Montanaro
European Smaller Companies - Annual
Overview from
QuotedData
27th
August 2024
Primed
for ignition
With
its dedication to high-quality, high-growth companies, Montanaro
European Smaller Companies (MTE) has fallen awry of recent market
trends. MTE's manager, George Cooke, notes that the market is
currently favouring low-quality, low-value companies (such as
smaller southern-European banks). This may be due either to
improving sentiment around Europe's economy (having seemingly
dodged a recession) or the initial effect of falling interest
rates, which are typically positive for riskier assets like
equities.
These
are macroeconomic-level events that effect the wider European
economy, however, and George is more focused on picking stocks than
making bets on the economic outlook. He believes such short-term
volatility can create opportunities to pick up positions at
attractive valuations. We believe that this not only applies to
MTE's underlying holdings, but also to the trust itself.
With
its shares having previously traded at a premium to net asset value
(NAV), MTE derated heavily during 2022 as interest rates rose and
economic uncertainty increased. Whilst nerves have settled a
little, the current 13.0% discount remains wide relative to history
and offers an attractive potential upside. Irrespective of the
short-term picture, MTE's NAV returns have still outperformed its
peers and benchmark over the long term, and its holdings have shown
few signs of diminishing quality or revenue growth in
aggregate.
Full
Research:
https://quoteddata.com/research/montanaro-european-smaller-companies-qd/
This
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NB:
Marten & Co was paid to produce this note on Montanaro European
Smaller Companies Investment Trust Plc, and it is for information
purposes only. It is not intended to encourage the reader to deal
in the security or securities mentioned in this report. Please read
the important information at the back of this note. QuotedData is a
trading name of Marten & Co Limited which is authorised and
regulated by the Financial Conduct Authority. Marten & Co is
not permitted to provide investment advice to individual investors
categorised as Retail Clients under the rules of the Financial
Conduct Authority.
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