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10 top trades: what Hambro, Young, Montanaro & Co bought and sold
by David Campbell on Nov 21, 2012 at 07:00
We've scoured the market to find 10 eye-catching trades over the last month or so from some of the best in the stockpicking business.
Citywire AAA-rated small-cap stockpicker Giles Hargreave has upped his investment in music and marketing group Immedia, the company founded and run by former Radio 1 DJ Bruno Brookes.
Hargreave upped his holding in the company from 1.45 million shares to 1.50 million or 10.38% worth around £90,300 at a share price of around 6p.
The shares are held in funds managed on behalf of private clients at Hargreave’s family stockbroker and investment manager Hargreave Hale.
Bruno Brookes worked at Radio 1 from the mid-1980s through the mid-1990s, before falling victim to a wholesale cull of presenters considered dated by the stations incoming manager Trevor Dann.
ImmediaImmedia Group PLC (IME.L) provides music services to businesses, selecting tracks complementary to particular brands and managing their delivery, whether through an in-shop audio system or streamed to a website.
In results for the first half issued at the end of September, the company reported a loss of £191,192, although it added that it expected to return to profit in the second half.
Pennink increased his stake in the company from 3.2 million shares to 41.89 million worth $26.8 million (£16.61 million) at a share price of 62 US cents a share.
While some of that increase is accounted for by the dilution impact of a $100 million rights issue launched last month, the manager also upped the total percentage of shares he holds.
Singapore-based Symphony invests in Asian consumption growth, primarily through stocks in the healthcare, hospitality, lifestyle and high-end real estate sectors.
Following the rights issue, broker Panmure Gordon cut its price target from $1.18 to $1.13, rated buy.
In first half results in mid-August the company reported a net asset value of $1.24 per share, meaning it trades at a discount of exactly 50% to the most recent estimate. Symphony has since announced two profitable exits likely to have boosted the portfolio, however.
Plackett increased his holding from 6.44 million shares to 10.12 million or 4.77% worth £15.49 million at a share price of 153p, making him the largest fund investor in the company.
The shares are held in his £1.41 billion BlackRock Special Situations fund, which seeks out undervalued and unappreciated turnaround stories.
Faroe announced a $350 million spending spree this month, saying it would exploit UK tax incentives on North Sea oil to increase extraction rights in British waters.
UK assets currently contribute less than 15% of total production but represent around 40% of post-tax cash flow.
Peel Hunt analyst Werner Riding rates the business a buy, with a price target of 210p. ‘Given its strong exploration track record, we believe Faroe ought to justify a valuation materially above its core [net asset value] of 151p per share,’ said Riding.
Small-cap income specialist Gervais Williams has upped his position in insurance and auto business Nationwide Accident and Repair Services, currently yielding just shy of 10%.
Williams increased his investment from 1.13 million shares to 1.42 million or 3.31% worth £843,042 at a share price of 59p.
The shares are held in his Diverse Income trust, a small-cap income fund launched by investment group MAM Funds last year, following his departure from previous employer, Gartmore.
Shares in Nationwide crashed 32% to 61p last November after it issued a profit warning and have continued to trade sideways to down since then.
Shares in the business currently trade at 9.32% of 2011 earnings, more than twice the FTSE All Share average of 4.05%, and at a price to earnings multiple of 6.41 times, versus 10.69.
Despite revenue falling 12.9% over the first half and profit before tax down from £3.5 million to £2.8 million, the dividend remains well covered with earnings per share of 5p and cash at £8 million.
Young increased his holding in the company from 6.81 million shares to 7.14 million or 13.05% worth £35.02 million at a share price of 495p, up almost 20% over the last year.
Hugh Young is managing director of Aberdeen Asset Management Asia, the group’s regional HQ and is group head of equities, as well as being the architect of its investment process.
In addition to recent demand for palm oil as foodstuff and feedstock, its biofuel potential has recently received a boost as drought and storms have driven the price of grains upwards.
Broker Peel Hunt has a buy rating on the company with a 550p price target while Panmure also has a buy rating and a 580p target.
Small cap tech star Katie Potts has bought heavily into a share issue at transatlantic media and entertainment business Reach 4 Entertainment, formerly Pivot Entertainment.
Potts took almost 75% of newly issued equity, taking her stake from 1.62 million shares to 7.32 million or 9.93% of the newly expanded capital, worth £329,625 at the launch price of 4.5p.
The shares are held by private clients of Herald Investment, which Potts founded in 1994. Her Herald Investment trust has returned 53.42% over three years, versus an index return of 25.15%.
Reach 4 Entertainment provides marketing, design and merchandising services to leading theatres in the West End and on Broadway.
The company is still in the red following a major restructure and management change, but in results for 2011 reported annual losses of £2.92 million, down from £7.81 million.
The turnaround ‘continues to look to be un-reflected in the share price and, with a near-term target price of 45p, our stance is buy’ said Growth Equities & Company Research analyst Steven Moore.
Montanaro cut his holding in the business from 2.45 million shares to 2.35 million or 2.91% worth £13.43 million at a share price of 575p.
The manager is founder, chief executive and chief investment officer of Montanaro Asset Management, a specialist in pan-European small-caps.
SDL fell 14.7% at the beginning of the week, after warning it may take a $1 million to $3 million (£1.9 million) hit in 2013 on legal costs stemming from its takeover of translation business Trados in 2005.
A number of brokers cut their guidance on the stock following the trading update, in which it added that third quarter trading remained in-line with its expectations.
‘That often translates to “not quite” in line,’ noted Panmure analyst George O’Connor.
Hambro, who previously held 10 million shares in the company worth £24.6 million at a share price of 246p, no longer has a reportable holding within the business.
The shares are held within his $10.6 billion BGF World Mining fund, which was the largest mutual fund investor in the company, according to Reuters data.
Bumi shares have leapt almost 40% in the last month, primarily on an offer last week buy out the company’s listing for $1.2 billion, or 483p a share according to a calculation by Barclays analysts.
The shares have nonetheless lost 66.5% of their value over the past 12 months on potential financial irregularities in an Indonesian subsidiary, and remain a shadow of the £10 they listed at in mid-2010.
Wright took a 1.5% stake in the company or around 3.74 million shares worth £6.69 million at a share price of 179p.
The shares are held in his £347 million Fidelity Special Value trust, which he took over in July.
Wright said he backs Brewins because of its 'sticky' client base and believes there are better opportunities for returns compared to its rivals.
Increasing its margins is key to realising this potential, he added. 'Brewins have realised [this],' he told Citywire, pointing out that while rival Rathbones has fewer assets under management its margins are healthier.
'The Brewin Dolphin business is pretty good. Rathbones is on a higher P/E and that does not make sense to me,' Wright added. Royal Bank of Canada last week increased its price target on the company from 170p to 210p, rated outperform.
Carroll increased his investment in the business from 4.7 million shares to six million worth £5.16 million at a share price of 86p, up more than 25% over the year to date.
Formerly of Schroder where he specialised in UK equity investment and was directly responsible for more than £2 billion, Carroll helped found FOUR in 2007 and runs its Active UK Equity fund.
‘We have an intrinsic value of £1.50 for this share,’ said Carroll. ‘The perception in the market is that ITV is still in structural decline with viewers switching off or over.
‘We believe that ITV is successfully repositioning itself for the modern media world via its medium term transition plan. Whilst trying to reduce dependency on advertising revenues it is still the only place where advertisers can hit a mass audience.’