
So I wasn't managing money at the time. But that was quite a sobering experience when I sort of just started buying shares myself watching the Brough family wealth sort of dissipate at an alarming rate.
So one thing in this job, if I'm honest, is you're always learning whoever you meet, you take something out of that meeting and apply it for later on. That's one of the great beauties of this job is the ability to keep learning.
Peter Higgins 09:27
Fantastic reply. I appreciate that Andy, thank you.
Now and the other, the head of the mid-cap team at Schroders small and mid-cap seems to say and the lead or co-fund manager of a number of funds, please can you share with us a synopsis of your roles and responsibilities within that team or those teams should I say?
Andy Brough 09:43
Right, okay, so we’ve got a variety of funds, we've got the Schroders of the Mid 250, we've got the Schroder Smaller Companies funds, we've got bespoke mandates for sovereign wealth funds. And I've got a team that includes Jean and Ian, and Ian’s got a PhD in quantum physics.
So he actually can understand what companies do how they make it. Jean used to be a retail analyst.
So she's very good on the sort of retail sector. And so my job was team leader is to make sure that balance is applied. And the golden rule is that if I'm not happy with the numbers, then we sell the shares.
I don't care how good the technology is, I don't care whether they're going to dominate the world. If I feel on my analysis, the numbers aren't right, then we sell shares.
Peter Higgins 10:29
Yeah, that's a good discipline to maintain. Now, Andy, you've been the manager and managed the well- known Schroders and Mid Cap 250 fund, since its launch and ‘89, sorry, November 1999, correction there.
Please can you share with us possibly without giving away the secret sauce, the methodology and the screening strategy that you have used and your team continues to use now?
Andy Brough 10:50
So when I started managing money, the Chief Investment Officer at the time John Govett said to me he said, equities are a great hedge against inflation. And that sort of got me thinking actually, that actually, as a fund manager, we probably want to try and invest in inflation. So I dreamt up this idea of the triangle, you had A stocks going up, you had C stocks coming down, and you have B stocks at the middle. And if people are going to trust you with their money, they need to understand your investment process, and feel comfortable with it and then see how it's applied.
So in an A stock for us very simply was where demand exceeds supply. So can you put your price up?
So if you look back to the days when EasyJet used to get on the plane with Mrs Brough, the three kids we'd have a look around, and I'd say you'd better go and sit with the kids, because there's not enough seats. I'll go and sit at the back. Yeah, at this point, Mrs Brough reached into her handbag, and pulled out the allocated seating, which she bought for 60 Quid so we could all sit together.
Now that 60 Quid went straight to the bottom line, EasyJet shares doubled from seven Quid to 14 Quid and went into the FTSE 100. And then if you think back when I started at Schroders, a media analyst, amongst others, regional newspapers with the stock market darlings, because they were the only places, you could advertise jobs, property and cars, and they had a monopoly over local area.
And then they started to invade each other's area with free newspapers, which we used to all deliver after school anyway to the first 10 houses, and then throw the rest in the ditch somewhere to pick up well, you know, £3.50 or whatever.
Then suddenly, all the jobs, went to LinkedIn, all the property went to Rightmove, and all the cars went to Auto Trader, and that whole sectors disappeared. And these are the stocks is where capacity goes in and out.
So people said to me, well, Andy, look at the number of pubs closing, why don't you hold my pubs, I must say, because actually, my kids have introduced me to this concept of free drinking, which when I looked it up in Wikipedia, it said, invite your friends around to your mum and dad's house, and drink their booze and then go out and order one bottle of Becks with eight straws to last the evening.
And so when you talk to people about this sort of triangle and the investment process and how things move around, then you can see people then going actually, you know what, I can see that happening in my everyday life.
And I will say you got to have the three P's, you've got to have a process that people go right. I understand that. You've got to have some performance to make money at some point in time. And then you need a bit of a personality to sell it and bring it to life.
Peter Higgins 13:28
Brilliant, and I love that concept as well, the freezer income bit as well. No, brilliant, fantastic, Andy.
Now that's such a straight on I was almost seamlessly to my next questions you once stated that the FTSE 250 is the Heineken index as it gets refreshed, like no other, do you want to expand on that for us, please, for our newer listeners?
Andy Brough 13:46
Yes. So every quarter, the indices are rebased so if a company is doing very well, and it goes into the FTSE 100 Can we sell it?
