INVESTOR PROFILE-Thurleigh CIO seeks green shoots

LONDON Aug 21 (Reuters) - Wealth manager Charles MacKinnon interpreted "gardening leave" rather literally when he left Goldman Sachs (GS.N) in 2000.

Having helped build up the bank's private client services business, MacKinnon was looking for a different challenge, and decided to convert his hobby into his profession by taking up landscape gardening.

"I had always been a passionate gardener and when I was at Goldman I used to garden by floodlight. It was my relaxation," he told Reuters. The garden got so good he used to open it to the public once a year for charity via the National Gardens Scheme.

Now chief investment officer of independent firm Thurleigh Investment Managers, which runs 175 million pounds ($289 million) for private clients and charities, he finds gardening provides a level of certainty missing from his day job.

"In investment there are many things outside of your control. But if I sow some lettuce seeds I know that in three weeks' time I will eat those lettuces," he said.

The route from wealth management to gardening and back again is a winding one. Although the 54-year-old showed his green fingers early, studying botany at Pembroke College, Oxford, before switching to human sciences, he became a reluctant reinsurance broker after leaving university.

To open new doors he went to business school INSEAD for an MBA, and joined Goldman Sachs in 1985, eventually becoming an executive director. But he still took the time to cultivate his garden, and in 2000 passed the Royal Horticultural Society general certificate of horticulture.

"So when I was thinking about leaving Goldman it was a logical thought to convert my hobby into my occupation," he says. "But it's rarely successful. It took me about a year to work that out."

On leaving the bank he earned a postgraduate diploma in garden design, before taking a 30 percent share in a landscaping business, Landmark Design and Build.

NO MONEY TREES

"Unfortunately, landscaping is a very bad business because it has no barriers to entry, and the majority of designers are not living off their design fees, they are living off their husbands," he said.

MacKinnon's firm had high points -- building gardens for the Chelsea Flower Show and at Kew, and winning prizes -- but he found that once he had taken up gardening as a career, he no longer enjoyed it so much. "Plus we didn't make any money."

On reflection, he decided to found Thurleigh in conjunction with David Rosier, now the firm's chairman. Rosier was a founding director of Mercury Asset Management on its flotation in 1987, and later headed Merrill Lynch's private client investment management businesses.

The theory was that Rosier knew how to run the company while MacKinnon knew how to run money, and together they worked out the guiding principles of the firm -- one of which was: no product.

Instead the firm builds portfolios for each client, using tactical asset allocation and hedge fund techniques to manage volatility. It targets absolute returns rather than benchmark-relative performance, making investment decisions through a strict cycle of meetings, then formalised in the "Green Book".

"If you don't have a product you are intellectually free to take asset allocation decisions," he explains. "If you have funds you will always want to use them, regardless of market conditions, because you've put a lot of cash and intellectual capital into developing those products."

Another principle the firm adopted was to be open with clients about performance swings. "We try to warn our clients when we think we have made more money than we should have done for the risk we have taken, because sooner or later the other side of the coin will turn up," he says.

"But at that point, most clients seek to increase their risk rather than walking away."

MacKinnon has no desire for Thurleigh to become a product house but is open to a merger with a similar business, or to significant shareholders who could offer access to new areas.

The firm continues to grow its charities business and is debating whether to run pension fund money. MacKinnon says the investment process is scalable up to about 5 billion pounds -- capacity is more a question of how to handle an increase in the number of relationships. These currently number 65-70.

MacKinnon has also recaptured his love of gardening now that he no longer has to earn a living at it, and says he is back to gardening by floodlight, building raised beds for an "epic" vegetable patch. ($1=.6045 POUND) (Editing by Will Waterman)