Worldview: Here’s advance notice of a new addition to our Global Share portfolio

We're looking for a new home for a handy pile of cash that's in the Biznews Global share portfolio. I've had my eye on one stock for some time. But after reading my colleague Jackie Cameron's insights into Lloyds Bank, it will be two changes to the portfolio when we do our update next week. Please diarise 12:30pm SA time on Thursday the 25th to join us..In March when I interviewed the UK's deep value investing king Nick Kirrage of Schroders, he opined that UK banks were as cheap as commodities had been before their 2015 surge. At the time the Lloyds Bank share price was £68. It's now £71, so no boat missed yet. Kirrage's insights are relevant in the light of what Jackie shares with us..Jackie Cameron writes: "UK asset management rock star Neil Woodford is betting big on the Lloyds Banking Group. His CF Woodward Equity Income Fund recently added Lloyds to the portfolio, with a note to investors that the London-listed bank is well-managed..___STEADY_PAYWALL___.Large banks have a reputation for being staid, frustrating to deal with and generally behind the curve when it comes to client service innovation and disrupting business models. So, what does "well-managed" actually mean?.It is common knowledge that Lloyds Banking Group CEO António Horta-Osório has ditched toxic loans, axed more than 20,000 staff and closed hundreds of bank branches to reduce the cost-to-income ratio to the lowest of all UK banks. This "conservative approach" to its balance sheet, an attractive valuation and ability to pay a healthy, growing dividend, are identified as the markers of good management by Woodford's team..But "conservative" is not a label that can be naturally applied to 53-year-old Horta-Osório, a former Santander boss in Britain who was headhunted for the job of stewarding Lloyds out of crisis. He is relatively open about his shortcomings, apologising last year to his 75,000 staff for an extramarital affair that blew up in public and admitting a breakdown in 2011 when he first grasped the scale of work he had on his hands at Lloyds..My own experiences with Lloyds suggest that it is not only the quality of the financial engineers at the top of the organisation who are to be credited with nursing this bank back to health and into private hands following a state bail-out. Under Horta-Osório, a culture of entrepreneurship, and perhaps personal accountability, has been taking root..In another role in the recent past, I had a lot to do with the Lloyds Banking Group as with at least a dozen other financial services PLCs. I ghost-wrote thought leadership pieces on behalf of a number of senior people in various Lloyds' divisions and put together sales kits for corporate bankers. I conceptualised a range of quirky, if cheesy, flyers to appeal to the agricultural lending sector at livestock shows..I got to know a lot about how Lloyds people work, drawing on the finer details of fleet leasing deals and credit cards to put together case studies to showcase the organisation's competitive advantages..What consistently struck me throughout my dealings with Lloyds was that the individuals in the engine rooms of the group take the competitive nature of banking very seriously. There was a common thread of focusing on giving business banking clients added value – for example sharing valuable market intelligence..I spoke to the people on the other side of banking relationships, too, hearing first-hand how many business owners had improved cash flow and cut costs with the help of their Lloyds contact person. And how Lloyds people had alerted them to the nuances of international laws, helping to reshape payment processes across Europe to maximum advantage..You could argue, of course, that I was taken in by my own propaganda. Before you take my infatuation with Lloyds with a pinch of salt, bear in mind that Woodford hasn't invested in banks since 2003 – aside from a brief "flirtation", as investment supermarket Hargreaves Lansdowne calls it, with HSBC..In 2002, Lloyds was Woodford's biggest investment. As the UK's banking system returns to normality after almost a decade of rehabilitation, Woodford is betting on Lloyds once again to deliver above-average returns. "Neil Woodford has a long history of making big stock or sector bets, and while these decisions have at times taken a while to come to fruition, they have added significant value for investors over the long term," note Hargreaves Lansdowne analysts..Bank-bashing is fashionable and in many cases warranted, but when it comes to Lloyds, Woodford's view resonates with my own experiences deep in the system looking from the inside out..I especially like the fact that Jackie's own inside knowledge supports the buy recommendation from another top money manager. With Kirrage, Woodford and our own Jackie Cameron getting excited about Lloyds, it should pay to follow them. Particularly as the bank confirmed this week it is once again 100% privately owned. The UK government has sold the last of the shares it received eight years ago when pumping in £20bn as part of the bailout required to keep the bank afloat during the Global Financial Crisis.

Worldview: Here’s advance notice of a new addition to our Global Share portfolio

Related Stories