House broker Peel Hunt’s notes that since raising funds at 50p a share in February of this year the trust has delivered a 16% net asset value (NAV) total return, putting it in the top quartile of its peer group – other trusts focused on UK smaller companies.
Piloted by Gervais Williams, a small caps specialist with a lot of fans among private investors, the company follows Williams’s edicts of investing on companies that have sustainable growth prospects and strong balance sheets.
Many of these companies, in Williams’s view, are the dividend stocks of the future, and as many investment studies have concluded, reinvestment of dividends is core to a successful portfolio strategy.
The trust has grown from £49mln to £90mln and is fully invested across 119 holdings that are well diversified by industry sector, Peel Hunt noted, adding that the bulk – around four-fifths - of the portfolio is invested in AIM stocks.
“The managers’ ability to add value through stock picking has benefited from increased dispersion in the AIM All-Share index, which has increased significantly since 2014. The managers have not had to change the portfolio in the face of the EU referendum outcome,” Peel Hunt said, as it reiterated its “outperform” recommendation.
The shares have recently moved to a discount to NAV per share and currently trade at just over 55p, giving a 10% gain to anyone who took up the shares issued in February.
The trust’s top 10 holdings are:
- Fulcrum Utility Services LTD (LON:FRCM) 4.2%
- Fishing Republic PLC (LON:FISH) 2.6%
- Cerillion PLC (LON:CER) 2.5%
- Bilby PLC (LON:BILB) 2.5%
- James Cropper plc (LON:CRPR) 2.4%
- Atlantis Resources Ltd (LON:ARL) 2.1%
- Constellation Healthcare Technologies Inc (LON:CHT) 2.1%
- Kromek Group PLC (LON:CMK) 2.1%
- WYG PLC (LON:WYG) 2.0%
- Cello Group plc (LON:CLL) 1.8%