In this month’s article for professional Paraplanner, Juliet Schooling Latter, research director, FundCalibre, focusses on the Premier Miton US Smaller Companies fund and finds a manager, she says, who “cuts through the noise”.
“Companies make money for investors; politicians take it away – that’s why we focus on the companies.”
At a time when macro-economics and geopolitics dominate the headlines, it’s always refreshing to speak to a fund manager who cuts through all the noise and simply focuses on the fundamentals of a company.
It’s even more interesting when they invest in the world’s largest economy. Premier Miton US Smaller Companies fund managers’ Nick Ford and Hugh Grieves do precisely that and happily admit events in Washington are just a distraction.
Nick points to Walmart as an example. He says: “If you’d bought the stock in 1970, you’ve been through numerous economic crisis and presidential terms – yet a company that started with one store in Arkansas now has over ten thousand globally. You would’ve probably sold it based on macro or political decisions at some point – that would’ve been a silly decision.”
The pair launched this fund in March 2018. Since then it has returned a stellar 139% to investors compared to a return of 57.43% for the sector average*. Both managers have over two decades of investment experience and also manage the Premier Miton US Opportunities fund.
The team identifies potential investment opportunities through conferences and company meetings. The managers also use WONDA (the William O’Neil stock screening tool) to help identify company entry and exit points.
The tool spots fast growing companies in the Russell 3,000 universe. The team tries to understand why these companies are growing as fast as they are – with Nick saying the result is they often have a disruptive product or service. The result is well-diversified 70-100 stock portfolio with an aggressive growth focus.
Companies are typically sub-$6bn at the time of purchase and are held with a three-to-five-year view. Nick says nothing will shake that longer-term view, pointing to the pandemic as an example. “The companies we buy tend to be focused on business going online – which is the way the world is going. We’re not going to tell investors we’re switching away from these companies to re-opening plays. They might do well in the short-term, but we’re investing for the long-term.”
Despite being bottom-up in nature, the fund has seen a number of investment themes appear throughout its lifetime. One is business services – companies that help others do their jobs better by taking on some of their tasks. Nick says it’s always been a winning formula for investing in the US market – sticky customers, repeat business and a value-added situation which people pay for.
Healthcare services is another theme, accounting for just shy of one-third of the fund. The team is investing in companies which help with drug discovery – this can be through testing or providing the latest technology/hardwire to help diagnose illnesses using artificial intelligence.
Nick says a new wave of medical advances are taking place in the US which will speed-up the time to market for new drugs. A good example is clinical research firm Medpace, which helps small, recently formed, biotechnology companies with an exciting new compound to treat major illnesses. He says: “Medpace help these firms get the products through the four phases of drug approval, while saving a lot money. If biotech firms test the product on the population themselves, it would cost the developer millions. Instead, they outsource to Medpace, who does it all for them by leveraging their skills to thousands of other customers.”
Nick says IPOs have been the best source of investment opportunities throughout the fund’s life. He says this has shown no signs of slowing down, meaning more new products which are “both exciting and disruptive” for them to look at. “It’s like an Aladdin’s’ Cave where we can grab the best treasures while we can. You always have to remember that Amazon was once an IPO.”
*Source: FE fundinfo, total returns in sterling, 14 March 2018 to 3 February 2021
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Juliet’s views are her own and do not constitute financial advice.
