This is no mean feat in a tough market and is testament to the underlying quality of the businesses that we have invested in, which have continued business-as-usual in patchier economic times. In fact, for companies that have maintained balance sheet strength through the good times, these more challenging conditions are an exciting opportunity to grow and win market share off those who have been less prudent – Darwinian but true.

One of the lead performers for the Fund this quarter (and all year) was Bytes Technology, who are the primary distributor of Microsoft software products (Office, Windows, Azure Cloud … the list goes on and on) in the UK. 2023 was an excellent year for Bytes and the years ahead look set to be even better as Microsoft’s new suite of AI products come to market. We have met with Bytes a number of times this year and have been particularly impressed with their CEO, Neil Murphy.

We initiated a new position in Ashtead Technology over the summer and shares have almost doubled since then. Ashtead, based in Aberdeen, is a rental company providing equipment to the offshore energy sector – the next time that you need a marine growth removal (MGR) system to get barnacles off your pipeline or a robot submarine to survey the foundations of your oil rig, then look no further than Ashtead! Shares were boosted by their recent acquisition of ACE Winches, which looks like an excellent fit and adds especially to their presence in the US and UAE.

Games Workshop shares have had a more volatile quarter as the market has blown hot-and-cold on the maker of Warhammer miniatures. While not being avid players of their game, we are ardent supporters of the business and its management team, who have done a remarkable job growing what was once a hobby-shop in Hammersmith to a global business that in 2023 signed a deal with Amazon Prime to produce a Warhammer series starring Henry Cavill (Superman) – could this be Warhammer’s Drive to Survive moment?

We are optimistic that the smaller companies market will continue to recover into 2024 and note that any move lower in interest rates would be a notable tailwind to the sector.
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.