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TM Tellworth UK Smaller Companies
This is a pure smaller companies fund run by two very experienced and highly regarded managers, Paul Marriage and John Warren. It focuses on smaller companies, avoiding micro-caps and mid cap stocks and meeting company management is integral to the investment process.
Our opinion
Paul and John have an outstanding long-term track record investing in smaller companies. Tellworth UK Smaller Companies fund is very similar to portfolios they have run before. It has a solid but flexible process, which affords them the necessary freedom to focus on the job of picking stocks. We have high hopes that they can repeat their past success with this new venture.
Company description
Tellworth is a new firm set up by Paul Marriage and John Warren in 2017, in order to launch this fund. Paul and John are the majority shareholders in the business. The firm has been launched with the support of BennBridge which is a minority partner. BennBridge is the UK regulated entity and appointed investment manager to the funds. It supports the firm with compliance and marketing operations.
Fund manager
Paul Marriage and John Warren are both highly experienced and have been investing in UK smaller companies for many years. They first worked together at Cazenove Capital, managing the Cazenove Smaller Companies fund, before it was acquired by Schroders in 2013. They then worked together on the Schroder UK Dynamic Smaller Companies fund amongst others, before leaving to set up Tellworth. The managers retain a good relationship with Schroders and still manage an external mandate for their previous employers.
I failed at insurance broking, I wasn’t much better at selling shirts, but somehow I’m a respectable stock picker – it’s as much about experience as it is expertise.
Paul MarriageFund manager
Investment process
Launched in November 2018, this is a true smaller companies fund. It doesn't invest in micro-caps or mid-caps like some peers. The managers avoid high risk areas, so don't invest in oil & gas, biotech or mining businesses, for example. They begin by running a number of different quantitative screens, to eliminate a number of factors, including companies with aggressive accounting or poor corporate governance.
The managers will then apply their 'P3M' process to the remaining stocks. They look for companies with a differentiated product, high sustainable margins, management aligned with shareholders and a market leading position. These companies will make up 75% of the portfolio. The remaining 25% will be made up of value opportunities such as self-help stories which are enjoying a turnaround or misunderstood businesses. Meeting companies is a key part of the process.
Risk
Tellworth UK Smaller Companies fund is well diversified with around 50 underlying holdings. The managers avoid the smallest, most illiquid stocks and the fund has a strict capacity limit to prevent it getting too big. The managers are keenly aware of the dangers of owning too much of any one particular company.
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