There might be light at the end of the tunnel, but it ain’t here yet.
A life in fund management: Richard Pease
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Richard Pease isn’t the only Eton-educated fund manager. But you’d be hard pressed to find one who is also both part of Britain’s aristocracy (a fourth baronet) and whose 17th-century country pile sadly burned down.
He’s also well connected – sister Nichola is CEO of JO Hambro and married to well-known hedgie Crispin Odey.
But it is Pease’s career as a fund manager that Citywire Amplify is interested in. It’s no less storied and interesting than his personal life.
Pease is a very successful fund manager who has added serial entrepreneur to his CV by being early to join – or get in at the start – of three fund firms. Which brings us to perhaps Pease’s most unique achievement: taking the same fund he founded in 1999 across three businesses.
The European special situations fund began life at Jupiter, before moving to Henderson and then Crux, where it was merged (see below). Pease has also taken people with him, such as James Milne, formerly at New Star who came to Crux to co-manage the special sits fund.
But with that continuity of experience, Amplify wanted to ask Pease for his assessment of current markets. Specifically, how had the 2022 selloff compared to his experiences in 2000, when the dotcom bubble burst, and 2008.
First of all, the 2022 selloff was in fact a 2021 selloff, he tells Amplify. That began in February when unprofitable company valuations peaked. Selling those off is indeed similar to 2000.
‘Back then, many start-ups were valued by the number of “eyeballs” as revenue was hard to come by; in the recent peak, firms were at least valued as a multiple of revenue, but some very lofty multiples at that.’
Some dotcom survivors have broadened their shoulders since then, with names such as Amazon and Microsoft propping up the market and taking longer to fall.
‘Microsoft is an interesting study,’ says Pease. ‘It more than halved in the dotcom, from a peak multiple of over 60x, to around 25x. This time it reached about 35x and is now 24x – not unreasonable for a quality growth stock even before Covid and endless money-printing with low interest rates.’
In some ways, every selloff follows a similar path: economic indicators turn south, some selling starts, management keeps their heads up for a while but later give up and downgrade outlooks, ‘which is then near the bottom of the stock market’.
Is the bottom here yet, then? Maybe not. The prospect of rate rises and Russia switching off European gas still lie in the future, says Pease. ‘But in years to come, one will look back and wonder what all the fuss was about and what a great time to buy it was.’
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