Because it's bit like being a Burnley fan, this season, you're having a fantastic time, top of the Championship winning every game, you're going to get back into the Premiership and the same thing is going to happen again, you can't hack it, and you're going to get relegated and the same thing happens with the 250 yeah, Aberdeen falls out the FTSE 100 does well for a while gets back in probably won't last.
And then at the bottom end, you've got companies falling out or companies been taken over. So in 2003, in one year, there were 103 changes to that index, and that's why I came up with the phrase, the Heineken index.
Peter Higgins 14:30
And rightfully so, now you the team and yourself in the Schroder UK Mid Cap investment trusts have a strategy whereby if a company gets promoted to the FTSE 100 you automatically sell it can you share some of the nuances regarding that and why you don't continue to hold them and does it still apply?
Andy Brough 14:49
Yes still applies. So basically, in fund management, everyone tells you how to buy a share. Buy this one because it's been left behind. Probably a good reason why, buy this one because relative something I've found in South Korea is very cheap, buys largest in the management group. No one tells you how to sell a share. No one teaches you how to sell a share. Because selling a share is very hard, because oh, I've sold it, but it's gone up, or maybe I've sold it too early, you're quite happy to buy them, but selling them is quite hard.
So you need to have something whereby you can take the emotion out of it. So it could be, are there making super margins. I've made lots of acquisitions, am I worried about the quality of the accounting, but the best way of taking the emotion out is when they're going into the FTSE 100 because that is as good as it gets for a lot of stocks.
The FTSE 100 look at Micro Focus when the FTSE 100 at £18 sold, fell out again, bought it back at three quid.
So it's just having that sort of discipline. And very few companies. You know, I know Halma, Ashtead, JD have gone on.
But a lot of companies just fall back out again, mentioned Frasers. Last time around Frasers went into the FTSE 100 at £8.50 pound, sold it all fell out at £2.50, pulled it back. And there we are still reducing. It's back at £7.50, back in the FTSE 100. It's just having a luxury with an automatic sell signal.
Peter Higgins 16:15
No thank you for that. I really appreciate that for replying you know, I'm going to ask a bit more now.
So on the opposite side of that, when a stock falls out of the 250 there's considerations taken and you don't automatically sell those what dynamics and using your earlier answer numbers are you looking forward to seeing actually that we're going to stick with this for a little while longer?
Andy Brough 16:34
So we take a view it's can you get back in have you got a business model that gives you a chance of growing and getting back in so somebody like Keller, fell outside the FTSE 250; new management team, under Michael Speakman came in when you implement his days at Cape and he's turned the business round and he's got it back into the 250.
ME Group which used to be called Photo Me but it's now changed his name to ME Group because it has three divisions Photo Me, Feed Me, Wash Me and back on track, get hold the shares, some 250 funds because we think it can actually get back in if we don't think can get back in, then we will sell it.
Andy Brough 17:13
Certainly. So you've got to know what you own is the answer really, isn't it?
Andy Brough 17:17
You need to know what you own.
Peter Higgins 17:18
Absolutely. Now, what are your thoughts on the on the recurring issue of undervalued UK 250 HQ companies and there's no recurring problem that we undervalue them as investors in the UK, but someone else comes along and makes a minimum premium sort of bid for it and it's gone. It's taken over for 20% and 30%. Rather than the long term 10 year sort of returns, you might have maybe 80 to 100 or 250%. Why do we continue to undervalue our companies?
Andy Brough 17:48
I don't know if I knew the answer to that. So the UK markets always been an open market. And everyone thinks, oh, we're selling the family silver. But what we've effectively done is we've refreshed the index with new companies coming up. The likes of Halma, Spirax-Sarco have gone all the way up into the FTSE 100 and a lot of the companies we've sold haven't been fantastic deals for the people who buying them, it'd be great deal for shareholders, because then you can go and reinvest somebody into a new area. So it's back to life. And also, when I started, the UK stock market was really controlled by four big groups Schroders, M&G. Prue, UBS, Gartmore and those four would probably have sort of 25% of the UK stock market. Now. It's dissipated around the world. So you've got no sort of control, keeping companies public. If the price is right, then people will sell and move on. And when you become quoted, that's not the end of your journey. That's the start of your journey.
