Montanaro European Smaller Companies aims to achieve capital growth by investing principally in Continental European quoted smaller companies (those with a stock market value below €3 billion).
The managers say investments are focused on companies that are profitable and where there are sufficient shares in public hands to enable us to establish a holding. They don’t invest in complicated, blue-sky companies but focus on companies they can understand, typically niche franchises with good and experienced management, sound finances, simple business models, good order visibility, high barriers to entry, a strong, normally dominant market position and a competitive advantage that ensures pricing power. They prefer companies that can demonstrate self-funded organic growth rather than those on the acquisition treadmill. They also believe it is worth paying more for a higher quality company. Their outlook is long-term – they say they are more interested in where an industry and a specific company will be in 5 – 10 years than its next set of figures.
We have written notes that explain how the trust works –
- “Unfazed by market turmoil“, published in March 2022, looked at the trust against the backdrop of inflation, rate rises and Ukraine
- “Impressive returns in difficult market“, published in October 2020, examined the trust’s recent track record in the face of the COVID-19 pandemic
- “Focus on the small picture“, published in September 2019, suggests that in an uncertain environment, it pays to identify companies that can prosper regardless
- “Quality businesses at sensible prices”, published in March 2019, looks at MTE’s portfolio of smaller companies that were selected for quality
You can access the manager’s website here