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.
You can access the manager’s website here
We have written a note that explains how the trust works – Quality businesses at sensible prices