Our small-cap investment strategy
Small cap investments can form part of any investor’s diversified portfolio, but picking small cap stocks can be risky, so the devil is in the detail. Our investment experts are constantly monitoring smaller companies that are becoming pioneers in their area, are at the forefront of innovation, are playing a vital role in the growth of an emerging sector, or are simply doing something better or faster than before.
How we choose small-cap companies to invest in
When choosing smaller companies to invest in, our specialist small-cap investment committee carries out extensive research and analysis. They then create a shortlist of companies that meet our criteria. We look for businesses with:
- high-quality management
- history of consistent earnings
- dividend growth
- balance sheet strength
- proven cash generation
- high barriers to entry
- reasonable valuation
- strong earnings growth
- owner managers.
How we seek out small-cap opportunities
Building on these criteria, we look for opportunities in businesses within these categories:
- Niche businesses: companies that satisfy a specific market need
- Roll-out stories: companies that are expanding, either in phases or store-by-store
- Market leaders: companies that enjoy the largest market share in their peer group
- IPOs: companies raising initial capital to help them transform from a private company to a public listed entity
- Industry consolidators: companies that are buying up their competitors and improving them
- Special situations: companies where our dynamic and nimble approach can exploit short-term market opportunities or identify early stage management change and corporate turnaround
How can our small-cap investment experts help you?
Small-cap investments tend to be high-risk but can also be profitable. If you’re interested in including small-caps in your portfolio, request a complimentary consultation with a specialist investment manager today. They will listen to your request and carefully assess your needs and preferences.
We always tailor our service to suit individual needs, and your wealth manager will be happy to include a small-cap investments if they are right for you.
Investments in smaller companies, including AIM stocks, carry a higher degree of risk than investing in more liquid shares of larger companies, so they may be difficult to sell at the time you choose. Investments in smaller companies are more volatile and, while they can offer great potential, growth is not guaranteed.
IMPORTANT: Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.