Interim Management Statement

RNS Number : 4398R

F&C U.S. Smaller Companies PLC

19 November 2012

 



F&C US Smaller Companies PLC

Interim Management Statement

For the four months ended 31 October 2012

Investment Objective

To achieve long-term capital growth by investing in a diversified portfolio primarily of quoted US smaller and medium sized companies.

Performance summary

	31 October  2012	30 June  2012	Movement
Net assets	£106.36m	£99.25m	7.2%
Net asset value ("NAV") per share	488.57p	468.32p	4.3%
Share price	493.00p	466.50p	5.7%
Russell 2000 Index      (sterling adjusted)	508.20	509.09	(0.2%)
Premium/(discount) to NAV per share	0.9%	(0.4%)

Four month review

The NAV per share rose by 4.3% in the four months to 31 October 2012.  This compares to a fall of 0.2% in the benchmark, the Russell 2000 Index (sterling adjusted), during the same period.

In the four month period, the market rose in anticipation of further quantitative easing by the Fed but, once this was announced, it retreated. The US economy has remained in a mid-cycle slowdown.

The best performing stocks which had the most impact on the performance were the retailer Conn's, which continues a two-year turnaround, Lincare Holdings (home oxygen) which agreed to a bid from Linde AG and Cardinal Financial (a regional bank based in Virginia), which reported strong results. Disappointing performance came from ICF International (a consultant) which fell on fears that sequestration of Federal spending would hit sales.

We bought four new holdings: Alere (diagnostic supplies), Safeguard Scientifics (venture capital investments), Spectrum Pharmaceuticals and WMS Industries (gaming equipment). The following stocks were sold: Lincare Holdings, Lumos Networks, NTELOS Holdings, Teledyne Technologies and Waste Connections.

The Company is not currently geared.

There have been no share buybacks during the period but the Company issued 530,000 shares. Shares have been issued at an average premium of 1.1% to the published NAV on the day of issue.

Ten Largest Holdings

31 Oct  2012	30 June 2012	Company Description	Percentage of  total investments
1	2	Conn's Retailer of home appliances, furniture and consumer electronics.	3.1
2	34	DeVry Post secondary education	2.5
3	6	America's Car-Mart Used car retailer.	2.5
4	19	LKQ Distributor of recycled and aftermarket car parts.	2.5
5	15	Rex Energy Oil and gas exploration and production.	2.4
6	7	Airgas Distributor of bottled gases.	2.4
7	9	Granite Construction Civil construction contractor.	2.4
8	3	Pool Distributor of swimming pool supplies.	2.4
9	29	Cardinal Financial Regional bank	2.3
10	22	Simpson Manufacturing Manufacturer of reinforcement products.	2.3

Industrial Classification

	31 October 2012 Percentage of total investments	30 June 2012 Percentage of total investments
Producer Durables	25.4	29.9
Consumer Discretionary	20.9	19.2
Financial Services	19.1	14.9
Technology	10.5	11.2
Healthcare	6.7	5.7
Consumer Staples	4.9	5.5
Materials & Processing	4.7	4.6
Utilities	4.2	5.2
Energy	3.6	3.8

Outlook

The US economy is stuck in a mid-cycle slowdown but it is showing some (as yet limited) signs of improvement, with recent ISM Manufacturing Surveys suggesting a modest acceleration of activity. The global economic backdrop is concerning as is tension in the Middle East. Political leadership is required to deal with the much-hyped "Fiscal Cliff", a political problem that can be resolved if politicians on Capitol Hill so choose.

The Board is not aware of any significant events or transactions which have occurred between 31 October 2012 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Daily and Key Information

Further information regarding the Company, including monthly factsheets and daily NAVs published since the end of the period are available on the internet at www.fandcussmallers.com

By order of the Board

F&C Management Limited, Secretary

19 November 2012

 

END

 

 

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