You would think that company management being aligned with shareholders was a given as they own the business, but you would be surprised how often this doesn’t seem to be the case.  But when it is, whether as an individual or a team, you should stick with them through the bad times as well as the good. So it’s not without a tinge of regret that we see one of our long-term favourite stocks, SSL, fall into the hands of Anglo-Dutch household products firm Reckitt Benckiser.

Gary Watts the CEO of SSL is just such a person and I first started investing in SSL when he joined the senior management team back in the late ‘90s. So I’ve invested with him for over a decade.  We will be keeping in contact with Gary to find out his plans and will look to support him again if we possibly can.

The management team at speciality insurance group Lancashire holdings have the same investment mindset and so they are another company that we expect to be with for the long-haul. One area they focus on is the off-shore drilling market. Not surprisingly rates have risen sharply following the BP oil spill.  But rates are also rising elsewhere as well. What we particularly like about Lancashire is that rather than keep surplus capital/cash within the company they are committed to returning it to shareholders, ensuring its balance sheet remains efficient and we get unrequired cash to invest elsewhere.

Lancashire is set to remain a core position in the F&C UK Equity Fund and when Gary Watts returns at the helm elsewhere in the market I would not be surprised to see that company enter the portfolio.