Monday, 23 December 2013

Unlocking Hidden Small-Cap Value in Marwyn Value Investors

One of my favourite hunting grounds for stocks that offer deep value is the small-cap and micro-cap segment of the UK stock market. We can define stocks as small-cap if they belong to the FTSE UK Small-Cap index (over 500 constituents of stocks whose market is typically smaller than those in the FTSE 100 or FTSE Mid 250 indices). Micro-caps typically belong to the FTSE Fledgling index or the AIM market.

Unlike many other stock markets around the world, the UK offers a broad and rich variety of small- and micro-caps that are liquid enough to trade without suffering bid-ask price spreads that are very wide, as long as you are patient when accumulating a significant holding. Typically, these companies are not covered by mainstream investment banking research analysts, and are often simply too small to interest most professional fund managers, who tend to invest in more liquid companies. It is precisely for these reasons that we are able to uncover very interesting value and growth investment stories in this arena. Academically speaking, small- and micro-cap stocks should outperform large-cap stocks in the long-term due to the existence of an “illiquidity premium”, i.e. an investor should be compensated for the risk of holding a stock which he or she cannot sell quickly by superior long-term investment returns from this type of stock.

I believe that one such interesting company is a closed-end fund company called Marwyn Value Investors (MVI). This company, listed on AIM, has a current market capitalisation of £119m (as of 18 December 2013). According to the company’s website (, this fund “participates in acquisition-led growth strategies by investing in diversified portfolio of European small- and mid-cap businesses”.

Read the rest of my article on Marwyn Value Investors by clicking on this link below to my MindfulMoney article:

Happy reading! And have a very merry Christmas and New Year.


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