Oppenheim strikes gold

A great performance in July by Stephen Hynes's stocks capped a stunning Rehab victory, with Oppenheim's €100,000 investment fund growing by 257 per cent, writes Caroline Madden

WITH A SPRINT across the finish line that Usain Bolt would have been proud of, Oppenheim Investment Managers took gold in the Rehab Great Investment Race, which wrapped up at the end of July.

Despite the extremely difficult trading conditions that have prevailed since the starting gun sounded last summer, Oppenheim succeeded in growing its initial fund of €100,000 by an astounding 257.4 per cent to €357,435. In July alone, the investment manager produced a dazzling return of almost 60 per cent, confirming its status as runaway leader.

The secret to Oppenheim's success for much of the race was its strong bias towards green energy stocks. But last month, fund manager Stephen Hynes decided to capitalise on turbulence in the airline sector as well, and a few calculated gambles on stocks such as Delta Airlines, Northwest Airlines and UAL Corporation paid off handsomely.

Oppenheim's performance is all the more remarkable given that its four competitors limped over the finish line in pretty poor shape, battered and bruised by prolonged market turbulence. All nursed significant losses.

AIB Investment Managers secured the silver medal position, despite a lacklustre performance over the last stretch, just about breaking even in July. AIB entered the home straight with just four stocks in its portfolio - Tullow Oil, Nintendo, Flir Systems and National Oilwell - but fund manager Keith Johnston made the decision to offload these stocks early last month.

"Seeking a buying opportunity when banking stocks were weak during the month, we purchased Irish Life Permanent with [about] 80 per cent of the proceeds," Johnston said. "This holding was then sold, having made a profit following a short banking rally mid-month."

"We reinvested in a US Ultrashort Financial Proshare Fund in anticipation that financials would remain weaker. Unfortunately financials continued to rally and we lost the gain that we had made on Irish Life, leaving the fund effectively flat on the month."

This flat performance in July left AIB saddled with losses of more than 11 per cent accumulated over the earlier stages of the contest, and meant that it crossed the finishing line with just €88,477 of its original €100,000 race fund left in the kitty.

Bank of Ireland Asset Management (BIAM) claimed third spot on the podium. Throughout the race, fund manager Pat Cunningham pinned his hopes on just four stocks, a strategy that failed to withstand the general chaos in global markets.

French company Vallourec, which sells steel tubing into the oil and gas industry, looked promising earlier in the year, but by the end of the race it had fallen considerably in value.

The biggest loss was sustained on a position in Macquarie Infrastructure Group, which operates toll roads around the world. In fact the only stock that maintained its value was Sun Kai Properties.

Although it seemed like Cunningham's luck was changing at certain stages of the race, by the end BIAM's fund had plummeted 23.7 per cent to €76,348.

KBC Asset Management didn't have anything left in the tank for the final stretch of the race, haemorrhaging another 9.4 per cent in July. This meant that since the start of the race, KBC's fund lost roughly a quarter of its value, leaving it at a depleted €74,977 by the time it reached the finish line.

KBC's fund manager Noel O'Halloran had built a five-strong portfolio at the outset of the race last summer, which included Irish building materials group CRH; Smartrac, a Dutch technology group; Acciona, a Spanish renewable energy company; Brazilian technology group Tele Norte Leste Participacoes; and Cia de Saneamento Basico, a water treatment group based in Brazil.

He stuck to his convictions throughout the race and kept his compact portfolio unchanged, but the buffeting of volatile markets over the last 12 months meant that the strategy didn't pay off in the end. CRH and Smartrac proved to be the weakest links, more than halving in value by the finish.

Despite a spurt of frenetic trading in the final lap, Irish Life Investment Managers simply couldn't make up lost ground, and hobbled home at the back of the pack with losses of 34.4 per cent, and a race fund of just €65,635.

Fortunately Oppenheim's stellar return wiped out the combined losses of all four of the other participants and a total profit of more than €160,000 was delivered in the most testing of circumstances.

Oppenheim has won the Rehab race for two successive years. Its gain this year was the highest since the start of the annual series and means that a total of €860,000 has now been raised for Rehab from the event. This profit will be used to help autistic children and their families in Ireland.