Buying into the boom

FUND manager Carl Stick has swept aside gloomy warnings of a consumer spending slowdown and house price slump in the UK.

Stick, a fund manager at investment house Rathbones, has been bravely buying shares in some of the market's smallest housebuilders - and has backed other stocks that will benefit from ongoing spending, such as online holiday firm lastminute.com, clothes retailer French Connection and car dealer Pendragon.

'There is of course every possibility that an external shock might affect global markets,' says Stick. 'But we are faced with the happy possibility of peaking interest rates, low inflation, and a falling oil price helping the UK market to recover much of its strength and poise.'

Speculation has been growing that the UK base rate, which has been hiked from 3.5% to 4.75% since November, may peak at 5% by the end of the year. Stick believes the market has been expecting larger rises. That fear, in turn, has stoked fears over the UK property market and hit the shares of housebuilders.

He has, therefore, snapped up shares in Persimmon, Bellway, George Wimpey and industry minnow Ben Bailey. Because Stick believes the property market will hold up well, he says the feel-good factor will also remain and consumers will keep spending.

He is, therefore, backing car dealers Lookers and European Motors (EMH), particularly after the latter's recent 'confident' trading statement, and he also holds specialist lenders Paragon and Cattles.

He has also topped up his holdings in French Connection, BATM, a technology company benefiting from the growth in broadband,Telecom Plus, an alternative phone services and energy supplier, and sportswear maker Umbro. 'In our view, all these shares were unjustly marked down over the summer,' he said.

Stick has also dumped shares in building materials group Hanson into plasterboard maker BPB, which has a high exposure to the residential homes market.

He has also sold his stake in cigarette maker Gallaher fearing the effect of smoking bans in public places. Smoking was banned in Irish pubs and restaurants five months ago and yesterday it emerged that 20,000 UK pubs were planning partial bans.

Stick has also created new holdings in satellite TV operator BSkyB, lastminute.com and Anglo-Norwegian pharmaceuticals firm Axis-Shield. He has dumped his shares in CRC, an electronics repairs specialist.

Stick has run the £335m Rathbone Income Oeic for four-and-a-half years. In that time the fund has returned 60% compared to an average 6% rise for UK equity income funds and a 14% loss for the FTSE All-Share.

He has run the £106m Rathbone Special Situations fund for just over three years. It has returned 47% compared to an average 1%.

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