City veteran builds up L&G stake

LARGE financial stocks have done very well since the stock market bounced back from its lows in March and one shrewd veteran investor has secretly backed insurer Legal & General to continue its strong run.

Nils Taube is the longest-serving fund manager in the business, with a talent for picking good long-term performers.

This summer, Taube has built a substantial undisclosed stake in L&G through his St James's Place UK & General Progressive fund. The fund now owns 10.1m shares, or 0.16% of the £6.2bn FTSE 100 company. At the current price of 98 1/2p, this stake is worth £9.7m.

St James's Place Greater European Progressive fund, run by Taube and colleague Cato Stonex, owns another 8.5m shares.

L&G has coped with the market and economic downturns better than many rivals, despite being largely UK-focused. At a time when financial-services has been an increasingly low-margin business, its efficiency has paid off. Its fund management operation has also been a success, due to its popular tracker funds.

A cannily timed £786m rights issue last year enabled the company to increase its dividend in its interims last month, compared with Prudential which cut its payout. The full-year dividend is forecast at 4.9p - a yield of 5.12%. Profits before tax are expected to hit £797m next year.

For investors who believe those who say the recovery will continue over the next year, Taube's example could prove worth following.