Marlborough in a special situation
A ninth birthday is not always a special occasion for an investment fund team - most would wait until getting into double figures before putting on their party hats.
But Giles Hargreave of Marlborough Special Situations has something to celebrate because the value of units in the trust he took over nine years ago has grown ninefold.
The fund has also grown considerably in size, from £2m in 1998 to £187m and has frequently topped the performance tables. So far this year it is second out of 59 UK smaller companies funds monitored by Trustnet, with a gain of more than 20%.
More to the point for Investment Extra readers, it has more than doubled since first tipped here in 2004 at 260p. Normally, I steer clear of unit trusts; their initial charges are steep and this column is about making your own choices. But Hargreave and his colleague George Finlay have delivered an exceptional performance.
How has it been achieved? The biggest holdings include Charter, the heavy mining equipment maker whose shares were a lowly 120p when Marlborough moved in. They are now more than £11. It is hoping to follow with bombed out engineer Invensys, now its largest individual holding.
These could be considered conventional recovery stocks, but the fund's make up is anything but conventional. It includes Air Partner, the highly successful aircraft charter firm (which has almost doubled since being tipped here at 657½p).
'Private planes are a huge growth market,' says Hargreave, an old Etonian who started as a City analyst before joining the family stockbroking firm, Hargreave Hale.
Ocean Wilson, the shipping group with a valuable business in Brazil, is another holding where Marlborough has trebled its money. Duly encouraged, it moved on to Argentina to buy shares in Cresud, a cattle farmer that owns 1.2m acres of land - some of it within 50 miles of the capital Buenos Aires.
The fund has bought into cement makers in China and Kazakhstan. Hargreave says: 'We are not too keen on the domestic UK economy at the moment. We have virtually no banks, property, or retailers.'
As these foreign ventures show, Marlborough's classification as a UK smaller companies fund is a misnomer. Hargreave says: 'We are a go-anywhere fund.' At home, some of the biggest holdings are restaurant or food groups - Domino's Pizza, Prezzo and Clapham House, owner of the Gourmet Burger restaurants.
Some of the faraway stocks are undoubtedly risky, but the risk is capped by limiting each holding to no more than 2% of the fund, which holds 150 stocks. 'We have a lot of money in the fund ourselves and we are not keen on risk,' says Hargreave. With Finlay, he is now looking for opportunities arising from the sharp rise in world grain prices. This has led to a stake in breeding group Genus in the belief that farmers will need to improve efficiency.
Hargreave is cautious about markets at present and is keeping a reserve of cash. He runs two other unit trusts, a leading companies fund and a microcap fund. He also runs two Keydata venture capital trusts, which I hold. In total Hargreave Hale manages about £800m.
It is the 5% initial charge that puts me off unit trusts. But you can avoid most of it by going to a discount broker such as Hargreaves Lansdown, which will rebate you 4%, cutting your effective purchase price to about 532.5p.
Hargreave says: 'We have a consistent record, we are not just a flash in the pan. We don't take big positions, but we are not scared of investing in weird places.'
I am not sure whether he means Kazakhstan or Clapham. Either way, those who followed him have done well.
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Silence Therapeutics clinched its keenly awaited deal with AstraZeneca as AZ took a 2.94pc stake, which was less than expected. But it is also paying £5m to fund research on siRNA gene molecules aimed at asthma and breathing diseases, with further payments that could go all the way to £200m.
Silence chairman Iain Ross wants links with up to four drugs giants, and is well on his way, having already landed Pfizer. This confirms the potential of the gene silencing technology of the group, formerly SR Pharma. Tipped at 18p in November, it is already one of our best ever performers, and the story is not over yet.
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Hopes are rising that the impasse which has kept Tertiary Minerals shares suspended since January will soon be resolved, enabling trading to resume. It needs to resolve licence issues at its Saudi Arabian tantalum deposit. The site also holds niobium. The good news is that the niobium price has trebled since January.
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Technology incubator Angle is making encouraging strides toward sorting out its problems. Chief executive Andrew Newland says the consulting division is on track for £400,000 profits this year. Angle has slashed costs, and lined up £2m funding for promisiing games technology group Geomerics. Year to April losses were a steep £9m but Newland says the £2.6m cash pile should carry Angle through to profitability. The shares, which I recommended selling at 49p, closed at 43½p on Friday.
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