Heenan commented that as a value investor he seeks to buy companies at a price to earnings ratio of around 12 times earnings. He remarked that, ‘One a one year view, I have no idea what will happen with the BP share price, or Shell’s, another company in which we are invested. But the key is that lots of capital expenditure has been cut, we have heard numbers as high as $2 trillion for the sector. Now in a five years, the majors will be in a very strong position, a time of shrinking capacity suits them, so we are invested in BP, Shell and Exxon, it is the big boys that will benefit in time from all of the capacity that has left the market.’ ’
A stock he has been selling some of his shares in lately is Admiral Insurance. He commented that the shares have rallied extensively since he bought them.
The largest holding in the fund is Newmont Mining Corporation. This is a US gold mining company on which he is keen because, ‘the mines are in stable places, they are in the US and Australia, stable areas, that is not the case for every gold mining company. There are also a good spread of locations, they have many different mines. The shares of many mining companies peaked in 2011, and those valuations were probably extreme, but the share price falls were extreme, and we think represent value. We are different to a lot of other managers in that we are willing to take a long-term view.’
The Kennox Strategic Value Fund has assets of £200 million. The fund managers have 100 per cent of their personal equity exposure in the fund. The fund has returned 37 per cent over the past year, compared to 19 per cent for the average fund in the sector in the same time period, ranking it 4th from 248 funds in its sector.