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5 small shares that top fund managers are trading

We delve into regulatory returns to see what small shares are being bought and sold by some of the best professional investors.

Key stats
Market capitalisation£21m
No. of shares out13m
No. of shares floating9m
No. of common shareholdersnot stated
No. of employees206
Trading volume (10 day avg.)0m
Profit before tax£1m
Earnings per share4.63p
Cashflow per share13.64p
Cash per share4.34p

*Correct as at 14 Mar 2014

Helium spots bar opportunity

Small cap hedge fund manager David Newton, of the sector-beating Helium Special Situation fund, has raised his stake in up-market bar company Eclectic (BARE.L).

Newton upped his investment in the business from 1.38 million shares to 1.41 million or 11% worth £2.34 million at a share price of 166p, up 2.6% from a price of 160p at its listing in November 2013.

Newton invests in under-researched small caps where he believes the market has misunderstood the value in a business, returning 129% over three years versus an international equity index of 8.7%.

Eclectic, in which fellow shrewd investor Citywire A-rated Giles Hargreave also holds a near-20% stake, raised £15 million last year, the first listing in the bar and hospitality sector since 2007.

The company is targeting an expansion to about 50 locations over the next decade, from a current figure of 20. Broker Panmure Gordon rates it a buy with a price target of 210p.

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Key stats
Market capitalisation£959m
No. of shares out289m
No. of shares floating259m
No. of common shareholdersnot stated
No. of employees1169
Trading volume (10 day avg.)0m
Profit before tax£-1m
Earnings per share-0.49p
Cashflow per share69.90p
Cash per share12.53p

*Correct as at 14 Mar 2014

M&G’s Dobell cashes in on Peppa Pig

UK Equity veteran Tom Dobell of M&G has banked some profit on his holding in Peppa Pig owner Entertainment One (ETO.L) as its shares continue to hover around all-time highs.

Dobell trimmed his investment in the company from 34.09 million shares to 34.05 or 11.78% worth £120.8 million at a share price of 355p, up 133% over three years versus a FTSE 250 return of 48%.

The bulk of the shares are held in his £6.94 billion M&G Recovery fund, with a minority stake in the company’s M&G Smaller Companies fund.

While best known in the UK for its ownership of children’s TV phenomena Peppa Pig, Entertainment One operates a global business of media rights, licensing and distribution, including UK rights to recent Oscar winners Dallas Buyers Club and 12 Years a Slave.

Investec raised its price target on the company from 340p to 360p and JP Morgan from 280p to 356p after it said full-year earnings were likely to beat expectation.

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Key stats
Market capitalisation£6m
No. of shares out2,689m
No. of shares floating2,199m
No. of common shareholdersnot stated
No. of employees13
Trading volume (10 day avg.)25m
Profit before tax£-5m
Earnings per share-0.38p
Cashflow per share-0.20p
Cash per share0.10p

*Correct as at 14 Mar 2014

Activist investor Morton buys into ViaLogy

Bob Morton, a prominent activist investor, has been busily trading shares in struggling oil and gas services company ViaLogy (VIY.L).

Through his Hawk Investment vehicle, Morton bought 150 million shares – worth £225,000 – at the end of January. Just two weeks later, according to a stock exchange filing last week, he sold 18 million of those shares after their price had surged up 45%. He still owns 4.9% of the company.

ViaLogy uses seismic imaging technology to detect subsurface gas and oil deposits, and boasts clients including Chevron. The firm’s most recent earnings report revealed that it had lost £1.1 million in the six months to 30 September 2013, while despite the recent recovery its share price has plunged by 89% over the past year.

ViaLogy announced late last year that it planned to spin off its US business in part to cut its working capital requirements.

Morton’s most famous intervention in a company involved marketing services business Media Square, when he led a consortium seeking to oust executive chairman Roger Parry.

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Key stats
Market capitalisation£32m
No. of shares out39m
No. of shares floating26m
No. of common shareholdersnot stated
No. of employees248
Trading volume (10 day avg.)0m
Profit before tax£-2m
Earnings per share-6.39p
Cashflow per share3.95p
Cash per share9.08p

*Correct as at 14 Mar 2014

Hornby chugs into Channon’s portfolio

Gary Channon, chief investment officer and co-founder of Phoenix Asset Management, has increased his stake in model railway firm Hornby (HRN.L).

Channon bought another 57,250 shares in Hornby, worth around £45,000, to take his holding in the group to 5.9 million shares – equivalent to 15% of the business.

Hornby hired former Ladbrokes managing director Richard Ames as its chief executive last month, with old boss Roger Canham becoming non-executive chairman.

Ames now has to get Hornby back on track after it issued a profit warning in January, which it blamed on supply delays. In appointing Ames, Canham highlighted his experience of ‘managing complex supply chains’ both at Ladbrokes and previous employers including Dixons and Asda.

Channon’s flagship Phoenix UK fund has returned 351% since its launch in May 1998, compared with 108% from the FTSE All Share index. By style, he looks for ‘competent, honest’ managers running ‘companies with strong pricing power’, buying in when they are attractively valued. Hornby currently trades at 80p, far below its pre-crisis peak of 300p.

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Key stats
Market capitalisation£47m
No. of shares out71m
No. of shares floating20m
No. of common shareholdersnot stated
No. of employees47
Trading volume (10 day avg.)1m
Profit before tax£2m
Earnings per share2.60p
Cashflow per share3.52p
Cash per share4.75p

*Correct as at 14 Mar 2014

Gervais Williams throws chips down on 32Red

Small-cap dividend specialist Gervais Williams has taken profits on online gambling business 32Red (TTRL.L) Williams sold down his 2.3 million shares in the business, worth £1.88 million at price of 82p. The company was formerly among his top-ten positions.

While down fractionally over the last month the shares remain 303% up over the last three years versus a FTSE Small Cap return of 42.35%.

The shares were held in his small-cap focused income fund, the Diverse Income Trust. 32Red currently yields 2.8%, just above the trust’s historical yield of 2.4%.

Broker Numis rates the company a buy, with a price target of 100p. 32Red reported a 21% increase in revenue in 2013, from £32.1 million to £38.8 million.

The number of new players registered over the year slowed from 41,918 in 2012 to 38,033 in 2013 however while the yield per active player fell 3% from £500 to £485.

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