TIDMBASC
Brown Advisory US Smaller Cos. PLC
02 November 2021
Brown Advisory US Smaller Companies (BASC)
02/11/2021
Results analysis from Kepler Trust Intelligence
Brown Advisory US Smaller Companies (BASC) has made a solid
start under the new manager. From 01/04/2021, when Brown Advisory
and Chris Berrier took over management, to 26/10/2021 the trust
generated NAV total returns of 7% compared to a total return of
just 4% for the Russell 2000 benchmark.
BASC has just reported results for the year ending 30/06/2021,
during which period the previous manager, Robert Siddles of
Jupiter, retired. The portfolio has now been aligned with the US
Small-Cap Growth Strategy Chris has run for over 15 years,
generating strong outperformance with lower than market levels of
risk.
Kepler View
BASC has made a strong start under the new manager, despite
quite challenging markets with rotations in style and macro
uncertainty abounding. Yet despite generating good absolute returns
and outperforming its benchmark significantly, the trust has seen
its discount widen to 12% (as of 01/11/2021). This may reflect some
profit taking in the US and global markets after a strong
reflationary rally and late summer worries about a winter COVID
resurgence. We believe it could represent a good long-term entry
point.
Chris' strategy is to identify companies which can generate
compound growth higher than the market over the long run. There is
therefore a strong quality growth tilt to his style which
contributes to attractive downside performance characteristics -
something he explicitly targets. The focus on repeatable earnings
and downside risk means there is a bias to companies with a track
record and good cash generation, which means 'meme stocks' and
profitless companies are unlikely to feature in the portfolio.
Chris runs a highly active strategy, with an active share typically
in the 90% - 95% range.
While the strategy is new to the closed-ended space, Chris has
been running it for many years in the open-ended space with
success. Over the ten years to the end of August, the Brown
Advisory US Smaller Companies UCITS Fund outperformed both the
Russell 2000 Index and the Russell 2000 Growth index, with a beta
below one and superior downside performance.
The current wide discount seems unwarranted to us and we believe
this could be a good entry point to a strategy with an excellent
long-term track record.
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(END) Dow Jones Newswires
November 02, 2021 06:29 ET (10:29 GMT)
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