The Week: Barnett is back: can he deliver?

Mark Barnett is back with a new role alongside Paul Marriage at Tellworth. Could greater freedom and flexibility see a brighter future for the fallen star?

  • Barnett left Invesco after a long period of underperformance
  • However, he had battled redemptions and an environment that didn’t suit his style for some time
  • With greater flexibility, smaller funds and a better climate for his style, he may be able to deliver for investors again

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Mark Barnett’s re-emergence at Tellworth has brought nowhere near the controversy of his former mentor Neil Woodford. However, it has raised the question of whether his star can rise once again in a different environment and a different market climate, away from the minute scrutiny that comes with managing billions.

On the face of it, there are reasons to be sceptical. Barnett left Invesco after a horrible period of underperformance. His value style appeared fundamentally incompatible with a climate of loose monetary policy and there were also some uncomfortable stock choices.

However, this weakness may prove a strength. Unlike many investment managers who leave to set up at the height of their powers, he is unlikely to raise significant assets in the short-term.  Investors are fickle and many won’t have forgotten his recent weakness or the unfortunate association with his former boss.

This could be a significant advantage. It allows him to build a track record out of the limelight and with a smaller pool of assets. He won’t be struggling with redemptions, or with vast unwieldly funds inherited from a predecessor that are difficult to trade and limit his investment options. He will have full flexibility to implement his investment philosophy.

It is also a better environment for his process. Even the most damning of his critics would grudgingly admit that it hasn’t been the perfect time for Barnett’s process. It has been a horrible time for value generally, and for Barnett’s deep value style in particular. The market has turned somewhat since his last venture. While it is unfortunate that he will have missed some of the early bounce, he will probably never face such a dire period for his style again.

Of course, there are elements he won’t have – he won’t have access to banks of analysts, for example, but Paul Marriage is a capable investor and Tellworth should be a fertile intellectual environment. The group’s two funds have been performing well recently and Barnett appears to be entering a group whose star is in the ascendancy.

There will be plenty of investors who don’t want to take another chance on Barnett or his particular brand of value. After all, there are other, proven choices whose performance has held up better. However, this new environment might just suit him.