Anthony Cross of Liontrust Special Situations funds tells us why he likes Craneware.
Craneware, the US hospital software supplier, has been one of the best performing companies in Liontrust's Small Companies and Special Situations funds this year. And this has prompted a bolstering of stocks up to 3 per cent and 1.7 per cent of portfolio, respectively.
At the start of 2012 Craneware's growth slowed considerably due to the US government's attention being shifted away to electronic recordkeeping, causing the price to plummet to around £2.50. But Liontrust seized the opportunity to buy cheap and is now reaping the rewards.
Craneware serves around 25 per cent of the hospitals in America and its market share is growing. Only half US hospitals have the right software to process the evermore complex billing and pricing they must deal with.
And Mr. Cross says its strongest investment point is its high recurring income which can be as high as 70 to 80 per cent of total annual revenue.
"This is an excellent long term investment," he says. "And it has the three things we look for - intellectual property, a very strong distribution network and high recurring income."
Keith Neilson, chief executive of Craneware, says: "The dramatic upheaval taking place in the US healthcare market continues to present a significant long term opportunity for us."
■ This year revenue increased 8 per cent to $41.1m (up from $38.1m in 2011).
■ Profit before tax increased 29 per cent to $11.2m (up $8.7m in 2011).
■ Craneware returned $4.1m to shareholders by way of dividends this year.