Peter Higgins 18:52
Absolutely. Absolutely. Now, Andy, you've within your portfolio has showed us you have a large weighting in one of the UK is institutional private investors’ favourite stocks, and that is of course, Games Workshop.
Now, it had a quite a difficult 2020 to what all investors got a nice little Christmas present in the middle of December. I want to ask you, if you may, what your thoughts are about that potential deal with Amazon to develop the Warhammer 400k franchise the potential of that deal?
Andy Brough 19:23
Sure. So it's very interesting Games Workshop. If you go and look at the history of the company. Everyone thinks it's been fantastic for years. But it wasn't until Kevin Rountree took over as CEO in 2015, that the business got absolutely transformed away from if you like the Warhammer enthusiasts into Warhammer enthusiasts with their financial approach. And Kevin Rountree is probably one of the best CEOs I've met in my career and actually coming out of COVID. Every time I did a management call or whatever with various companies, I would always ask them the question ‘what did you learn about your business during COVID?’
And the best reply came from Kevin Rountree. And he said, Andy, what we've learned is we really rock. Now, I spoke to him on Amazon a couple of weeks ago. I said, Look, my experience, Kevin, when Amazon do a deal with another company, like it did with Micro Focus, then they take warrants over 5% of the company. And he said, that's why it's taken so long. We do business our way or we don't do it. So here is Games Workshop, 3 billion market cap company, taking on a very large river, Amazon, trillion and saying that if you don't want to do business our way, then we're not doing it. I've touched on culture. Earlier, we've talked about Schroders the culture of a firm is absolutely critical. And Kevin Rountree has done that in spades for Games Workshop.
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Peter Higgins 21:14
Absolutely, I agree with you, I want to I want to ask you to expand a little bit on something you've touched on there about the quality of leadership you've interviewed, you've visited, you've had conversations you've had calls with what are the recurring traits that you see that make the better and the best leaders of companies do have to name names, but the traits I'm more concerned about so we can identify them? Hopefully, when some of us attend an AGM or we go on a call with a CEO.
Andy Brough 21:39
The best trait is those that know what they don't know. There's a great temptation if you're a CEO, to say, you know what I'm a CEO, I can do that.
If you take Kevin, for example, he doesn't know a lot about media. So he's got a got a few experts in to run it, make sure they're the right fit. And then say, right, actually, this is the way we did deals here. You take Mike Ashley at Frasers, he doesn't know a lot about high end goods.
So he's left it to his son-in-law to do the whole Flannels elevation thing. And he's gone back to doing what he's good at, which is actually running the guts of the business. And so there's great temptation for CEOs to go yeah, I can deal with that. And when I said earlier about learning from people, when you spend time with these people, you learn that actually, it's quite okay to say, no, I don't know that.
Let's get someone else to have a look at it. But it's a really important trait to have because otherwise, you spread yourself too thinly. And you don't have that degree of expertise. And by bringing other people in, you've made them part of the team, and the team is stronger, but you're still leading it.
Peter Higgins 22:50
Thank you for that. Fantastic reply. Thank you, Andy, now wanted to touch on the leadership qualities and the numbers and all the rest of it and ask you this question.
What triggers you and your team to lose faith in long-term holding? When you're thinking okay, well, either going to reduce this or we're going to exit it now. What are the numbers? What the fundamentals you're looking at? And going enough is enough now?
Andy Brough 23:11
Ok. We've touched on sell signals, right?
So basically, frequent acquisitions is a no no for us. We will sit down and we will piece together for our piece together, what we think the real underlying earnings are. So NCC, for example, we sold it for £3.60, the holding, because too many acquisitions, difficult to see what's happened to the core business that like it was going backwards, then had a big profit warning.
So you know, it's quality of accounting, frequent acquisitions is pretty much up there. And then are you making super margins?
So a classic case in the past would be sort of Dignity, funeral business every year, it just put its prices up, and profits just rose and rose shared price went to 25 quid paying super dividends taking on debt.
And then the whole thing blew up. And here we are with a bit of £5.50.
But once you've made the decision to sell, that's it. You just said right asset, sell it, let's move on.
There's lots of other shares to go. Never think about. People will think oh, if I sell it, will they ever speak to me again?
Again, it goes back to that earlier point. It's not your money.
Peter Higgins 24:19
Thank you for that. Now, Andy, you're known for blending growth and value across strategies in the portfolios. And that you run how much conviction Do you currently have towards UK quoted small and mid-cap equities?
