Hargreave Hale Chairman and Fund Manager Giles Hargreave caught up with DirectorsTalk for an exclusive interview to discuss how 2016 played out for them, standout investments including Blue Prism Group PLC (PRSM), EVR Holdings PLC (EVRH), Hochschilds Mining Plc (HOC), Hurricane Energy Plc (HUR), Hotel Chocolat (HOTC), Fevertree Drinks PLC (FEVR) & NMC Health Plc (NMC), his view on prospects for the year, interesting sectors and stocks he likes the look of for 2017 including Quixant PLC (QXT), Clinigen Group PLC (CLIN), Victoria PLC (VCP) & Marlowe PLC (MRL)
Q1: Giles, first off, can I ask how do you feel 2016 played out for you?
A1: Yes, pretty good, I run 3 small cap funds and they all performed well, they’re all under the Marlborough banner. So we have a Marlborough Micro-Cap fund which is up 15% and finished 5th in the league table out of 46 and then there’s a Marlborough Nano-Cap fund, the micro-cap is a £700 million fund and the nano-cap is £130 million fund, that was up 13.4% and finished 8th. The Special Situations fund is up 10.5% and finished 16th against an average of 8.1% so they were all better than average, 2 of them top quartiles, 1 second quartile so pretty satisfactory.
Q2: Were there any standout investments within your portfolio?
A2: Plenty of them. I think the best performer was the robotics company called Blue Prism Group PLC (LON:PRSM) which floated at 78p in March and finished the year at 445p and still going strong as we speak, it’s not 525-538 is the quote as we speak. It offers robotic process automation software designed to help firms automate a wide range of business processes for reduced costs, improving balance and increased productivity so we’re all going to have robots in our office soon.
Most recently, a company called EVR Holdings PLC (LON:EVRH) which owns a virtual reality content from many well-known artists so you’re going to be able to watch your favourite artists in virtual reality using their software. The shares started the year at 1.275p and they touched just short of 9p yesterday and they’re about 7.5p today, not bad, and we own 60 billion shares in the nano-cap and the micro-cap.
We had some commodity shares that did well, a bit of a contrast there. We had Hochschilds Mining Plc (LON:HOC), which is a world-leading silver miner I think, which was up 3.5 times and on the energy side we had Hurricane Energy Plc (LON:HUR) which was up 3 times and those two did well.
One of two more, we had Hotel Chocolat Group PLC (LON:HOTC) that doubled from the IPO price and Fevertree Drinks PLC (LON:FEVR) which is one of the great stocks which did most of its work last year was still up 90% this year. NMC Health Plc (LON:NMC) which operates hospitals in the UAE, that was up 84% so pretty good.
Q3: So what are your views on prospects for this year?
A3: Well I think in a way in the short term they’re better because the bond switch is on , bonds have been obviously falling so there’s no point in sitting in ones that are losing money. So the switch into equities has been accelerating I would say, you’ve got some inflation coming so you need, again, equities to protect yourself from inflation if at all possible. So I think the prospects are pretty good really, the danger is when you have too much inflation interest rates have to be put up more than we’d want and that would be very serious for the UK but hopefully that won’t happen.
Q4: I think you touched on this a little bit but what sectors do you think will be interesting this year?
A4: We tend not to be too agnostic, we are very much bottom-up stock pickers, if it looks like inflation is coming back you probably want to have some gold shares and we had a few of those last year which did fairly well. Otherwise it’s variety of individual stocks doing all sorts of things and not worrying too much about sectors.
Q5: Are there any particular stocks that you like the look of for 2017?
A5: There’s a company called Quixant PLC (LON:QXT) we like which is a manufacturer of hardware and software solutions for the gaming industry, fruit machines, the old fashioned fruit machine, they have contracts with most of the leading operators and they’re not a very unknown company I think. The shares have been performing very well and they might do particularly well this year, particularly if Brazil allows gaming machines which they haven’t in the past, we think they’re very likely to and that would be a big plus for those guys.
Clinigen Group PLC (LON:CLIN), which my colleague and the media seem very keen on that, which is a global leader, speciality in medicine access, in other words you can apply, if you want a particular medicine which isn’t on the market, to use it and these guys will procure it for you.
NMC Health Plc I’ve already mentioned.
Victoria PLC (LON:VCP), which my other colleague is very keen on, is a consolidation of small carpet companies all over the UK and in Australia and that’s been performing very well.
A company called Marlowe PLC (LON:MRL) which has gone up a lot already but could potentially go a lot further, that’s a roll-up of business services in the UK focussing on fire and water sector. So they come and make sure your water is clean and the water you’re supplying to your employees isn’t going to poison them and that area, everyone has to have that so those little companies are being consolidated into a company called Marlowe. So there you go, there’s a selection.
