UK Small-Cap Fund North Atlantic Smaller Companies Gains Momentum

Christopher Mills, the chief executive and fund manager of North Atlantic Smaller Companies, has been at the helm of this £555m investment trust since 1982. With a focus on UK and US small-cap stocks, the trust has demonstrated a strong track record over the past four decades.

Mills, now 71, is known for his "engaged" investing approach, which involves acquiring substantial stakes in companies and joining their boards to assist in turnarounds or restructuring. This strategy has proven successful, as evidenced by the trust's consistent outperformance of the UK stock market.

As of June 30, 2024, Mills' 42-year tenure had generated a 13% annualized return from the trust's investments, surpassing the 8.9% annual return of the FTSE All-Share index. The trust has also outperformed the UK benchmark over various time periods, including 5, 10, 20, and 30 years.

Despite recent challenges faced by UK small-cap stocks due to high interest rates and inflation concerns, North Atlantic Smaller Companies has shown resilience. In the past year, the trust's shares have rallied 19%, aided by strong performances from key holdings such as Oryx International Growth and Odyssean investment trust.

The trust's portfolio, valued at £751m, includes investments in both public and private companies. Notable holdings include fund manager Polar Capital Holdings, asthma treatment provider Niox, and housebuilder MJ Gleeson, all of which have recently issued positive updates.

Investors are eagerly anticipating the trust's half-year results in September 2024, which may provide insights into Mills' plans for the £100m cash pile accumulated from returns of capital and special dividends. Additionally, updates on the disposal of three private equity businesses are expected.

"Christopher Mills is held in high regard, and his long-standing track record speaks for itself."

The trust's shares currently trade at a 29% discount to its net asset value, presenting a potential opportunity for investors. With small companies rallying on the back of a strengthening UK economy, and the endorsement of respected fund manager Peter Spiller, North Atlantic Smaller Companies appears well-positioned for future growth.

While the trust has pledged to improve transparency in its communications, investors can take comfort in its consistent long-term performance and the expertise of its veteran fund manager. As the UK small-cap sector regains favor, North Atlantic Smaller Companies stands out as a compelling investment option.