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Family office hires value manager – given market trends could this be exquisitely timed?

Mark Barnett, a renowned value manager crushed by the global growth rally has been hired by an affiliate of Australia’s Bangarra Group, a family office started by fund manager Jeff Chapman in 2000.

Barnett’s return signals a change of style for the stock market. It also shows the willingness of family offices to take a view on talent which is the victim of ill-fortune.

In his early years, Barnett developed a fantastic record as a picker of cheap value stocks at US manager Invesco, where he worked in the UK with Neil Woodford, the star fund manager whose reputation has taken a hit in recent years. 

Their performance became less reliable after the financial crisis of 2008.  Woodford set up his own boutique during a bounceback. But his firm imploded when his returns started to fall, unquoted investments suffered write-offs and clients pulled away their money. 

Barnett also suffered performance problems and write-offs, although their impact was less partly because he continued to work at Invesco, where he ran £5 billion. But he was obliged to quit a year ago, as his returns continued to slump.

Barnett and Woodford both suffered as a result of the outperformance of growth stocks in a period of low interest rates and disruption in the technology sector. 

The market’s interest in growth stocks has not gone away. But their rating became stretched in 2020 amid fears of rising inflation and higher interest rates. Value stocks, including small caps and income stocks beloved by Woodford and Barnett have recovered. The world’s best-known growth investor, Ark Invest, has started to suffer criticism from the likes of data provider Morningstar. 

Bangarra’s decision to back Barnett could be exquisitely timed. He has been hired by its associate Tellworth Investments, founded by John Marriage and John Warren, who once worked for Schroders’ wealth arm Cazenove Capital. Tellworth manages £800 million and Barnett will work with its team, with a view to launching an income fund.

Tellworth is an associate to BennBridge, known as Bennelong in Australia, which owns a stable of investment boutiques that managed $8.5 billion in 2019. Bangarra Group owns the business, plus eight Crown Golf golf courses in the UK.

Its founder and chairman is Jeff Chapman, now known as an entrepreneur after an early career as an Australian-rules footballer. He has been praised in the Australian media, as a good judge of stock picking talent. 

Chapman’s Bennelong Foundation, led by Sandra Jacobs, pursues a range of philanthropic endeavours, including an unusually large number of grants targeted at deserving individuals.

At this stage, Woodford’s future is less certain. He has apologised for client losses but retail advisers have proved unforgiving. He has, however, started a new business called Woodford Capital, involved in life sciences investments with Acacia Research Corporation. 

He could also choose to take a discreet advisory role at family offices prepared to take the view that criticism of him is overdone. Particularly now Barnett has been given another chance by Jeff Chapman’s team.

 

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