The Telegraph thinks there’s more to come from JPMorgan UK Small Cap Growth & Income, while The Mail on Sunday believes shares in Cordiant Digital Infrastructure deserve to rebound.

By
Frank Buhagiar
30 Jul, 2024

Questor: This fund is riding on smaller companies’ rising tides
Whisper it, UK smaller companies are showing signs of life. So much so that The Telegraph’s Questor Column has dusted off a tip it made in summer 2023 – JPMorgan UK Small Cap Growth & Income (JUGI). Actually, two tips. For the £487m trust was only formed in February 2024 following the merger of JPMorgan’s UK Smaller Companies and Mid Cap listed funds. Back then, Questor had been drawn to the fund managers’ strong track record which had seen the small-cap portfolio beat “its stock market benchmark in six of the last seven years. Over a decade it has produced a 206pc total shareholder return – the best in its sector and well ahead of the Deutsche Numis Small Cap index, which has generated just 62pc.”

Over the shorter three-year timeframe, however, the shares have generated a zero total return and that’s including dividends – a symptom of the tough times small caps have had to endure. But what has got Questor excited is the turnaround seen over one year during which JUGI’s shares have risen +39%, “as more investors noticed the incredible bargains that sustained selling by bearish investors had created in smaller UK stocks.” With inflation falling, interest rates expected to be cut and wages rising in real terms, there is “a greater mood of wellbeing.” At least enough of a feel-good factor to show “that the country is not the ‘banana republic’ some overseas investors thought it was”.

So, despite the bounce seen in JUGI’s share price over the past year, Questor believes that “While the early bounce has occurred, we believe there is more to come as UK small companies and the broader stock market comes back into favour. Following the merger, this is a bigger, slightly cheaper growth fund offering an attractive 4pc dividend under a new quarterly payout policy starting next month.” Looks like the fund got the timing of its merger spot on.

Midas: Goals pay dividends for TV tech specialist specialist Cordiant
If you are reading this article online in Eastern Europe, Belgium, Ireland or America, it’s quite possible you are doing so with the help of assets owned by Cordiant Digital Infrastructure (CORD). That’s because CORD owns mobile phone towers, cables and data centres in these territories. Assets that, as The Mail on Sunday’s Midas Column writes, “make it possible to buy goods online, stream live TV, make calls, send emails and much else via the internet.” Put simply “Modern life would be almost impossible without these assets.” Not that you would think so, if CORD’s share price was anything to go by. For since joining the London Market in February 2021 at 100p per share, the shares are now at the 76p level.

What’s more the shares trade at a 40% or so discount to the value of CORD’s portfolio – £920million or £1.20 a share at the last count. A number of reasons have been cited including challenging markets and concerns over that £920 million valuation, not helped by peer Digital 9 Infrastructure’s woes. Midas however, thinks “Many of these concerns seem overblown, as Cordiant is well-managed, conservatively financed and has shown it can buy assets well and generate decent income.” Midas takes comfort from the steady rise in dividends from 3p to 4.2p; CORD’s customer base; use of a third-party valuer (accountants BDO); and boss Steven Marshall “energetically buying stock” – he acquired 800,000 more shares last month to bring his holding to over nine million shares.

All of which leads Midas to conclude “Growth is expected to continue at pace and Cordiant should benefit. Shareholders who bought on flotation have been poorly served but, at 76p, the shares deserve to rebound and investors can take heart from the 5 per cent dividend yield along the way.” In short, shareholders are being paid to wait.

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