Shares to buy, hold or sell: Ben Lofthouse

Published by Rebecca Jones on 30 July 2014.
Last updated on 31 July 2014

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Rebecca Jones asks him which shares he has been buying, holding and selling in his fledgling funds.


With a market capitalisation of over $19 billion (£11 billion), Seagate Technology is the world's second-largest hard disk drive (HDD) manufacturer. Along with number one manufacturer Western Digital, Seagate occupies 80% of the HDD market and has enjoyed recent success in mass data, providing hard drives for remote 'cloud storage' centres across the globe.

Despite this, however, Lofthouse claims that Seagate remains a relatively unloved company, which is why he bought into it in April. "Seagate has a very strong balance sheet with not very much debt on it, plus a 3.3% dividend that is three times covered by earnings, and it's trading on a forward price-to-earnings (p/e) ratio of 10 times, yet it has been overlooked."

This, however, is all the better for Lofthouse, whose investment process is centred on identifying 'under-appreciated, undervalued companies' that have attractive dividend yields, strong market positions and good free cash flow.

Seagate certainly ticks all the above income boxes, but perhaps more importantly it also has the potential for strong growth in the medium term, which Lofthouse also focuses on. He believes it will be driven by the expanding need for data storage alongside a pick-up in PC sales, which he says is beginning to come through.

Seagate currently accounts for 1.5% of both the International Income Trust and the Global Equity Income fund. However, Lofthouse is not averse to increasing his holding, claiming he will use any weakness in the share price – $58.95 at the beginning of July – to buy more.


Like other mail services across the globe, Deutsche Post faces uncertainty over the future of its postal service, with volumes continuing to decrease as customers take to the internet to send and receive correspondence.

Nonetheless, Deutsche Post is a top 10 holding in both the International Income Trust and Global Equity Income fund at a weighting of 2.5% and 2.8% respectively, and since purchase in May 2012 it has returned 116%.

Again, Lofthouse cites an attractive p/e – currently 14 times compared to 17 times for its main competitor UPS – alongside a dividend yield of 3.6%, which has grown 14% in just over 12 months, as his reasons for buying.

However, the firm is still living down some bad business decisions, including a 'disastrous' expansion into the US that Lofthouse claims has created an "overhang of negative sentiment" toward the firm, while a shaky European economic recovery raises questions about future growth.

"Deutsche Post is not widely held as people aren't sure about its growth outlook. We have quite a large position, but we're waiting to see whether the German economic recovery continues; however, if the share price weakens at all we'll buy some more," says Lofthouse.


Lofthouse bought into Dutch insurer Delta Lloyd in August 2012, when former owner Aviva was selling it at a knockdown price of €10(£7.9) per share in an effort to shore up its balance sheet. Since then, Delta Lloyd's share price has performed well, rising to €18.93 by the beginning of July. However, Lofthouse has concerns about the future of the company and sold out of his 1.5% holding on 30 May at a share price of €18.50, securing profits of 85%.

"When we bought Delta Lloyd, it was trading at half its book value and on a p/e of 4 times while paying a 10% dividend yield. Now it's trading more around book value and at 8 times p/e, so it's still not expensive, but it has quite a subdued growth outlook. It pays out a very high percentage of its earnings in dividends and so its ability to grow that dividend is less likely from here," he says.

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