Earlier last week, reputed investor Anthony Bolton was in the press discussing the relatively poor performance to date of Fidelity's China Special Situations, the publicly-listed fund he came out of retirement to launch. The fund's NAV is apparently down 21% since its April 2010 launch, slightly worse than the -18.5% for the MSCI China Index. Bolton has attributed the losses to market turbulence, the fund’s gearing and exposure to volatile small- and mid-cap stocks. That got us, Dave especially, to reading more about Bolton's approach (discussed below), and of course, mulling over the extent to which it might be replicated using a Anthony Bolton-esque quantitative screen via Stockopedia Premium (implementation details to be discussed in a subsequent piece).  

For those that are interested, there are a number of useful primary sources of information on Bolton's investing. The first is the book, "Investing with Anthony Bolton", a very helpful summary of the performance and track record of the UK Special Situations fund co-written by Bolton and Jonathan Davis, the investment columnist of the Independent. Anthony Bolton has also written an excellent book, Investing against the Tide, in which he discusses his strategy, approach to stock-picking, the need to identify good managers, and how to run a portfolio. You can also read a series of articles by Bolton on the Fidelity website

Anthony Bolton Investing In Brief

Anthony Bolton is widely regarded as one of the UK’s best fund managers, delivering an outstanding investment record over a 25-year period at the Fidelity Special Situations Fund until his retirement in 2007. He studied engineering at Cambridge University and  joined Fidelity in 1979, aged 29, as one of its first London-based investment managers. During his time at the helm of Fidelity Special Situations, which he ran until the end of 2007, he delivered average annual returns of 20% (vs. 14% for the market). That would have turned £1000 into £147,000 over 28 years. 

Bolton's approach is a contrarian one focused on buying recovery or turnaround stocks on attractive valuations. It is a fundamentals-based approach based on buying unfashionable and cheap companies with something to recapture investor attention. Interestingly, though, for a value investor, he blends in technical analysis as a warning signal against value traps. Bolton has traditionally invested in smaller and mid cap companies…

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