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Bargain shares: Exploiting information voids

Our small-cap stock picking expert highlights two under researched anomalously priced investment companies on his watch list.
Bargain shares: Exploiting information voids

A key reason why I focus on stock picking under researched small and micro-cap companies is that I can gain an edge over other investors, hence why my Bargain Shares Portfolios have outperformed the market so consistently over the past two decades. This year is no exception.

My motley crew of 10 small-caps have produced a total return (TR) of 21 per cent (28 per cent against magazine prices) using the market maker inflated opening offer prices on 5 February 2021. By comparison, FTSE Aim All-Share and All-Share indices have produced TRs of 5.5 per cent and 12 per cent, respectively.

The outperformance this year in part reflects my decision to target under researched investment companies. A good example is Vietnam Holding (VNH:265p), a little known closed-end fund that holds a concentrated portfolio of mid to small-cap companies to play secular growth trends in Vietnam. The shares have rallied 31 per cent to date, but still trade on an unwarranted 23 per cent discount to net asset value (NAV) even though the £145m fund has increased NAV by 47.6 per cent since the start of January, a seven-percentage point outperformance of the Vietnam All-Share index. The share price discount is worth exploiting. It’s not the only one either.

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