And by which I mean underweight, balanced or overweight regarding that sort of exposure.
Andy Brough 24:37
At the moment, I'm really positive on the UK mid and small cap, I'm really positive.
A lot of money invested in this space and I've been investing further, because I think I look at it and I go, actually, the shares are cheap across the piece. There's a lot of cheap shares. I don't think the UK is the basket case that everyone else thinks it is. But always be stocks which are expensive, but what we're trying to do is we're trying to find companies that are changing.
So one of the first shares I got Schroder's to buy back in 1988/1989 was Provident Financial, and I went to a meeting with the new guy come in John Bancofleur, came back over to buy the shares.
We made sixty six times our money, Provident Financial went into the FTSE 100 at thirty two Quid, the CEO at the time, Peter crook, bit of unfortunate name, blew the whole thing up, it was in the wilderness fell all the way back into the small cap index went to see them and then six months ago, and they got out the door to door lending business, they got a banking license, their rates have gone from two and a half thousand per cent interest to twenty nine, people completely missed the transformation of this company.
And the results this week showed they're back on track and the shares sort of going up 60% since then, and so it's a classic case of looking for things that are changing people who are afraid of change.
But actually, if you're running a company, you've got to be thinking about what changes am I going to have to make to keep myself in the game, the phrase example, they've gone from running a jumble sale called Sports Direct to selling 19 of the top 20 brands in the world because you've got to keep moving.
And that's what we're trying to do we're looking at portfolio is can your business evolve?
Can it actually grow? Because history is littered with companies that have made it so earlier this year, I dug out the FTSE 100 and 250 constituents from December 99 and I sent it around to everyone saying where are they now? So many of those stocks that disappeared, gone bust. GUS, for example, was the 12th largest company in the UK. So can you evolve?
Peter Higgins 26:49
Yeah, I think unfortunately, that does happen quite frequently in the sense of companies sometimes are thriving, and sometimes they get the wrong management at the top and then make a significant purchase.
Maybe as in the case of what Micro Focus did with Hewlett Packard part that they purchased and never recovered.
Talking about things not going quite right Andy, it's often said that profit warnings arrive in threes, given your near four decades of managing money. Do you have a certain strategy agreement or view on this in the sense of when the first profit warning arrives? How are you assessing it and thinking maybe I should get out? Are you reviewing it think actually, we might be able to ride this one out?
Andy Brough 27:26
Well, it's like anything, isn't it?
People calling it profit ordinance coming in threes, so we'll wait.
Now, companies have been more realistic in their sort of approach and not quite kitchen sinking things.
But just taking an approach. So right. Okay, Mark, it's going against us? Let's be conservative. So again, it comes down to the point, we look at the business and say, right, okay, can you recover? Can you evolve this business, and we typically get the chairman in and then take a view.
So he can have one rule is really looking at the business and saying, right, we've got a profit warning, hopefully, we will have seen the problems ahead and got out, you know, like, Carillion, way before it went under, and other things.
But with a profit warning, you just have to go back and look at the numbers and get some comfort to actually everything's okay.
Or is it a case of they've had the profit warning. They've been stretching the creditors, so they've got too much debt, and they're really just praying things are going to get better.
Peter Higgins 28:27
Yeah, thank you for that reply. Now, on the concerns of profit warnings and difficulties in the market.
Obviously, right now, in a high interest rate environment, a lot of companies have got a major issue with levels of high borrowing, and their next their debts are going to need refinancing going forward.
Are you and your team very studious about companies with debt? Do you avoid them with higher debt? Or are you looking to support them when they come to raise cash?
Andy Brough 28:52
I'm hoping to get what Dave Whelan, the founder of JJB said to me once he said here you know, what, if you're not generating profits, and cash and paying down debt, you're going bust!
And that is it. Are you generating the profits to pay down the debt?
Now, everyone gets excited that debt two times EV or whatever, but if you look at private equity, it's like seven or eight times.
So the problem is not in the quoting arena, I would argue the problems in the private arena. And if you're going to have to refinance those debts, like Superdry had to do not using traditional sources of finance, you're paying like sort of 10%. So that is a consideration we look at pretty closely the level of debt. Because if someone once famously said to me, never, ever underestimate the ability of a large amount of debt to erode the value of equity at an alarming rate.
