Nimmo Focuses on Buy-and-Hold

Avoiding profit-taking, and retaining ‘winners’ for several years, are the reasons behind Harry Nimmo's investment success

Investment Week 4 October, 2012 | 8:00AM
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Standard Life Investments’ fund manager, Harry Nimmo, says his buy-and-hold philosophy is the secret behind delivering top-quartile returns over the past two decades.

Nimmo was crowned Outstanding Investor at last month's Morningstar OBSR awards, and that is when he revealed his personal secrets to success.

Nimmo manages the top-performing, Gold-rated Standard Life UK Smaller Companies fund and the Gold-rated Standard Life UK Smaller Companies Trust (SLS). He says one of the key drivers behind his investment performance has been his reluctance to take profits, instead choosing to retain ‘winners’ for several years.

“Having been through an array of economic cycles I have learnt the trick is to keep faith in your process and not change the structure of the portfolio to adapt to the macro environment," he says. 

“You have to hold your nerve and not be blind-sided by a period of underperformance. Instead, the key is to be predictable and for me this is to outperform 75% of the time in rising markets.”

The manager named ASOS (ASC), Paddy Power (PLS) and Telecom Plus (TEP) as his three best-returning stocks since he began managing money in the early 1990s. He bought into online clothing retailer ASOS in 2006 when shares traded at just 18p.

Nimmo said performance has also benefited over the years from his investments in a number of IPOs, with Ted Baker (TED), Hargreaves Lansdown (HL.) and Moneysupermarket.com Group (MONY) his three favourites.

However, Nimmo is growing frustrated by private equity firms giving IPOs a bad name.

“I am finding it tougher to invest in IPOs as private equity firms overpromote stocks, putting them on inflated valuations which cannot be backed up by either the company’s earnings or revenue streams,” said Nimmo.

“Private equity firms have a lot to answer for and are the main reason the IPO market has been very disappointing over the past couple of years.”

Nimmo's Standard Life UK Smaller Companies Trust (SLS) was recently upgraded by Morningstar from a Silver rating to a Bronze rating. Find out why the rating was hiked by watching the video: "The Very First Investment Trust Rating Upgrade". Nimmo also co-manages the recently launched Standard Life Investments Global Smaller Companies fund

To read about other Morningstar OBSR award winners, read "Nimmo and Pease Win Outstanding Investor Honours".

The original version of this article was written by Kyle Caldwell and published September 2012 by Investment Week.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
ASI Global Smaller Companies R Acc176.15 GBP-1.70Rating
ASI UK Smaller Companies R Acc1,049.10 GBP0.97Rating
ASOS PLC2,294.00 GBP0.00Rating
Flutter Entertainment PLC127.40 EUR0.00
Hargreaves Lansdown PLC1,340.50 GBP0.00
Moneysupermarket.com Group PLC193.00 GBP0.00
Standard Life UK Smaller Co. Ord667.04 GBP0.76Rating
Ted Baker PLC90.30 GBP0.00
Telecom Plus PLC1,504.00 GBP0.00

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Investment Week  provides news and analysis on investments, equities, and the UK fund management market. It is published by Incisive Media.