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Four shares the pros are buying

Our regular roundup of trades by professional investors, featuring Microgen, Marshalls, Zoo Digital and Curtis Banks.

by David Campbell, Selin Bucak on May 15, 2017 at 05:01

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Key stats
Market capitalisation£155m
No. of shares out54m
No. of shares floating19m
No. of common shareholdersnot stated
No. of employees458
Trading volume (10 day avg.)1m
Turnover£291m
Profit before tax£4m
Earnings per share7.02p
Cashflow per share9.61p
Cash per share834.91p

Curtis Banks

Citywire AAA-rated value experts Anthony Cross and Julian Fosh have more than doubled their stakes in pension administrator Curtis Banks (CBP.L) as its shares spike to an eight month high.

The managers upped their investment in the business from 2.8 million to 6.1 million shares, a 11.3% stake worth £17.46 million at a share price of 286p, which was up 61% from their low of 177p in October 2016.

The shares are held in their £700 million Liontrust UK Smaller Companies fund. Bristol-based Curtis Banks floated in 2015 and provides administration to 72,000 self-invested personal pension schemes.

The business purchased rival Suffolk Life from Legal & General early in 2016, expanding to become one of the top three businesses in the sector. It shares have climbed more than 7% this month following a rerating from hold to buy by broker Peel Hunt, on a price target of 350p. They fell 17p or 6% on Friday to close at 275.25p. Earlier in the week the company disclosed that director Steve Hart had sold 125,00 shares and chief investment officer Kristian Morgans had left.

Key stats
Market capitalisation£796m
No. of shares out199m
No. of shares floating188m
No. of common shareholdersnot stated
No. of employees2250
Trading volume (10 day avg.)1m
Turnover£397m
Profit before tax£37m
Earnings per share18.61p
Cashflow per share25.24p
Cash per share10.37p

Marshalls

Small company specialist Charles Montanaro has upped his stake in Marshalls (MSLH.L) after the retailer of landscaping materials posted positive results and signalled upcoming acquisitions.

Montanaro has increased his holding in the business from 7.9 million to 8.2 million shares, a 4.1% stake worth £33.4 million at a share price of 409.10p, which was up nearly 40% this year.

The shares are mainly held in his £188 million Montanaro UK Income fund.

Marshalls recently revealed that it had increased pre-tax profit for the year ended 31 December 2016 by 31% to £46 million. In a trading update published on 10 May, the group said revenue for the four months to 30 April was up 6% to £135 million.

Following the strong numbers and increase in sales figures, the company said that it identified ‘good bolt-on acquisition opportunities’ in areas of minerals, protective street furniture and water management.

‘The board believes that Marshalls' innovative product range and strong market positions will continue to support the growth objectives of the 2020 Strategy,’ it noted. The shares shed 7.5p on Friday to close just above 401p.

Key stats
Market capitalisation£203m
No. of shares out61m
No. of shares floating49m
No. of common shareholdersnot stated
No. of employees312
Trading volume (10 day avg.)m
Turnover£43m
Profit before tax£6m
Earnings per share9.99p
Cashflow per share12.25p
Cash per share40.22p

Microgen

Citywire AAA-rated small-cap veteran Dan Nickols has ramped up a recent run of purchases in wealth management and accounting software specialist Microgen (MCGN.L) as its shares continue to climb.

Nickols increased his holding in the business from 3.8 million to just over five million shares, a stake worth £16.8 million at a share price of 334p, which has risen threefold since early last year.

Most of the shares are held in his £1.1 billion Old Mutual UK Smaller Companies fund with the remainder held in his colleague Nick Williamson’s £188 million Smaller Companies Focus funds.

In 2016 results Microgen chair Ivan Martin hailed ‘record numbers’ of new contracts signed in the year, driving revenue 35% higher to £43 million, and its operating margin 30% higher at 15%.

While consistently rating the business a buy, analysts at Investec have struggled to keep pace with the rally, which has already outstripped a late April price target of 330p.

Key stats
Market capitalisation£8m
No. of shares out73m
No. of shares floating54m
No. of common shareholdersnot stated
No. of employees103
Trading volume (10 day avg.)1m
Turnover9m USD
Profit before tax-1m USD
Earnings per share-0.02 USD
Cashflow per share0.01 USD
Cash per share0.01 USD

Zoo Digital

Citywire A-rated small cap selector Giles Hargreave has taken advantage of a share placing at TV streaming and subtitling business |Zoo Digital (ZOO.L) to rapidly increase his stake in the company.

Hargreave upped his holding from 266,000 shares to 17.7 million of the enlarged capital base, a position worth £1.6 million at an issue price of 9p. As a percentage of the company's market capitalisation, his position rose from below 5% to 24%.

The position is largely held in funds run for clients of his broker and asset manager Hargreave Hale, with the remainder held in portfolios he runs on behalf of Marlborough Fund Managers.

Zoo Digital provides captioning and streaming services to platforms including Netflix. The company raised £2.5 million in the placement, with a further 12.2 million shares being listed in a debt-for-equity swap.

The company said the cash would allow it ‘to further the momentum in our business’ as it increased investment to meet ‘strong demand’ for its services. The shares closed at 10.4p on Friday.

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  • Microgen PLC (MCGN.L)
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  • Marshalls PLC (MSLH.L)
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  • Zoo Digital Group PLC (ZOO.L)
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  • Curtis Banks Group PLC (CBP.L)
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