Venture: Portfolio Update

Issue 74

In the UK, mid and small-caps have played catch-up, yet AIM stocks still lag. That said, the trend has improved, and there is considerable implied upside. It’s a similar pattern in Europe and around the world as well.

UK Large, Mid, Small, and AIM Indices – 2 Years

Source: Bloomberg

The same chart over 10 years hits it home how depressed AIM stocks are, in particular when small-caps have done quite well. There are some amazing companies listed in London’s AIM market, but they have been battered by the post-2021 bubble and are the last to recover.

UK Large, Mid, Small, and AIM Indices – 10 Years

Source: Bloomberg

This comes down to market liquidity, and the larger companies have had the upper hand since 2021. A question for Venture is whether to continue embracing undervalued small caps, knowing that patience will deliver excellent results, or to bow to the markets and embrace liquidity. There can be no doubt that we no longer find as many deep-value opportunities as we did two years ago. However, casting a wider net into Europe and the UK mid-caps has identified some great companies at attractive prices.

We are very excited about the recent additions at prices we never thought possible. Picking up opportunities from the 2021 bubble and subsequent crash remains our focus.

Action

Sell Henry Boot (BOOT).

Sell Gateley Holdings (GTLY).