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F&C Global Smaller Companies (LSE:FCS) issued its first-half report this morning, and the results are quite positive.
“F&C is one of Europe’s largest fixed income managers and has strong expertise assisting insurance companies and pension schemes on asset and liability management and liability-driven investment strategies.” F&C is unique in that is an independent firm, not owned by a conglomerate, bank, or insurance company.
The firm reported a 4% increase in share price during the first six months from 588.00p at 30 April to 611.50p at 31 October. The F&C share price is at 644.00p today. The company’s net assets gained 7.3% during the same period, climbing from £246.8 million to £264.8 million. F&C attributed the efforts the world’s central banks as providing some help to achieve this growth in its investment portfolio and rise in share price. F&C will be increasing the interim dividend by 22.7% from 1.63p to 2.00p.
Geographically, performance in the UK led all others with a 9.2% increase in return on investment. Continental Europe was next with 6.8%, followed by the US and ROW at 5.7% and 4.2% respectively. Investments in Japan lost 3.9%. The US comprises nearly 40% of F&C’s portfolio; the UK is 29.4%, followed by ROW at 11.9%, Continental Europe at 11.6% and Japan at 7.4%
Lupus Capital, the Ashtead Group, James Fisher, Vertu Motors, and Quindell Portfolio were major contributors to the UK portfolio. The aquisition of Vail Resorts in the US gave F&C a boost early on as shares rebounded from a mild winter and the summer season came into play with more strength. Conn’s, Cardinal Financial, Mohawk Industries, and LKQ all performed will for theUS porfolio.
Despite a weak automotive sector in Europe, Kuka, a manufacturer of robotics for automotive manufacturing and assembly, performed well with indications that it was gaining market share. Other European companies that helped to drive the positive portfolio results included Glanbia, Andritz, Azimut, and Topdanmark.
In an unusually humorous description of the company’s investment strategy rarely seen in these reports, F&C said that “We did add to our European holdings gradually over the period on the basis of the sentiment towards the region could not get much worse.” Comical as it may seem to envision portfolio managers meeting together and saying something akin to, “Let’s go for it, there’s a lot more sky above than there is runway ahead,” is, in the investing world, great wisdom.
F&C currently has £270 million in its investment portfolio, up from £228 million at 31 October 2011 and £252 million at 30 April 2012.
