JZ Capital Partners and a disastrous shift of strategy

The grim tale of JZ Capital Partners, the UK’s worst-performing investment trust, presents a cautionary tale for all investors, writes David Stevenson.

Fulton Mall, Brooklyn, worth $53.2m in February, has now been written down to zero © Getty

Move over Neil Woodford – there’s a new challenger in town for the biggest single investment disaster in the investment trust market. That contender is JZ Capital Partners (listed in London under the ticker JZCP), whose recent market update reveals the grisly wreckage of a disastrous decision, made back in 2012, to appoint a co-manager comprising two partners not that long out of university with a grand total of 12 years’ experience between them, to build a $1bn real-estate portfolio.

At the centre of this tale is an echo of the Woodford affair – a decision by managers who were experienced in one sphere (in this case, private equity) to switch focus to a seemingly more exciting asset – in this case, real estate. However, by failing to stick to their core competency, the investment advisers have destroyed hundreds of millions of dollars in investor value – an error only slightly redeemed by the fact that the managers and related parties themselves are some of the biggest shareholders.

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David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.