The founder and managing director of London-based global equity boutique Bedlam Asset Management, Jonathan Compton, already knows what everyone’s first question will be. So he’s got a very good answer for it – so good in fact, it’s worth reprinting here in full.
“Many investors asked why we chose the name. Traditionally, financial services companies were named after their geographic location (Bank of Americas), a founding family (Fleming) or bizarre aspirations (Standard Life). More recently the names have been zippier, using planets (Mercury), animals (Tiger), or monikers to denote safety (Northern Rock). Such options were usually inappropriate, odd or weird.
“In 2002, markets, as now, were suffering from collective idiocy as the technology boom collapsed. Selling dog food or fruit on the web was not, after all, a route to easy wealth. Institutional investors had again pursued reactive ‘buy high, sell low’ strategies; individuals were blaming everyone else for their cupidity. Bedlam best described such market antics. “However, we did not want to mock the real distress of mental illness. Then we discovered an 1876 report from the British Journal of Science on the Bedlam Hospital. This read, ‘The management is so good that each year one half of all inmates are returned as cured’.
“Such a success rate made the name a logical choice; so we started a business structured to make money for investors by disciplined and rational investment, and to rescue them from their delusional fund managers.”
In Bedlam’s view, a delusional manager is any that currently holds a banking stock. Over its six-year history, it claims to be the world’s only manager never to have owned a bank from the English-speaking world (Australian Ethical has always shunned our Big Four but for quite different reasons).
Compton’s reasoning is simply that banks, increasingly reliant on leverage, prop trading and inflated profits through the issuance of artificial ‘high quality’ bonds, can no longer be modelled more than two years forward and therefore can’t be properly analysed (unlike, presumably, their investors could be at a certain London hospital).
Bedlam also claims it is unique because its website contains a full list of its current portfolio holdings, the prices at which the manager bought in, and the prices at which it intends to start selling down.
Compton calls it a level of transparency which will inevitably be legislated. A doctor at the firm’s eponymous hospital might diagnose it as exhibitionsm.