Montanaro Uk Smaller Com... Share Discussion Threads

[speedsgh] 12/4/2024 09:23

Bascially a reprint of the article published in the Telegraph’s Questor column yesterday...

Don’t ignore Montanaro’s ‘buy’ signal for over-sold UK smaller companies -

‘Every valuation metric is telling you to buy at this level,’ says Montanaro Asset Management's chief executive after lifting its stake in Montanaro UK Smaller Companies to 6%...

[philanderer] 11/4/2024 00:22

The Telegraph

Questor: This ‘standout bargain’ trust has returned 544pc since 1995


Questor says Buy

Ticker: MTU

Share price at close: 101.5p

[sphere25] 24/11/2023 11:02

Some interesting commentary in here:

"It is difficult to overemphasise how challenging the past few years have been for our asset class. The Numis Smaller Companies (excluding investment companies) Index has lagged the broad UK market over the past 1, 3, 5 and 10 years. In other words, the "SmallCap Effect", which has been a major tailwind to investors' returns for the past 70 years, has been working in reverse for the past decade. This is a rare event: the last time this happened was in the late 1990s.

More recently, this underperformance has coincided with outflows from the asset class reaching parity with that witnessed after the Global Financial Crisis. According to the Investment Association, cumulative outflows from UK SmallCap Funds amounted to GBP2.1 billion since January 2022, almost in line with the GBP2.3 billion experienced in 2007-09. Several open-ended UK SmallCap Funds decided to wind up this year while some industry veterans have retired. In the investment trust space, wider discounts have prompted some consolidation.

Valuations for the asset class have returned to levels last seen during the Global Financial Crisis, which marked the start of the recent Great Bull Market. At 13.9x, the 8-year Shiller P/E for UK SmallCap is rapidly heading towards the all-time lows of August 1992 (10.9x), March 2003 (11.6x), February 2009 (11.8x) - which would suggest 15% to 20% maximum downside from current levels. While the past is of course not guaranteed to repeat, history tells us that when valuations have previously reached current levels, returns over the subsequent 5 years for SmallCap were between 100% and 150%. Investors should perhaps take note.

Ironically, amidst all the doom and gloom, Smaller Companies - quality ones in particular - have resurfaced on the radar of trade buyers and private equity fund managers. M&A activity is quietly making a comeback. MUSCIT lost Dechra Pharmaceuticals (at a premium of 47%) to a bid by a consortium of investors before the Summer and Ergomed received a bid (at a 30% premium) in September 2023. Although we never invest in a business in the hope that it will be taken over, we would not be surprised to see more bids in the portfolio over the coming months."


So we have cheap valuations on one hand, but continued under performance of the smaller caps on the other. Ripe takeover activity on another hand, but profit warning's (this week alone: AHT, AXS, EMR, TRI, SFR, KGF, SDY. TTG, TRMR, PEBB, PHC, VCP, TM17) a regular occurrence on the other.

A more optimisic feel of late with some nice oversold/relief type bounces on a further hand, but huge overhang sellers continuing to restrict bounces and any major moves on another. The macro factors stablising (not great of course) now likely allowing the market to focus more on each individual company on a further hand, but flows and sentiment and talk of the death of the UK small cap market on another.

Basically, we need alot of hands to deal with this market.

Roll on the big buyers - sat waiting!

All imo
DYOR

[essentialinvestor] 15/11/2023 12:10

AS mentioned in the above post.. Lovely.

[essentialinvestor] 14/11/2023 17:09

Depends on the market cap at acquisition. They held Dechra for 20 years, from memory.

MTU looks very cheap to me, particularly given the BRSC share price today.

[taylor20] 14/11/2023 16:33

tempting, but GAW and FOUR not what I'd class as 'small caps'.

[essentialinvestor] 14/11/2023 16:14

NAV may be over £1.06 on tomorrow's update.

[essentialinvestor] 06/11/2023 13:03

NAV now at £1.05 and you can buy just under 90 prnce, looks a bargain to me - if wider equity markets stay around current levels.

[essentialinvestor] 02/11/2023 12:17

Tomorrow's NAV, if markets stay around here likely nesr 1.04 pence.

Recent BOD chunky buys, often sells close to NAV, good value?.

[wskill] 03/7/2023 09:26

Joined you today seems a tad too cheap price is somewhat the same share price as in 2015 and a decent mix of companies as well.

[panshanger1] 27/11/2022 13:39

Front page Ad on the Sunday times today worried me !!

[essentialinvestor] 04/10/2022 21:05

May be of interest:

[essentialinvestor] 04/10/2022 13:36

Due a bounce?.

[essentialinvestor] 22/9/2022 19:06

3% plus falls on many of their top holdings today, so this was arguably overdue some downside.

[essentialinvestor] 22/9/2022 16:01

top, would you not expect some more multiple compression on their portfolio
given the rising rates environment?.

[topvest] 16/9/2022 15:22

Added a few more. Valuation getting towards a low point I feel for a successful strategy.

[essentialinvestor] 15/9/2022 14:24

Hilton Foods a major holding, not good today.

[rcturner2] 15/8/2022 17:00

I sold today at 126p. Had a good rise recently and now trading very close to NAV.

[marksp2011] 20/7/2022 09:24

I suggest that you don't look at the 10 year chart as they had a big reshuffle and manager change about 3 years ago

I have been buying 1000 month

[essentialinvestor] 28/6/2022 12:48

Added a small amount.

[topvest] 24/2/2022 15:32

Nothing has changed, but investment style rotation. They are a fantastic manager with a proven long term record. 10 fairly poor years in the UK but better in Europe. Very unlikely to have another 10 poor years in the UK in my view. c5% yield medium term also helps! 4% + some price bounce back. That's my logic.

[speedsgh] 24/2/2022 14:47

Hi topvest. What has changed to make the prospects that much brighter than the performance over the last decade? Just trying to work out whether or not to look further into MTU. TIA

[topvest] 24/2/2022 13:26

I've added a few more. Still a small holding for me. They have had a disappointing decade. Their investment stratgey is bulletproof though and so I'm very confident that the next decade will prove more lucrative!

[rcturner2] 22/2/2022 12:10

I have bought in to this today as seems to have fallen a long way. Decent discount and yield available in a very solid collection of companies.

[disc0dave45] 03/8/2021 08:57

Or try AJ Bell chart.