If you judge a man by the company he keeps, Graham Clapp comes with a glowing endorsement.
The former manager of Fidelity’s European Growth fund and leader of the firm’s European Institutional Group from 1992 to 2004 has helped nurture some of the best talent in the business.
Citywire AA-rated manager Nick Price and Matt Siddle have both risen to senior roles at Fidelity under his watchful eye, while Carlos Moreno and Cedric de la Chaise have since moved on to success at JO Hambro and Edmond de Rothschild respectively.
But although reflected glory is all very well, Clapp wanted to showcase his own talents.
So in 2008 he founded long/short equity specialist Pensato Capital, based in London’s West End. The Pensato Europa fund was launched at the same time followed by a Ucits-compliant version, the Pensato Europa Absolute Return fund, in 2010.
‘We started Pensato partly for me to run my own money,’ says Clapp. ‘I wanted to concentrate on what I thought I was good at, which was stock-picking. So the fund is centred on this, it has stock risks but it has little market risk.’
Clapp spends equal time on the short and long books in the €424 million absolute return fund and runs only marginal net exposure.
Currently he holds 63 long positions and 57 shorts. This approach has seen the Pensato Europa Absolute Return fund deliver 10.91% in euro terms since launch, versus 7.6% from the STOXX Europe 50 CR EUR index.
Clapp’s main hunting ground is mid-cap stocks, both in the long and short book. Consumer discretionary and industrials make up the largest sector weightings, although he stresses this has come about via stock-picking rather than sector bets.
These selections are derived from three sources: the analysts, Clapp and his co-manager Ed Rumble, another graduate from Fidelity.
Clapp says what he brings to the table is the wisdom of his long career. ‘I bring 29 years’ investment experience and over 1,500 company meetings. I have met with or held a position in most companies in Europe at some point. I have experienced very different market conditions and can see how a company performed, or how they reacted, to a certain financial scenario.’
The confidence that springs from this track record makes Clapp a very active manager. Turnover in the fund approaches 100%, with 10-15 positions being sold, opened or revised on a monthly basis.
However, when asked to name a stock that exemplifies his process, he points to chemical firm Croda, one of his longest-held positions.
‘We added it to the portfolio in the same month that we launched the original Europa fund in June 2008, and we held it until last autumn. The investment at the time was about the opportunity the business had to improve performance through an acquisition it had made.’
For a man nearing his 30th year in fund management, Clapp has seen a lot of change but is proving to be all the more agile for it.
This article originally appeared in the October issue of Citywire Global magazine