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Liontrust micro-cap team pours millions into Charles Stanley

The Liontrust team has backed the national wealth manager's turnaround strategy by increasing its stake to above 10%.

Liontrust micro-cap team pours millions into Charles Stanley

Liontrust's micro-cap team has backed Charles Stanley's turnaround with a multi-million pound investment. 

According to a London Stock Exchange announcement, in a transaction reported on 14 June Liontrust's stake in the national wealth manager more than doubled from an original 2,264,748 shares to 5,210,279 shares. 

Based on Charles Stanley's closing price of 360p on that day, the additional investment is worth around £10 million, with Liontrust's overall stake valued at a little under £19 million. 

Matt Tonge, co-manager on the Liontrust UK Micro Cap fund and Liontrust UK Smaller Companies fund, listed a number of compelling factors behind the move.

'When reviewing investments we look for distinctive characteristics in a company which we believe give it an economic advantage; intellectual property, strong distribution channels, and significant recurring business,' Tong told Wealth Manager

The transaction came on the same day Charles Stanley unveiled its full-year numbers, which showed the firm was back in the black after a major restructure under chief executive Paul Abberley (pictured). 

The results revealed a pretax profit of £8.8 million in the 12 months to the end of March versus a loss of £0.3 million in the previous year. Core business revenue was up to £138.6 million from £133.5 million the previous year. 

'The strategy determined in early 2015 required considerable preparatory work but I am pleased to be able to report that this is now largely in place and the benefits to both clients and shareholders are materialising,' Abberley told the market. 

If Abberley continues to deliver, Tonge sees potential for further gains. 

'We believe that management at Charles Stanley are successfully improving the business through a mixture of reorganisation, cost control and a greater focus on recurring income

'The longer term goal is to achieve higher margins that are more comparable with competitors.  If this can be achieved the shares will deliver further gains.'

In the 12 months to the end of May the Liontrust UK Microcap fund - which is managed by Julian Fosh, Anthony Cross and Victoria Stevens alongside Tong - has returned 29.7% versus a sector average of 27.2%. 

 

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