Peter Higgins 29:45
Spot on, it happens so frequently it’s bizarre, someone says often looking and going, you know, the share price was so high, six months ago, a year ago, why would the raising money then and now it's down here but raising money? It's like, I don't understand. I don't understand that at all timings that at some times.
Now Andy, you’ve got a decent position in AIM 100 listed Tremor International, the digital advertising solutions company.
However, the markets always been a little bit….what about it?
Complete disregard for the company's positive fundamentals, its potential, etc.
However you kept and your team have kept quite steadfast with a strong conviction in the company going forward.
What are your thoughts currently regarding that particular company? And the advertising space, per se, really?
Andy Brough 30:30
Well, if you look at the advertising space has changed dramatically.
You and I were brought up when we have one advertising channel ITV1 or ITV now.
So that whole business has sort of changed dramatically how you get hold of eyeballs. And Trevor along with the trade desk Magnite programmatic effectively said, right? Okay, what we're going to do is we're going to attach articles to advertising.
They've done the deal with Hisense. So they got the data from all the TV, but the stock market's just gone well, we don't really fancy it, it's had horror experiences with Globo and various other things. But the company have bought back a huge amount of shares. And so I would expect the management team in US incentive package comes to an end.
This year, we'll be looking to hopefully realise value. But it again, it's an industry sprung up, you've got the huge one out there trade desk, that in US International spent a fortune trying to get into that space.
Unruly, they sold it to Tremor, they've got 7%. So I think it's a space that hopefully is going to consolidate next year, three of us control 50%.
So hopefully, there won't be too many phone calls. But that's it, some of these new industries, they are very fast growing, it comes down to have you got a platform.
So if you go back to the company called Cambridge Silicon Radio, which used to take pictures for your camera phone, whatever, everyone wins, that business is over. Well, they sold that the business that was over $300 million, one day, valued at zero by the analysts.
And they bought back loads of shares and actually developed a platform, which enabled them to not be swept away.
Now, hopefully Tremmor, it's got a platform now where they can just put more and more things on it.
But you know, it's not for the faint hearted, but it's got cash on the balance sheet is buying back shares. And the reason we've got such a big holding is because the shares were up so much, we did actually sell a lot at seven or eight pounds, but sometimes you can't sell as many as you want to when things are moving so quickly.
Peter Higgins 32:35
Brilliant. Thank you for that reply. And I really appreciate it. Now, I want to touch slightly now on your personal investing style. Does it change the Brough family money get invested within Schroders and elsewhere?
Or is it all within shareholders mate? What's your personal investing style?
Andy Brough 32:52
Well, personal investing style is I don't buy individual small cap stocks, or mid cap stocks. I haven’t done for like 12 years, I think I've got one holding when I was like 28, playing golf had and used to put your name on the board, so you were never quite sure where you were playing with.
And I got to the first hole. And it was an old man. They're a bit like me now really. And so got round to the ground to the fourth hole. I said mate do you have a job or what?
He went. He said I'm chairman of a public company, I went oh yeah sure you are. I said I’m some young thruster from the City. He said no no, me and my brother we’ve floated a company in 1964 at eight and a half p a share.
And at that time, I think the shares are about 10 Pounds. They're now 120 Pounds, and they've just paid a special dividend of five pounds for the interim stage.
So it is the largest company in the UK stock market that is followed by no one. It's called Mountview Estates. And that's personally as a store of value. But the brother and sister they have control of 77% Mark Pes has got six. And so actually I'm put that to one side not worried about it.
I've got 2% in the Investment Trust personally, that's a big chunk of change. So when people say you've had a tough year, I sit down with my kids, and they go dad disappointing last year, wasn't it performance? And I say well, yes, but the dividend went up by 18%.
That's put that in context with your holding. That is another week of nights out. Oh dad, your genius. Well done.
Peter Higgins 34:30
Yeah. Thank you for that. I love that reply. Now. I'm going to move on to a question that was asked a bit later on to talk about nights out and etc. Can you share with us Andy, your love of jazz and where people can find you possibly playing jazz, please?
Andy Bough 34:42
I don't play jazz. It was before my dad died. I sat him down. I think like in 2008. Just tell me everything you want to do before you die. And he said I want to do this I want to do that. He said I want to catch a salmon and we were fishing. And Richard came into the hut and he at the time was the chairman of Jazz FM. And he said, Andy, will you host this show jazz in the city, and will Schroders sponsor it?
