Marriage: How to master a small cap strategy
The FE Alpha Manager says he focuses on four key factors when stock picking – product, market, margin and management.
Maintaining a strong relationship with the management of companies is the key to constructing a UK small cap portfolio, according to Paul Marriage
, who heads up the Cazenove UK Smaller Companies
Marriage, whose £108m portfolio is a top-quartile perfomer in its IMA UK Smaller Companies
sector over one, three and five years, says he would never invest in a company without meeting the management first.
"Finding out what is going on on the ground and then comparing that to what the market is expecting for that company and its profits is the key to our investment process," he explained.
The manager also places an emphasis on understanding the companies he is invested in, which is why he has no exposure to oil & gas stocks.
"I don't invest in the mining sector. For me, this is 'pin in the map' investing – I don't have a geology degree. There's nothing wrong with these companies per se, but I'm not an expert in these areas and I feel I can apply investors' capital more effectively elsewhere."
Marriage says he doesn't chase the market during extreme rallies, instead preferring to maintain his bias to market-leading companies that fit his 'P3M' – product, market, margin and management – investment style.