Overstone UCITS Global Smaller Companies Fund
Capture the small cap premium through a classic value based approach.
Investment objective
The objective of the Fund is to attempt to achieve over the long term a total return in excess of that of the MSCI World Small and Mid Cap Index (with net dividends reinvested). The Fund seeks to achieve its objective through investment in a concentrated portfolio of equity and equity-related securities of primarily small and medium-sized companies, selected from all the major markets and to a lesser extent from emerging markets worldwide. The approach is focussed on valuations and bottom-up fundamental research of individual companies.
Fund particulars
| Launch date | 01 October 2007 |
|---|---|
| Domicile | Ireland |
| Structure | UCITS |
| Base currency | USD |
| Dealing | Daily |
| Min. investment | £10,000 |
| Benchmarks | MSCI World Small Mid Cap |
| MSCI World |
Portfolio manager
Harry Fraser
Harry Fraser
Harry joined OP in August 2011. He was previously employed by Herald Investment Management as a research analyst covering the media sector for a total of 5 years. He graduated from Newcastle University. He manages global smaller companies portfolios and contributes to the overall investment selection.
Latest publications
Latest publications
Global Smaller Companies Strategy
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Commentary
In a public statement correcting inaccuracies from a Mail Online article, JD Wetherspoon highlighted that drinks prices at competitors were now, on average, 43% more expensive than Wetherspoon’s and food prices were 33% more expensive. In 2014, when we first bought shares in the company, competitor products were roughly 25% more expensive; the company owned the freehold of just 40% of its pubs compared to nearly 70% today and sales per pub were 30% lower. Clearly the company’s competitive position has strengthened over this period, yet the share price remains the same at just £7 per share. The value created will eventually be recognised by the stock market - to quote Benjamin Graham in the Intelligent Investor: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Tim Martin, founder and Chairman, bought another £7m worth of shares at the beginning of September indicating that he sees value at this price.
Allegiant Travel, the low-cost US airline, performed poorly in August on the back of increased concerns about falling ticket prices. The company has executed better than peers over the last twelve months, yet the shares languish near Covid lows. Allegiant has a good long term track record of growing earnings per share in the low teens and there remains plenty of growth opportunities from smaller airports in the US for the company to go after. Allegiant trades on just eight times earnings compared to its long-term average of 17 times.
Portfolio companies have continued to produce better than expected earnings with look through earnings now up 38% compared to the beginning of the year, resulting in the trailing price to earnings ratio of the strategy falling to below 10x. Since the beginning of 2012, earnings have grown at over 13% per year compared to 9% for the average company in our benchmark. The upside to our target prices remains elevated at over 80%.
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