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piworld interview: The Signs Were There - Tim Steer & Andy Brough

piworld interview: The Signs Were There - Tim Steer & Andy Brough

29 January 2021

Tim Steer, Author of The Signs were There, and Andy Brough, Head of the UK & European, Small & Mid Cap team, at Schroders, talk through different elements of Tim’s book. They help us identify some of the red flags in company accounts, including where profits are flattered by either balance sheet assets which should appear as debits on the P&L, or with credits taken out of the balance sheet benefiting the P&L. Artfully, they take a dry subject, add some personality and humour so one learns and enjoys it!

Tim’s background – 00:33
Andy’s involvement with The Signs Were There – 01:30
What do you look at first with a set of accounts? – 03:07
Auditors – 09:30
When is it appropriate to capitalise? – 11:11
When is EBITDA an appropriate measure of profit? – 17:08
How easily can we understand a company’s accounts with CV19 provisions/ adjustments? – 20:40
How do you distinguish between good & bad acquisitive companies? – 23:27
Are high levels of debt ever appropriate to achieve shareholder returns? – 27:26
Are you surprised the ease at which companies can raise funds with CV19? – 28:40
Will there be continued enthusiasm for capital raises? – 30:17
Are you optimistic for the markets in 2021 and 2022? – 31:47
ESG – 33:52

About Andy Brough:
• Head of the UK & European Small and Mid Cap team
• Manager of the Schroder Mid 250 Fund and the Schroder UK Smaller Companies Fund
• Co-Manager of the Schroder UK Mid Cap Fund plc and Co-manager of the Schroder Institutional UK Smaller Companies Fund
• Co-manager of Schroder ISF European Smaller Companies
• Investment career commenced on joining Schroders in 1987
• Chartered Accountant
• BSc in Economics, Manchester University

About Tim Steer
Tim Steer toured with Meatloaf, Diana Ross, Cheap Trick, The Cars, Thin Lizzy and The Jam as a sound engineer, and managed the Pink Floyd’s old sound and lighting system after the release of The Wall. At the time it was one of the largest systems in the world.

He then embarked on a new career and qualified as a Chartered Accountant with EY and after leaving there he became a highly rated investment analyst at HSBC James Capel and then Merrill Lynch, where he was Managing Director and Head of Research of Pan Euro Small/Mid Cap Companies. He puts his success entirely down to the excellent training he received at EY, BPP and from a partner called Richard Findlater.

In 2000 he was a founding shareholder of New Star and in 2009 he joined Artemis where he was part of the team that purchased the business back from Fortis, then part of RBS. Tim Steer was one of the most highly ranked fund managers in the UK being rated Triple A by Citywire and he ran both long and absolute return funds. At its peak he ran $4 billion of assets, a significant portion of which was held in short positions, many of which are included in his book – ‘The Signs Were There’. He has written regularly for The Sunday Times where he had an investment column, and The Sunday Telegraph.

The Signs Were There is a book that points out that for many company and share price disasters such as Autonomy, Aston Martin and Patisserie Valerie there are usually warning signs in the company’s financial statements for those who bother to look.

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