Why 2007 will be the year of the stockpicker

Andrew Green, manager of the Bramdean Specialist UK Equity Fund tells us what he would invest in now. From medium to mega-caps, these are his top stock picks.

2007 is set to be the year of the large cap or so the New Year research hitting my desk suggests. Mid caps again outperformed their larger peers in 2006, but we're not convinced that this automatically means the FTSE 100 is now more attractive. A prospective mean p/e ratio of 12 for the blue-chip index looks compelling, but this is distorted by the heavy weighting of lowly valued mega caps. If you take out the largest 15 stocks (accounting for around 50% of the FTSE All-Share's market cap), then the FTSE 100 trades on a p/e of 14. This does not look out of line compared with a p/e of 15 for the faster-growing FTSE 250.

At Bramdean Equity Managers, we invest in shares across the FTSE 350. We take a bottom-up approach (looking at individual stocks rather than macroeconomic trends) and invest with strong conviction, holding a maximum of 30 stocks and evaluating mega caps on the same basis as mid caps; index weightings do not influence our stock choices.

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