Shares to buy, hold and sell: Anthony Cross

Published by Holly Black on 11 March 2014.
Last updated on 11 March 2014

Buy, hold and sell

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.


"When I joined Liontrust in 1997, I had to think of a way to run money. I spent three months researching and testing and I concluded that intellectual capital and other intangible assets were becoming increasingly valuable in a globalised world.

"As companies became open to competition from overseas, there were big opportunities to sell abroad. It wasn't ownership of fixed assets that would count, but things such as intellectual property, research and development or strong distribution networks. These were very difficult to replicate and gave a strong competitive advantage.

"With this in mind, a recent buy for my fund has been System C Healthcare, which provides software to the health service. I have had a small holding for quite a while, but have built it up recently. It was hit hard when the NHS's National Programme for IT was ended, but this actually proved an advantage. Now trusts are coming to buy its software direct.

"It has lots of characteristics we like - it is cheaply valued, has strong net cash, but most of all its software is good intellectual capital and provides good barriers to entry. It has recently been subject to an £87 million bid by US healthcare IT giant McKesson.

"The management of the company owns a substantial chunk of the shares. The owner-manager culture is very important in all smaller companies." 


"I am currently holding the engineer Spirax Sarco, which makes steam used for the cooling and heating of materials for industrial products. Most industrial plants use steam and Spirax Sarco is the world leader in the systems.

"It has a strong recurring income stream and a good distribution network. It is very integrated with its customer base - it does a lot of training of its end users, which has created strong barriers to entry for other providers.

"It has also grown its dividend constantly. This group should also benefit from industrialisation in emerging markets. It has a presence across the globe - in emerging markets, the UK, Europe and the US.

"This is an example of the type of strong intellectual property that I look for in companies. It is a great business to tuck away for the long term and not worry about."


"I believe many fund managers trade far too much and it unnecessarily increases fund costs. Fund managers need to get to know a business and you can't do that if you are constantly changing. As a result, I will only sell if I see a company's competitive advantage being eroded.

"The broking area was one where we got it wrong. In particular, for Panmure Gordon, its distribution network has not proved valuable enough to deliver good profits.

"I bought the company originally because of its strong distribution network - it has established offices around the globe, particularly in the US. It also had a broad corporate finance offering. But margins at Panmure Gordon are under significant pressure as there hasn't been the corporate finance activity to drive profits.

"As a result it hasn't been a good investment over the last couple of years and I have now reduced the holding in our portfolios.

"The best exit would be via consolidation, but this hasn't been happening. I have had a couple of companies in the fund taken over and it has given us a nice uplift. Smaller companies that don't get the market following will often end up very cheap and someone will come and take it over.

"At the moment, I am moving away from the mid-cap area of the market, where prices have got quite high and things have started to look less exciting. I am finding most opportunities in larger companies. The big international companies offer a solid income - usually higher than gilts - and look cheap. This includes names such as Unilever, AstraZeneca and Compass."

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