Winnifrith is the worst-performing FE Alpha Manager of 2011, with losses of 32.18 per cent year-to-date. This compares with -11.58 per cent from his manager peer group and -7.41 per cent from the average FE Alpha Manager.
Performance of manager vs peer group in 2011
Source: FE Analytics
However, the manager says his micro-cap portfolios have fallen disproportionately and believes a significant rebound is now inevitable.
"Whenever there is a meltdown in the markets, small caps are worst affected, as essentially they run out of cash," he explained. "Nervous investors have been withdrawing liquidity from the markets, which has hit my portfolios very hard."
"However, in the last couple of weeks we have seen an increasing number of share buy-backs and management buy-out proposals, which tend to signal the bottom of a value cycle. Once there is an ounce of certainty in the eurozone and fundamentals reassert, I think we’ll see a rally in small caps, and particularly those that have been hit hardest."
In spite of this year’s heavy losses, stellar returns in 2009 and 2010 mean that the manager’s longer-term track record is still strong. According to FE Analytics data, Winnifrith has returned 110.71 per cent over three years, outperforming his peer group by 35.1 per cent, albeit with significantly more volatility.
Performance of manager vs peer group over 3-yrs
Source: FE Analytics
In the FE Alpha Manager list only Alex Wright and Giles Hargreave have returned more. Wright tops the list with 158.41 per cent, while Hargreave has returned 117.06 per cent.
Winnifrith says there have been no defaults in his t1ps Smaller Companies Growth and Smaller Companies Gold portfolios, which have a large proportion of their assets invested in sub-£20m companies.
He commented: "The stocks we now own are tremendously undervalued and we’ve tried to add to our positions wherever we can. We’ve sold off a few companies which haven’t delivered and put that money back into our biggest holdings."
"Take a company like Avisen, for example, which is valued at £13m. It’s currently sitting on £7m cash and next year it is forecast to make a profit of £3m. This is ridiculously cheap – not because there is anything wrong with the company, but because no-one is buying shares at the moment."
Avisen, which is the third-biggest holding in the SF t1ps Smaller Companies Growth portfolio, provides companies with advice and solutions in order to enhance overall profitability. It has recently acquired 1Spatial – a merger that Winnifrith says he actively drove as shareholder.
"I also used my 20 per cent stake in Nexus to sack half the board. Only two of the original members remain, and now finally the company is moving in the right direction," he added.
According to FE Analytics data, Nexus – an information technology service specialising in outsourcing IT and support – is SF t1ps Smaller Companies Growth’s eighth-biggest holding, with a weighting of 4.09 per cent.
Winnifrith remains very optimistic on the performance of gold, which has around a 10 per cent weighting in his t1ps Smaller Companies Growth fund.
"Citibank has come out saying gold will reach $3,400 within two years. Even if you give them leeway of 30 per cent either way, this is still going to be very good news for both my gold fund and my growth fund," he said.
A recent FE Trustnet study revealed the top-performing FE Alpha Managers of 2011, with Insight’s David Hooker topping the list.