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7 tech stocks held by top UK fund managers

Amid mounting concerns over the exodus of technology firms from the London market, we look at seven tech stocks held by top UK fund managers.

by Max Julius on Nov 23, 2011 at 17:06

Key stats
Market capitalisation£969m
No. of shares out68m
No. of shares floating67m
No. of common shareholdersnot stated
No. of employees972
Trading volume (10 day avg.)0m
Turnover£174m
Profit before tax£34m
Earnings per share50.56p
Cashflow per share57.58p
Cash per share44.49p

*Correct as at 23 Nov 2011

Aveva Group

One day after Autonomy, Britain’s largest software firm, delisted from the London Stock Exchange, technology company Aveva (AVV.L) reported a 6% increase in first-half profit, in line with analyst forecasts.

The shares dropped from close to a three-month high as Singer Capital Markets analysts noted that although improvements in trading conditions should help drive growth in the next few years, much of the recovery in end-markets was already priced in.

Analysts at Canaccord Genuity later picked up on a ‘significant detail’ they found worrying in the results from the Cambridge-based group, whose software is used to design oil and gas facilities as well as ships and nuclear power stations.

‘We had expected Brazil to bolster performance – we had not expected the group to be so reliant on a very strong performance from Russia,’ they said, warning that they saw ‘material risks’ to the group achieving consensus earnings forecasts for 2012.

The stock, a top holding in Harry Nimmo’s Standard Life Investments UK Smaller Companies fund, has lost 9% of its value in the past year – falling short of the wider London market and its sector.

According to data from Starmine Professional, there are currently four ‘strong buy’ recommendations from analysts for the stock, three ‘buy’, seven ‘hold’, two ‘sell’ and one ‘strong sell’ recommendation – with an average price target of £16.20.

Key stats
Market capitalisation£1,036m
No. of shares out258m
No. of shares floating230m
No. of common shareholdersnot stated
No. of employees725
Trading volume (10 day avg.)1m
Turnover£98m
Profit before tax£19m
Earnings per share7.36p
Cashflow per share8.59p
Cash per share19.13p

*Correct as at 23 Nov 2011

Imagination technologies

Nigel Thomas holds chip designer Imagination Technologies (IMG.L) in his Axa Framlington UK Select Opportunities fund.

A recent rally by the stock from its August low of 285p has stalled over the past few days, amid turmoil in global markets. Yet the stock has still taken on 30% in the past year and 35% in the past three months.

And analysts at Jefferies noted at the height of Imagination’s recent rebound that recent licensing deals meant the future ‘continues to be ever brighter’ and that the stock has a ‘solid’ 2013-2014 story.

They did point out, however, that the share price gains of recent months appeared to some investors as though expectations for the stock had run too far. The analysts cited worries that a potential volume disappointment loomed next year, given the strength of rival ARM Holdings’ volumes at Samsung and the ‘terrific momentum’ for Qualcomm, the world’s largest wireless chip maker.

There are currently two ‘strong buy’ recommendations from analysts for the stock, four ‘buy’, six ‘hold’, one ‘sell’ and five ‘strong sell’ recommendations – with an average price target of 429p.

Key stats
Market capitalisation£33m
No. of shares out16m
No. of shares floating9m
No. of common shareholdersnot stated
No. of employees173
Trading volume (10 day avg.)0m
Turnover£22m
Profit before tax£3m
Earnings per share17.64p
Cashflow per share41.28p
Cash per share39.76p

*Correct as at 23 Nov 2011

CML Microsystems

CML Microsystems (CML.L), which designs, manufactures and markets a range of products for use in communications industries, on Tuesday reported an increase in first-half profit before tax of 56%.

Dan Ridsdale, analyst at Edison Investment Research, branded the results ‘robust’, noting that sales of storage products were the main driver of growth and ‘prospects here remain exciting’.

He added: ‘The rating looks fair given the economic risk/storage reward, but further delivery on milestones could be a catalyst for upside to estimates and the rating.’

The stock, a top holding in Giles Hargreave’s Marlborough UK Micro Cap Growth fund, has gained 31% in the past year, beating its peers and the wider London market.

Key stats
Market capitalisation£1,138m
No. of shares out198m
No. of shares floating181m
No. of common shareholdersnot stated
No. of employees445
Trading volume (10 day avg.)1m
Turnover£196m
Profit before tax£38m
Earnings per share19.00p
Cashflow per share32.52p
Cash per share12.30p

*Correct as at 23 Nov 2011

Telecity

Data centre operator Telecity (TCY.L), a top holding in Daniel Nickols’ Old Mutual UK Select Smaller Companies fund, announced earlier in the month that its cash flows would enable it to start paying a dividend next year.

