Friends Prov definitely a 'buy' - Axa Fram

Axa Framlington UK Growth fund manager Jamie Hooper can understand takeover approaches for Friends Provident, a stock he labels “clearly a buy, not a sell”.

Hooper says Friends Provident is currently trading at a material discount, so he upped his portfolio's exposure in the insurer to 1.8%.

It is understood Friends Provident rebuffed a renewed attempt by US private equity firm JC Flowers over the weekend. Flowers is attempting to buy part or all of the struggling life company.

“Friends Provident is definitely of interest to other life companies and I can see value (in it),” Hooper says.

“I first got into Friends four months ago and bought some more recently after the strategic review.”

Hooper says his fund is well positioned in the current market, due to its 76% large-cap exposure. Oil and gas producers feature prominently in his portfolio, led by the BG Group (5.25%) and BP (4.43%).

While Hooper has an underweight 16.53% exposure to financials, he is not yet ready to buy back into banks, despite many showing 5% to 6% P/E ratios.

“I have been underweight for two and a half, three years now… in that time there was simply better places to put money,” he says.

At the moment it is a credit crunch thing, we haven’t seen the consumer problems coming through.”

“We are in the final throws of banking underperformance, but I am not ready to buy back in just yet.

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