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WS Gresham House UK Micro Cap
This is a highly concentrated, high conviction, UK micro-cap fund. It has been managed by Ken Wotton since its launch in 2009, with the support of the 50-strong specialist team at Gresham House. The fund only invests in companies in a select number of sectors where the team has specific expertise.
Most recently, LF Gresham House UK Micro Cap fund. Previously LF Livingbridge UK Micro Cap fund
Our opinion
WS Gresham House UK Micro Cap is a genuine UK micro cap fund, leveraging its resources well to find some truly unexplored ideas, making for a very different portfolio to anything else in the sector. Ken has the accounting expertise to understand the financials and the experience and network of the wider group to provide a large amount of insight. Being such a focused fund, both in terms of portfolio size and sectors, it is a higher risk option. However, there is the potential for strong rewards.Company description
Gresham House plc is an AIM quoted specialist alternative asset manager providing funds, direct investments and tailored investment solutions. The company's expertise includes strategic public equity, private equity (private assets), forestry, renewable energy, housing and infrastructure. It aims to deliver sustainable financial returns and is committed to building long-term partnerships with clients to help them achieve their financial goals. Gresham House bought Livingbridge in December 2018. The Livingbridge team are known for running the successful Baronsmead venture capital trust range.
Fund manager
Ken Wotton graduated from Oxford and began his career as a chartered accountant at KPMG. He spent 5 years working as a sell-side analyst for Commerzbank before moving to Evolution, where he covered small-cap telecoms and technology. Ken joined Livingbridge, now Gresham House, in 2007 and has been running the WS Gresham House UK Micro Cap fund since it launched in 2009.
The variety and dynamism of genuinely smaller companies always keeps this job interesting. It’s exciting to back entrepreneurs and help them to grow their businesses.
Ken WottonFund manager
Investment process
WS Gresham House UK Micro Cap is a growth fund that aims to invest in companies that can double their earnings over a five-year period. The manager avoids high risk sectors such as oil, mining and property. Gresham House has experience of working with companies and management teams before they come to the stock market and this can give them an advantage over their peers. The fund only invests in profitable businesses with low levels of leverage. Most investments are initially between £50m and £250m, but the manager will continue to hold successful investments that have grown beyond this size.
ESG
ESG - Integrated
Gresham House as a business has a commitment to make sustainable investment considerations integral to its approach. This entails exclusions of certain areas of the market, such as oil and gas and mining. These exclusions are a result of both the broader investment philosophy and a sustainable investment framework which enables the company to actively monitor a broad range of issues. Beyond this, Ken looks at all three ESG factors proactively, with an emphasis on governance. During the analysis, Ken will look at inputs such as a company’s carbon emissions, waste management, supply chains and employment safety to identify potential material risks to the business. For governance issues, Ken will look at factors such as board composition, company culture and remuneration policy. At this end of the market, management teams and their decisions have a critical impact on the business, so identifying issues here is integral to the successful application of ESG analysis in the process.
Risk
Typically holding around 50 companies, WS Gresham House UK Micro Cap fund is unusually concentrated for a smaller companies portfolio. This means inventors are heavily reliant on the fund manager's skill in choosing the right investments. The manager mitigates this risk by undertaking rigorous analysis and by only investing in profitable companies with low levels of leverage. The fund is also deliberately small in size, which gives it the flexibility to exit positions relatively quickly and easily if necessary.
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