Investors Plan To Increase Exposure To Small And Micro-Caps

0
Investors Plan To Increase Exposure To Small And Micro-Caps
mohamed_hassan / Pixabay

New research reveals professional investors plan to increase exposure to small and micro-caps

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q3 2020 hedge fund letters, conferences and more

  • New survey of 117 professional investors, including 73 in the United States
  • 76% of survey respondents believe investors should increase their exposure to small and micro caps over the next six to 12 months
  • 71% of investors think small and micro-cap indices will continue to outperform mid and large cap indices over the next six months
  • MBH Corporation began trading on the OTCQX® Best Market on 18th December 2020 (ticker MBHCF)

Investors Think Small And Micro-Caps Are A Good Investment Opportunity

London [21 December 2020] A new survey1 of professional investors in the United States, UK and Germany, reveals 80% think small and micro-caps are a good investment opportunity in the current market, and therefore three quarters (76%) believe investors should increase their exposure here over the next six to 12 months. Of them, over half (54%) think investors should increase their allocation to small and micro caps ‘slightly’, whereas 22% say there should be a ‘significant’ shift. Comparatively, just 2% of those surveyed believe investors should decrease their exposure to small and micro caps.

This Top Value Hedge Fund Is Killing It This Year So Far

Stone House Capital PartnersStone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More

The findings are from MBH Corporation plc, which began trading on the OTCQX® Best Market last Friday 18th December. The diversified investment holding company, also listed on the Frankfurt and Dusseldorf Stock Exchanges, acquires successful, well established small to medium sized enterprises across multiple geographies and sectors.

This year, micro-cap indices have been outperforming mid and large cap indices, a trend that 71% of the 117 professional investors surveyed believe will continue over the next six months. In fact, their low correlation with large caps performance is one of the key aspects driving the increase in appetite for micro caps, with 73% of investors citing this as an increasingly attractive feature.

Riding The Storm Of 2020

Callum Laing, CEO of MBH Corporation plc: “We have seen first-hand, within our own portfolio, how smaller businesses have been able to successfully and profitably ride the storm of 2020. We’re pleased that our research shows an increasing number of professional investors recognising the potential of small and micro-cap stocks.

The Covid-19 crisis has made for a tough year for all businesses, and small businesses have not escaped unscathed. However, many small and micro caps have built up an excellent long-term track record of performance, and those investors that do increase their exposure here will find these stocks are typically nimbler and more resilient to changes in the market.”

MBH Corporation recently published its half year results for 2020, which revealed revenue growth of 31% to GBP27.4 million (1H 2019: GBP21.0million) and a stable net profit of GBP0.7 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 13% to GBP1.5 million (1H 2019: GBP1.3 million).

MBH currently has 22 very successful and profitable small businesses in its portfolio and will continue its highly focused growth of well-established profitable small businesses across multiple geographies and industries.

MBH companies carry minimal debt, deliver around US$1m – US$10m EBITDA and are generally still run by their founders who become co-owners of MBH.

By leveraging its unique Agglomeration™ strategy, MBH can create substantial shareholder value through the consistent and accretive acquisition of excellent companies.  With Agglomeration™, profitable companies convert their private shares into public shares or bonds in MBH Corporation plc in a perpetual earn-in model. Company owners are then incentivised to accelerate their growth trajectory using the resources of the plc including expertise, skill transfer of best-in-class practices, cross-selling to other group companies and where appropriate, zero cost funding for new growth projects.

Each group company retains its autonomy and follows appropriate corporate and financial governance.  Business owners are also incentivised financially to enhance shareholder value through a share bonus scheme aligning their interests with public shareholders.


About MBH

MBH Corporation plc is a diversified investment holding company, listed on the Frankfurt and Dusseldorf Stock Exchanges and the OTCQX® in the United States. The company acquires small to medium enterprises across multiple geographies and sectors that are well established, profitable and looking to scale. By leveraging its Agglomeration strategy, MBH Corporation plc is able to create substantial shareholder value through the consistent and accretive acquisition of excellent companies.

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
Previous article Sign Of A Top?
Next article Stocks Fall but Close Week Positive

No posts to display