The Silent Assassin


Anthony Bolton, Fidelity International, UK

20% CAGR return over 37 long years - 50% higher than the benchmark. A fund manager who actively seeks out research to disprove his investment thesis, rather than support it. A money manager who believes equally in fundamental as well as technical analysis. Contrarian value investor who earned the nickname "The Silent Assassin" for his silent yet effective shareholder activism. Meet the UK's foremost fund manager: Anthony Bolton.


Anthony Bolton is one of Britain's foremost investment managers. Over a nearly thirty year long period he maintained a humongous 19.5% annualised return, and was Fidelity International's leading light until he retired in 2007.

Born in 1950, Bolton was educated at Stowe School and completed his degree in engineering and management studies from the University of Cambridge. He worked first for Keyser Ullman, moving to Schlesinger Investment Management thereafter. In 1979, he was hired to manage Fidelity's newly established UK operations, specifically the Special Situations Fund. If one had put in 1,000 pounds in the fund then, it would have been worth a stupendous 1,47,000 pounds in 2007, which was when Bolton quit managing the fund. This represents an annualised 20% return, nearly 50% more than the 13.5% growth recorded by the FTSE stock exchange during this period.

From 1985 to 2002, he managed the Fidelity European Fund (a European equity OEIC), and from 1990 to 2003, the Fidelity European Growth fund (a European equity SICAV). Further he managed the Fidelity European Values PLC (a UK-listed investment trust) from 1991 to 2001 and Fidelity Special Values PLC (also a UK-listed investment trust) from 1994 to 2007.

Investment Philosophy

Bolton's basic investment philosophy is simple. He says that the purchase of every stock should be based on an investment thesis. One should be able to articulate clearly why a particular share is to be acquired, and be able to put it down in a few sentences that even teenagers can understand.

According to Bolton, "the investment thesis should be retested at regular intervals. When testing it you should think about what might lead to the share becoming 'bad'; what might the 'bear' in the market place latch onto? Can you provide convincing counter- arguments to those who are much more negative about the share?"

Normally people tend to look for data to confirm their beliefs. Bolton is unique in that he actually goes in search of evidence that can disprove his stated theory. For example, Bolton avidly reads research findings by brokers and analysts that disagree with his views. He discusses this new knowledge with his colleagues to firmly establish in their minds why they think the broker is wrong. Thus he makes sure that his original thesis is valid. Even so, business is inherently uncertain, he cautions. Your ideas and convictions are bound to change with changing circumstances.

The trick, says Bolton, is to have 'a modus operandi that works for you. You can't be someone who is blown one way and then another, you have to have conviction. If someone has no conviction, they won't do any good, but if they have too much, and are pig-headed and won't change their mind, they will be a bad fund manager too. You have to be able to change as events dictate.' (The Guardian, June 25th, 2006)

Investment Strategy

Bolton is a contrarian value investor. He looks for cheap, little known stocks, trading at a low price/ earnings ratio and which have been ignored by the market. To confirm his beliefs about the soundness of such stocks, he undertakes deep and wide research on the company's prospects and business model. He is fond of small companies, particularly those in a turnaround situation. Typically these are companies where valuable skills have been brought in by new managements or companies that have managed to markedly improve their performances;and which changes have not been acknowledged by the market.

Here is a summary of his approach to investing from his book, 'Investing Against the Tide'.

  1. What to look for in management

  2. Developing an investment thesis

  3. Gauging market sentiment

  4. Constructing a portfolio of shares

  5. Assessing the financials of a company

  6. Understanding valuations

  7. Technical analysis and the importance of price charts

  8. Market timing

A striking feature of his approach is his resort to technical analysis which is a rarity amongst bottom-up investors. "The way I look at technical analysis today is as a framework or overlay into which I put my fundamental bets on individual stocks. I see it as a discipline for my stock picking. What I mean by this is that, if the technical analysis confirms my fundamental views, I may take a bigger bet than I would do otherwise. However, if the technical analysis doesn't confirm my fundamental positive view, it makes me review my investment thesis on a company, for example checking that there aren't negative factors we have overlooked. If my conviction is very strong I will often ignore the technical view; at other times if it conflicts I will take a smaller bet or reduce my position..."

Biggest triumphs

Bolton as a contrarian investor, who develops strong convictions about shares and who then checks this out with extensive research had one of the most memorable successes during the tech bubble in the late 1990s. He was convinced that the sector was over hyped and kept away from investing in the surging dotcom shares. Initially this adversely affected the performance of his funds, with returns lagging peer investment managers by some 20%. Once the dotcom bubble burst, he outperformed the market for several years as others fell by the wayside. Equally contrarily, he invested in airline, insurance and hotel stocks in the aftermath of the September 11 attacks.

He earned the sobriquet 'the Quiet Assassin' in 2003 when he used his shareholdings to block Michael Green from becoming the chief executive officer of ITV.

Advice to investors

He says contrarian investors need to have a sound grasp of psychology to have the convictions and courage to go against the tide of conventional thinking and consensus. He is famously quoted from The Daily telegraph as saying: "know why you own a stock, know what's discounted in the price and know yourself."

"'In the early years [of my career], investment was all about getting information others did not have,' he says. "Now, it is more a case of how you interpret information which is widely available.' When he started in fund management, the Fidelity way of employing analysts to conduct the firm's own research and spend time meeting companies was 'the exception. Now everyone has it." (The Guardian June 25th 2006)

I look at the technical situation as a summation of all the fundamental views available on a stock at that particular moment and it can sometimes be a warning signal of problems ahead. In a world where every professional fund manager knows that at least two out of five share picks they make will not work out as they hoped this is very useful...

One of the great disciplines of technical analysis is that it forces you to cut losses and run profits - something that's always easier said than done. Although at heart I'm a fundamentalist I have definitely found that the combination of two approaches seems to work better than just one on its own. A few years ago I spoke at a technical analysis conference and said that if I was on a desert island and was only allowed one input for my investment decisions, it would be an up-to-date chart book. I think today I would still be of the same opinion. The trouble with fundamental data is that I can't single out only one source that on its own would be sufficient. I could, if pushed, run a portfolio with just a chart book - although on a desert island, it wouldn't be high up on my list of survival items. (Valuewalk 03/2017)


Content is prepared by Wealth Forum and should not be construed as an opinion of HDFC Mutual Fund.

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