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Tech tips: Giles Hargreave reveals his favourite minnows
Giles Hargreave, manager of the Marlborough UK Micro Cap Growth fund, shares the small technology stocks he's backing to make it big.
Markets
Small technology companies might sound like a daunting investment to some, but Giles Hargreave, manager of the Marlborough UK Micro Cap Growth fund, is looking to the sector to boost returns in his portfolio.
One of the companies he flags up as a favourite is Bango (BGO.L), whose shares have added 177% so far this year. ‘We like Bango, which is a mobile payments processor which has just signed up with Facebook and Microsoft and Google,' he says.
‘As people use their mobiles more and more, mobile payment processing is going to be very big. Bango is a small company in the North of England, which extraordinarily has signed up all these giants in the industry, and it’s going to be processing their mobile payments so that stock, not surprisingly, is on the up.’
Hargreave says the fund has a technology bias as he runs it with Guy Feld, whom he describes as ‘a bit of a technology expert’.
A soft spot for Cupid
Other firm favourites include online dating agency Cupid (CUP.L), which is also held by Mark Slater in the MFM Slater Growth fund and Richard Penny in the Legal & General UK Alpha Trust .
‘I like Cupid, although it hasn’t done much recently. I think it’s a very cheap stock, and it’s growing at 40% and selling on about 12 times earnings. The market is not prepared to give it a decent rating, but one of these days it will do or get taken out.
‘Another is GB Group (GBG.L). That’s an identification company, if you want to make sure you’ve got somebody’s identity correct you can use the GB group software, so they have been doing very well.’
Hargreave is a Citywire AA-rated manager and the fund features in Citywire Selection. It has given a total return of 89.4% over the past three years, outperforming the Numis Smaller Companies Extended (+ Investment Trust) benchmark's total return of 52.7% over the same period.
It has large cash reserves, currently at 11%. Hargreave explains: ‘I have a lot of cash in case of redemptions, though that has never been a problem yet. Secondly, I never want to have to sell something in order to buy something.
‘Sometimes there’s a bit of a flurry, and there’s a lot of things you want to buy. We want to have the cash to be able to deal with that without having to sell something, as selling micro-caps in a bad market or even in a good market can be very difficult.’
Taking a blow from Clean Air Power
The fund’s top holding is in Clean Air Power (CAP.L), which makes up 1.87% of the portfolio. However the shares have lost 48.6% over the past three months.
‘Clean Air Power is a very interesting company as it facilitates trucks to use gas rather than oil or petrol. They’ve signed up with Sainsbury’s, who are building a fleet of trucks powered by gas, and they’re negotiating to do a deal with the Americans.
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- Bango PLC (BGO.L)
- Cupid PLC (CUP.L)
- GB Group PLC (GBGP.L)
- Clean Air Power Ltd (CAPC.L)
- Cove Energy PLC (COVE.L)
- Amerisur Resources PLC (AMER.L)
- Royal Dutch Shell PLC (RDSb.L)
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