Bath/Head Office & Unquoted Equity Team:
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Investor Information

monthly manager commentary

October 2019

Having appeared to be closer than ever to a BREXIT transitional agreement, the withdrawal of this agreement from parliament and the subsequent calling of a general election has served to further the uncertainty in the UK. Added to this, sentiment around the outlook for the global economic environment is cautious, and this has been reflected in some of the more recent corporate reporting and, particularly, companies’ outlook statements. Over the next month, we’d expect to see the headlines dominated by the election and the impact this will have on government spending decisions, corporate activity and corporate investment. However, depending on the outcome, we may end the year with more clarity around BREXIT and, combined with improving US-China relations, this would be positive for UK equity markets as we exit 2019.

Our top performer this month was Future, our largest holding, which bounced strongly on the announcement of the acquisition of TI Media, a UK based magazine and digital publisher. Alpha FX also performed well on the back of an update indicating they were trading ahead of analyst expectations. Our main detractors to performance in the month were Accesso, who are currently subject to a formal sales process and announced that none of the bids it has received to date are at a level that offers sufficient value to shareholders, and Castleton, who warned that product and professional services sales would be lower than expected. During the period, we added to our DotDigital holding on strong final results, and our Clinigen position on weakness in the share price. We also reduced our Convatec and Avon Rubber holdings on rising share prices.

At the time of writing it is gratifying to note that the Fund has now reached its fifth anniversary topping its IA UK All Companies sector. The performance has been achieved against a backdrop of quite considerable political and economic upheaval with the BREXIT vote mid-year 2016 and Trump’s election and subsequent trade wars disrupting global supply chains and GDP growth. Hopefully, this performance underlines the merits of our very simple investment strategy of investing in cash generative companies that can fund their own growth and we will continue to manage the Fund on this basis going forward.


September 2019

The Fund returned 2.06% in September, modestly underperforming its IA UK All Companies benchmark. A number of profits warnings put the brakes on the Fund’s performance. Altitude, a stock we had high hopes for this year, warned that it was behind schedule in its plan to monetise its supply chain position in the US promotional goods market, causing i[…]

August 2019

The Fund fell back slightly last month, outperforming its IA UK All Companies benchmark, as the market generally subsided on fears of slowing global GDP. Its exposure to two defence stocks was the main contributor to this outperformance, as investors at large started to show more interest in this sector as political tensions between the global supe[…]

July 2019

After a disappointing June, the Fund enjoyed a much better month from both a relative and absolute returns perspective. Several factors contributed to this outperformance. Two stocks, RPS and XPS Pensions, which fell sharply on profits warnings last month, recovered some of their losses. Future, which had sold off sharply on the back of a negative […]

June 2019

The Fund had a more difficult month in June, giving up some of its recent outperformance as smaller companies, where the Fund is overweight, underperformed large caps which in relative terms benefitted from a weakening £ on the heightened prospect of a no-deal BREXIT, the prospect of looser monetary policy around the world and more conciliatory noi[…]

May 2019

The Fund held up well in May, generating a modest positive return, against the backdrop of a falling market. This outperformance was helped by a bid for Tarsus, one of the Fund’s larger holdings and strong performances from Future (its largest holding) and CentralNic, both on the back of well-received results. On the bear tack, our industrial stock[…]

April 2019

The Fund enjoyed another good month in April, comfortably outperforming its IA UK All Companies benchmark, helped to some extent by its small and mid-cap bias, with those segments outperforming large caps as some of the more defensive large cap sectors got left behind in the rising market. Newsflow from portfolio companies was generally supportive […]

March 2019

The UK Equity market continued to rally in March, capping off a strong 1st quarter with investors looking through BREXIT and trade wars and focusing on underlying company fundamentals, with most corporates reporting robust results, and attractive valuations, post the sell-off at the end of last year. The Fund, having lagged the market early in the […]

February 2019

The equity markets continued their more positive start to the year into February, with optimism surrounding a trade deal between the US and China and signs that, despite little indication of what manner of deal with the EU they would support, Parliament would not support a “No Deal” Brexit. The latter helped drive a strengthening of the pound, whic[…]

January 2019

After a torrid end to 2018, markets started the new year on a more positive note. The Fund itself enjoyed a good rebound, just slightly underperforming its IA UK All Companies benchmark. Its best performing stocks were Cloudcall, which recovered from a prolonged sell-off on the back of a positive trading update, and Angle, which rose on the back of[…]