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Long-term relationships: Stocks to have and to hold

14 February 2024

Fund managers have owned these companies for years but still love them today.

By Emma Wallis,

News editor

Many fund managers adopt a buy-and-hold strategy, subscribing to the belief that owning companies for a long time is the best way to compound returns, maximise gains and avoid the corrosive impact of trading costs.

Some well-known names such as FE fundinfo Alpha Managers Nick Train and Terry Smith have made stellar returns for investors over the years by employing such an approach, but they are far from alone. Below Trustnet asked four fund managers which stocks they have held for a long time and how those investment relationships have played out.



Ken Wotton, manager of Strategic Equity Capital, has held Inspired for 13 years and was a cornerstone investor in the energy consultancy’s initial public offering (IPO) in 2011.

At the time, Inspired had a market capitalisation of £11m and was expected to make a profit of just over £1m. “Today it has a market capitalisation of over £75m, made a £25m profit in 2023 and in the meantime has paid cumulative dividends well in excess of our original investment,” Wotton said.

“The business continues to grow, generate cash, pays an attractive and growing dividend and enjoys a market opportunity even more exciting than when it was admitted to AIM more than a decade ago.”

Strategic Equity Capital has built up its position in Inspired from below 10% at IPO to more than 29% of the shares in issue. As in any good long-term relationship, it has been a supportive partner – providing new capital to fund acquisitions and supporting the company’s evolution from being founder-led to having a professional management team.

“It has not all been smooth sailing – the failure of a listed peer impacted sentiment a few years ago, Covid negatively impacted client activity and the Russia/Ukraine conflict and resultant energy market volatility was challenging for the business to navigate,” Wotton admitted.

“Despite all these issues the business continues to grow, remains profitable, cash generative and its prospects continue to be exciting.”


CME Group

Neil Denman, portfolio manager of the Sarasin Global Dividend fund, has owned CME Group (formerly the Chicago Mercantile Exchange) for more than a decade.

“CME Group owns the deepest, most liquid markets, providing volume and price availability that attracts the largest volume of customers and trade, creating a virtuous captive market. It now needs limited capital to grow and therefore distributes a healthy quarterly dividend and, in most years, an additional special dividend,” he said.

The total return has compounded at 15% per annum for the past 10 years and the dividend has grown at a 16% compound annual growth rate.

“The business now focuses on derivatives and helps institutions manage all sorts of global risks – including interest rate moves, commodity price fluctuations and climate risks. This makes CME incredibly relevant today, as the world is surrounded by many significant global challenges that require risk management,” Denman continued.

This long relationship has not been a static one. Denman took profits when CME Group experienced a period of significant outperformance in 2019 and he has used “recent relative underperformance – largely due to the fact it is not an expensive tech stock” to rebuild the position.

CME also brings diversification benefits. “CME is a great hedge within our portfolio, as it tends to outperform the broader market when volatility is high. This occurs because trading volumes increase across derivatives markets such as futures and options during periods of market volatility and uncertainty,” he explained.

Franco Nevada

Canadian General Investments has held many of its investments for more than 15 years and the average tenure of its top 10 holdings exceeds a decade. It has owned Franco Nevada, a gold-focused royalty and streaming company, since its IPO in 2007 but the relationship dates back to a predecessor company in the 1990s.

“The company’s royalty model has many advantages over traditional gold mining companies and is our preferred method of exposure,” said portfolio manager Greg Eckel.

He is also a fan of Canadian banks. “Investors would be remiss not to have some exposure, given their performance, stability and dividends.”

The trust has invested in the Royal Bank of Canada, BMO and TD “for a very long time and some combination of them will maintain a permanent presence in the portfolio,” Eckel said.


TSMC, Microsoft and Novo Nordisk

The Mirabaud Sustainable Global Dividend strategy has more than tripled its money in Taiwan Semiconductor, Microsoft and Novo Nordisk since 2017-18, which demonstrates the benefits of compound returns, said Anu Narula, head of global equities.

Taiwan Semiconductor is the leading global foundry worldwide with a 30% market share and it has maintained its competitive advantage and moat, Narula said. By compounding at 26% annualised since 28 April 2017, TSMC has produced a 388% total return.

Mirabaud Asset Management’s dividend strategy invested in Microsoft on 25 May 2017 and it has compounded at an annualised rate of 32% to deliver a total return of 551%.

“The investment case with Microsoft was the move to the cloud and Azure. At the time, the market did not believe Azure could compete with Amazon Web Services. Post Covid, we saw a significant acceleration in migration to the cloud,” he said. “The company has been able to continually reinvent itself, from Microsoft Office to the cloud and now CoPilot.”

Finally, with diabetes and obesity on the rise and governments struggling to afford healthcare costs, Novo Nordisk is “part of the solution”, Narula said.

“Wegovy has been one of the most transformative drugs in history with demand far outstripping supply. This is the kind of bottleneck we look for and as long as demand outstrips supply, the tailwind will continue.”

Since Mirabaud bought Novo Nordisk on 28 August 2018 it has compounded at 36% to return 428%.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.