Ahead of the results, the managers of SVM UK Growth, Colin McLean and Citywire-AA rated Margaret Lawson, highlighted the company’s ‘excellent reputation for reliability, connectivity and security’.

Noting that this was essential for customers who rely on their data centres to host critical software, they wrote: ‘We believe that Telecity will be able to maintain strong pricing and should benefit from significant operating leverage as they increase in scale.’

Shares in the London-based firm have gained 28% in the past year, outperforming its peers and the wider London market.

There are currently seven ‘strong buy’ recommendations from analysts for the stock, six ‘buy’, four ‘hold’ and one ‘strong sell’ recommendation – with an average price target of 624p.

Key stats
Market capitalisation£3,470m
No. of shares out1,321m
No. of shares floating1,310m
No. of common shareholdersnot stated
No. of employees13256
Trading volume (10 day avg.)2m
Turnover£1,435m
Profit before tax£227m
Earnings per share17.23p
Cashflow per share22.12p
Cash per share5.37p

*Correct as at 23 Nov 2011

Sage

Business software group Sage (SGE.L), a top holding in Philip Matthews’ Jupiter Growth & Income fund, has edged up 2% in the past year – beating the wider market but underperforming its sector.

UBS downgraded the Newcastle-based group from ‘buy’ to ‘neutral’ at the end of October, noting that while the shares were still 6% below their 2011 highs, they saw ‘limited catalysts’ for a bounce in the near-term.

There are currently five ‘strong buy’ recommendations from analysts for the stock, seven ‘buy’, 12 ‘hold’ and four ‘sell’ recommendations – with an average price target of 288p.

Key stats
Market capitalisation£82m
No. of shares out340m
No. of shares floating308m
No. of common shareholdersnot stated
No. of employees332
Trading volume (10 day avg.)0m
Turnover£31m
Profit before tax£4m
Earnings per share1.05p
Cashflow per share1.82p
Cash per share0.59p

*Correct as at 23 Nov 2011

Idox

Idox (IDOX.L), the supplier of software to local government, has surged 83% in the past year, trouncing its sector and the wider market.

In a trading update last week, the AIM-listed group said that despite considerable economic uncertainty, it had delivered a ‘strong’ financial performance for the year.

Andrew Darley, analyst at FinnCap, said the update from Idox – which is also a top holding in Marlborough UK Micro Cap Growth – indicated that performance had been in line with expectations.

He added that underlying organic growth for the year supported by the successful integration of two acquisitions, LalPac, which provides local authorities with licensing tools; and McLaren, suppliers of enterprise scalable engineering document management.

Key stats
Market capitalisation£42m
No. of shares out419m
No. of shares floating250m
No. of common shareholdersnot stated
No. of employees136
Trading volume (10 day avg.)0m
Turnover£16m
Profit before tax£2m
Earnings per share0.44p
Cashflow per share0.95p
Cash per share0.81p

*Correct as at 23 Nov 2011

Ffastfill

Software provider FFastFill (FFA.L) also reported first-half results on Tuesday, posting a fall to a pre-tax loss amid higher infrastructure and staff costs, but stressed that it was still in a ‘strong position to continue to achieve growth’.

The AIM-listed group, which provides software as a service to financial groups, said this was particularly so at a time when its market was still punctuated with moments of structural change, such as the recent collapse of US brokerage MF Global.

The stock, another top holding in Hargreave’s fund, has gained 19% in the past year, outperforming its rivals and the market.

More about this:

Look up the funds

  • Standard Life Inv UK Smaller Companies Ret Acc
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  • AXA Framlington UK Select Opportunities Inc
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  • Marlborough UK Micro Cap Growth
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  • Old Mutual UK Select Smaller Companies A Acc
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  • Jupiter Growth & Income
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Look up the shares

  • Aveva Group PLC (AVV.L)
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  • Imagination Technologies Group PLC (IMG.L)
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  • CML Microsystems Plc (CML.L)
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  • Telecity Group PLC (TCY.L)
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  • Sage Group PLC (SGE.L)
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  • Idox plc (IDOX.L)
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  • Ffastfill PLC (FFA.L)
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Look up the fund managers

  • Harry Nimmo
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  • Nigel Thomas
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  • Giles Hargreave
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  • Daniel Nickols
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  • Philip Matthews
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  • Colin McLean
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  • Margaret Lawson
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