This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Lowland is top of the Association of Investment Companies' UK Growth & Income sector over three years, having risen by 110.2%.
Here are the latest stocks Henderson has bought and sold and the one he's holding on to.
"The firm is doing well because companies are preferring to rent rather than buy equipment. This is due to two reasons, either firms don't feel confident about the economic environment or they don't want to pay bank charges to borrow money to invest. Renting is becoming a more accepted practice and those companies that can meet demand are benefiting. Ashstead is already growing its profits and I believe it will significantly improve from here.
"The share price is relatively low for the growth on offer. It doesn't yet have a high dividend, but I believe that it will post good dividend growth as the stronger earnings come through.
"Ashtead's strong position in the US market has been an advantage. The US economy has been slightly stronger than the UK's and capital expenditure is – tentatively – starting to resume.
"In general, I am not looking for earnings outside the UK, but I do like to have diversity and overseas exposure helps with that. The unexpected will happen and for companies, diversity of underlying operations is more important than it has ever been."
HOLD: SENIOR ENGINEERING
"Senior Engineering is an aerospace company with strong earnings, dividend growth and big clients, including Airbus and Boeing. It has just secured another very large order from Boeing and is increasing the share of work it receives from the group. The company's order book now stretches out for the next seven to eight years.
"Looking at the company's profits, you would have no idea that there was an economic slowdown. There has been a lot of emphasis on emerging market growth in the aerospace industry, but developed markets need to refresh their stock as well. A number of the big US carriers are renewing their fleets at the moment and companies such as Senior Engineering are benefiting.
"The valuation is still compelling for Senior Engineering, as it is in much of the wider market. Whatever valuation method investors use, the stockmarket looks pretty cheap. In particular, the yield on the stockmarket is now higher than that on a 10-year gilt."
SELL: BRITISH AMERICAN TOBACCO
"British American Tobacco (BAT) has been a strong performer and a key beneficiary of the climate of risk-aversion that has prevailed over the past six months. It is a cash-generative firm, which has been buying back shares and has seen strong dividend growth. The problem is that all this good news is now in the valuation, which looks relatively high, and I am keen to move some of the money into shares with a higher income.
"The company has been very well-managed in recent years and its pricing policy has been effective, but it is not a fast-growing market. Cigarette consumption will eventually plateau and then fall. All the defensive companies have done well in the latter half of this year, but BAT is perhaps the most extreme example.
"Most importantly, BAT's dividend yield is now lower than the market average. To date, it has always paid more than the market and the share price is therefore in new territory. In my funds I am looking for the future yield of a company. I value dividend growth rather than simply looking at the existing yield, but I don't see a lot of potential growth from BAT in the long term.
"That said, as a value investor, there is always a danger of selling out too early so I tend to sell out in smaller sizes and reduce a position incrementally. As such, I still have a small holding in BAT but am moving away gradually."