How we invest

The value investment approach, how we differ from our peers and our rigorous investment process

A classic approach to value investing

The portfolio managers Nick Purves and Ian Lance aim to rotate the Trust’s investment portfolio into those companies which they believe are available at a significant discount to intrinsic value, buying and holding out-of-favour companies until share prices have recovered, at which point they will sell the stock. Typically, the stocks Nick and Ian identify as opportunities will fall in to three distinct categories:

Identifying quality and avoiding value traps

Some value strategies simply apply mechanistic measures to identify undervalued stocks but the problem with that is that it can lead to business in structural decline; they may be cheap but their potential to recover is limited. Instead, Temple Bar’s ‘intrinsic value’ approach aims to identify under-valued yet good quality companies with strong cash flows and robust balance sheets. We put a strong emphasis on financial strength because it gives us the confidence that a company can survive through a prolonged period of lower profitability caused by company specific issues or an unexpected downturn in the economy.



By consistently buying lowly valued but sustainable businesses with strong finances, we believe we are able to create excess returns for our clients over time.

Nick Purves

Portfolio Manager

We aim to avoid lower quality stocks or so called ‘value traps’ by monitoring companies against three different types of risk:

  • Valuation – extrapolating favourable trends and paying more than the intrinsic value of the business (e.g. avoiding a situation where something is positively impacting a company’s share price in the short-term but that isn’t sustainable longer-term)
  • Earnings – the risk that the earnings of the company decline for cyclical or secular reasons (e.g. the industry or sector that the business operates in is itself in cyclical or long-term decline)
  • Financial – debts overwhelm equity holders whose interests are subsequently diluted

In the diagram below we have set out some of the key factors we consider when seeking to uncover the most compelling value opportunities:

Past performance should not be taken as a guide to the future and dividend growth is not guaranteed. The value of your shares in Temple Bar and the income from them can fall as well as rise and you may lose money. This Trust may not be appropriate for investors who plan to withdraw their money within the short to medium term. A portion (60%) of the Trust’s management and financing expenses are charged to its capital account rather than to its income, which has the effect of increasing the Trust’s income (which may be taxable) whilst reducing its capital to an equivalent extent. This could constrain future capital and income growth. The effect of borrowings to finance the Trust’s investments is to magnify the volatility of its price and potential capital gains and losses. We recommend that you seek independent financial advice to ensure this Trust is suitable for your investment needs.