Fairground Gaming

New Star: Hidden Value Fund
Published: December 21 2005 10:10 | Last updated: December 21 2005 10:10

Jamie Allsopp, the 27-year-old wunderkind who runs New Star’s Hidden Value Fund, has one cardinal rule when it comes to stockpicking. He likes to pour money into companies other investors have missed.


Each stock in his £40m portfolio is bought on merit and he never maintains positions larger than 2.5 per cent. He also meets frequently with companies’ management teams. “What I’m looking for are companies that are insufficiently covered [by analysts],” he says.

Allsopp, who has grown the fund’s assets over the past two years from £1m to £40m, uses economic value analysis to assess companies’ worth. And he is focused on buying shares in groups where revenues are more dependent on corporate rather than consumer spending. There are 106 companies in Allsopp’s portfolio spread across the mining, media, aerospace, telecoms and pharmaceuticals sectors.

About 25 per cent of the fund is in companies that make up the FTSE 100; another 20 per cent is in the FTSE 250; and about 15 per cent in small cap stocks. About 30 per cent of the portfolio is tied up in companies listed on the Alternative Investment Market, London’s junior exchange. Some of these Aim holdings include green companies of which Allsopp is a big fan.

“Green technology is going to become more important in everyday life. It’s necessary to invest in stuff like wind power,” he says.

IT is another favoured sector and about 8.27 per cent of the portfolio’s assets have been put towards that area. One of the fund’s top holdings is Fairground Gaming, the online gaming group, which recently signed a joint venture agreement with Microgaming, the online software gaming group.

“The synergies there are enormous,” says Allsopp. Last October, shares in Fairground rose 110 per cent when it debuted as a public company on the Alternative Investment Market. The fund bought a position in BAE Systems, the defence group, in October.

Another favourite stock is Petra Diamond, which has grown into a much bigger company since it started as a mid-tier diamond producer with assets mostly in Angola. “I don’t think the market fully understands the value of this company. Petra now has assets in Sierra Leone and in South Africa,” says Allsopp.

A little more than 9 per cent of the portfolio is dedicated to banks and speciality financial providers and Allsopp is a fan of small investment banks. “I like them. I like companies that are benefiting from growth in primary issuance,” he says.

Allsopp plans to take bigger positions in the IT sector. He is also on the hunt for companies that have balance sheets with capital ratios that are low relative to sales.

He says his age has never been an issue on the job, citing the growth in the fund’s assets over time and experience gained from working as an analyst under more senior managers. He joined New Star in 2001 and also works alongside Tim Steer in helping to manage New Star’s UK Alpha Fund. “I just want to continue to grow the fund. I think the approach will stay the same,” he says.