John Armitage: Wealth through Discipline
The rarest commodity in the world of investing is not gold or silver. In actuality, it is the one thing that investors need but few actually possess: discipline. And in the realm of finance, if there’s one individual who’s known for his discipline, it would be Mr. John Armitage.
John Armitage cofounded London-based independent investment firm Egerton Capital in 1994 with William Bollinger; to this day, John continues to serve the firm as its chief investment officer and portfolio manager. Using both long/short and long-only equity investment strategies, Egerton Capital oversees approximately $18.3 billion in assets under management for a diversified client base that includes endowments, family offices, foundations, high-net-worth individuals, pension plans, and sovereign wealth funds. Partners and employees of the firm collectively represent one of the financial community’s largest single investor groups.
John graduated from Cambridge University in 1981 with a degree in Modern History. Prior to co-founding Egerton, John Armitage worked at Morgan Grenfell Asset Management, where he began his career in 1981; he became a director at that firm in 1991. Mr. Armitage managed the Morgan Grenfell European Growth Trust from its launch in April 1988 until March 1994 – notably, Morgan Grenfell was the top-ranked European mutual fund during this time.
What John Armitrage and Egerton Capital strive to do is deliver superior long-term and risk-adjusted performance through investing primarily in liquid, large-cap, publicly traded equities. Central to the investment philosophy of Mr. Armitrage and his firm is a rigorous process of fundamental research which includes collaborating frequently with company management, as well as analysis of publicly available information and proprietary and independent research.
Drilling down to the specifics of Mr. Armitrage and Egerton Capital’s hugely successful investing strategy, we see that certain core principles are strictly adhered to. These include: diversification is key, both by geography and sector; liquidity is paramount; little or no leverage is employed; use a bottom-up approach to stock selection; remain benchmark-independent; and target quality companies at attractive valuations with significant upside potential.
In other words: build wealth over time, and always with strict discipline. Targeting companies with attractive valuations requires the discipline to wait until prices are relatively low; eschewing leverage requires the discipline to concentrate on smaller (but consistent) profits; avoiding illiquid assets requires the discipline to stay away from certain speculative investments.
This is, by no means, an easy path to wealth, but it has worked wonders for John Armitrage, Egerton Capital, and their legions of clients around the world. The end result is a fundamentals-oriented, bottom-up, research-intensive approach to stock selection that provides a dynamic, eclectic, and uncorrelated portfolio – not to mention the fact that Egerton Capital has provided clients with 15% annual yield net of fees with significantly less volatility than the S&P 500 since 1994.
For John Armitrage and Egerton Capital, discipline means avoiding speculative bets and investing in the cream of the crop – companies that have withstood the test of time and are themselves highly disciplined. That’s why the firm’s holdings include such time-tested stalwarts as Time Warner Cable, Southwest Airlines, and Comcast.
It’s this wealth-through-discipline approach that has investors flocking to John Armitrage and Egerton Capital for reliable returns that beat the street. There’s little doubt that Mr. Armitrage and his firm will stay the course and outlast all of the Wall Street gamblers and speculators, year after year.