That's your wish I don't really like jazz and Schroders are down to their last one and a half billion, so probably not. But I know a man who will. So I used to write with Paul Kavanagh at Killick so launched Jazz in the city on Jazz FM. And to go back to that thing you asked me about Price Waterhouse and what I leant, Well, the first guest on the show was Ian Powell, who at the time was the senior partner of Price Waterhouse.
And just that 24,000 applicants for 2,000 jobs. Mr. Powell, welcome to the show. I think when I left Price Waterhouse, I found my interview file. And I said under Appearance, it said, either tasteless or trendy, which given I was wearing my dad's suit at the time, I kind of let go right. And the conclusion from this partner was Price Waterhouse didn't get to where they are today. Without taking a risk. Martin, this guy's worth the risk. So Mr. Powell, my question to you is 24,000 applicants, 2,000 jobs, and you know, you're taking enough risk?
And he said, Andy, that is the question that keeps me awake every night. And I've taken that into when I've been hiring people and say, right, is this person different? Are they worth the risk? It's a great thing to have, because it's actually on the leadership.
It's about taking risks. It's about not hiring people who are going to tell you you're brilliant. It's about hiring people who are slightly different, who's going to tell you something you don't know. And about four years ago, I was at a black tie do and the department who wrote that was Mark Armour and I went up, shook his hand and said thank you, I owe my career to you.
Peter Higgins 36:41
Fantastic. So it's that having an eye for talent as well as and giving opportunities to some that are not necessarily the same as everybody else.
I think that creates a nice bit of diversity within teams as well. Now, Andy, I love it that you pay it forward as well, because you've got some charitable endeavours that you'd partake in, including prostate and crises. But I want to speak to you about speakers for schools, which you touched on when we were speaking regarding Robert Peston as well, the heavyweight journalist.
Andy Brough 37:08
He suddenly realised he was being only invited to Harrow and Eaton to speak.
So he went to the local school near me and Muswell Hill. And he set up this speakers for schools, he got this hedge fund manager to back it. And it's quite interesting, actually, you going to local schools, I did one in South London, back in November to a group of about 70 6th formers.
And it's quite interesting walking in and saying to them, I've just had a chat with the headmistress on the way in, and I asked her what grades you need to get back into the sixth form. And she told me, and then she asked me what grades I've got. And so she told me that the only reason I'm here is because I've been invited, because I wouldn't have got back in.
So you kids are already ahead of me. And then I try and just tell them a lot of stories about how the market works, what the opportunities are, how our back various people, privately and in education, with their business ideas. And some have worked, some haven't.
But it's a case of you know, just getting to try and think differently.
Peter Higgins 38:08
Brilliant, I love that reply.
Now, Andy, I'm conscious that we've had you on here for a little while. So I'm going to ask one final question, if I may?
Andy you've been managing money since 1989. And you've experienced far more than most of the fund managers in the investment industry. What are your two or three most important lessons or learnings that you've identified as integral to your investing success over the past near four decades, please, sir?
Andy Brough 38:36
I think it's the ability to spot things early that are either they're going to do really well backing entrepreneurs like Ashley or whatever, in the ability to spot things that are wrong, like independent insurance, and Carillion.
Basically, there is no substitute for hard work. I get out of bed in the morning, I cycle to work, and I come in, I run off all the RNS’s and I go through them.
And if something worries me a number, then I'll go and get the accounts. And it's relentless. Just got to work very hard, same to any profession, but in fund management people think that I'll let the market do the work for me for sure.
It's going up, it's fine. It's not you've got to actually really understand what's behind the numbers.
Peter Higgins 39:21
I love that response. And I love the fact that some hard work because some people obviously think that academia means everything and that intelligence will get them through every single hurdle and it doesn't. So hard work always supplied create success.
Andy Brough 39:34
Also, what you got to remember about common sense is not common.
Peter Higgins 39:39
Absolutely. So very true. So very true. Andy, thank you ever so much. That was Andy Brough fund manager legend in the city 35 years and still going strong. Andy, thank you ever so much for participating in this Investing Matters podcast with me. It's been an absolute delight. So I look forward to seeing you face to face soon.
Andy Brough 39:56
Thank you.
LSE 40:03
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