Small Caps Set to Flourish

Balance sheets are strong and management confidence has improved across the board on the back of a brighter economic outlook, particularly in the UK and the US

AXA Framlington 13 October, 2014 | 3:08PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Henry Lowson, manager of the AXA Framlington UK Smaller Companies fund, outlines why he believes the stage is set for small caps to flourish.

There has been an uptick in mergers and acquisitions activity this year; however in the first half of 2014 this was dominated by larger companies. There are now signs that M&A is trickling down the market cap spectrum. Balance sheets are strong and management confidence has improved across the board on the back of a brighter economic outlook, particularly in the UK and the US.

In recent weeks there has been bidding activity for a number of publicly quoted companies, including Hyder, the engineering services company, Kentz, the oil services company and Spirit Pubs, which has been approached by Greene King. More is expected and many smaller companies have their own M&A agendas they are pursuing, both on and off the public markets.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
FireAngel Safety Technology Group PLC18.50 GBX0.00
Porvair PLC564.00 GBX-2.42
Restore PLC380.00 GBX-0.65

About Author

AXA Framlington  is a leading and progressive specialist investment management company within the AXA Investment Managers Group

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