Small cap specialist to list on ASX

Interviews

Transcription of Finance News Network Interview with Glennon Small Companies Limited (ASX:CG1) Chairman, Michael Glennon
 
 
John Treadgold: I’m John Treadgold for the Finance News Network and joining me from Glennon Capital Small Companies Limited (ASX:CG1) is Chairman, Michael Glennon. Michael, glad you could make it in today.
 
Michael Glennon: Thanks John, pleasure to be here.
 
John Treadgold: You are listing a Small Cap Fund. Can you give us an overview of the offer, how much are you looking to raise and what’s in it for investors?
 
Michael Glennon: We’re looking to raise up to $50 million, which is 50 million shares at $1.00 a share with a free attaching option, exercisable at $1.00 in 12 month’s time. What’s in it for investors?  Investors get access to a portfolio of small companies, managed by a specialist Small Companies Portfolio Manager.
 
John Treadgold: Can you explain the benefits of focusing on smaller companies, rather than the big players?
 
Michael Glennon: The benefit of small companies is that most of the research in the market on listed companies, is on the top 100 listed companies. Small companies aren’t researched, so you need specialist skills to be able to do well in small companies.
 
John Treadgold: Why did you decide to list?
 
Michael Glennon: Well listing is fun because to date, investors haven’t been able to access our portfolio unless they’ve come through a financial planner, or they’re a sophisticated investor with a million dollars to invest.
 
John Treadgold: How do you deal with liquidity when some of these companies may only have a small share register?
 
Michael Glennon: We only invest small amounts of capital initially and as we get more confidence in their company, we invest more money. And what we get access to, is capital raisings and things that private investors and the public, don’t generally get access to. And we take advantage of that and we increase the weighting of the shares in the portfolio, as the company becomes de-risked and a bigger market capitalisation.
 
John Treadgold: What do you look for as you research potential investments?
 
Michael Glennon: There’s a range of factors that we look for when we’re looking for potential investments. We look through some qualitative factors and some quantitative factors. The quantitative factors involve going through the P&L (profit & loss) and the balance sheet of the company, and pulling them apart and getting an idea about the financial health of the business. And the qualitative comes from experience in assessing management and the market, and the industry that the business operates in.
 
John Treadgold: Your unlisted Fund has a strong track record over the past decade. What do you put that outperformance down to?
 
Michael Glennon: We put it down to the fact that we’re out there and we’re seeing a lot of opportunities, in the market every year. We see hundreds of opportunities every year. We pick the best of those opportunities for our clients and for our portfolios. And the fact that we’re specialising in small companies and that’s all we do, that gives us an edge over people that are doing this part time, or aren’t spending as much time looking at investments.
 
John Treadgold: What gives you confidence you can beat your benchmark going forward?
 
Michael Glennon: We’re pretty confident that we can find small businesses that then grow into large businesses. It’s a function of the equity market that small cap’s are a breeding ground, for tomorrow’s future leading companies. And because we’re continually looking for smaller companies, we’ve got an advantage in that we can find those businesses that become tomorrow’s leaders.
 
John Treadgold: Looking at risk. What is the risk profile of the Fund and what time scales should people consider, when looking at investing in your Fund?
 
Michael Glennon: It’s a long-term proposition looking at our Fund and investing in equity markets. It’s a five to ten year proposition. That’s the outlook we take on businesses when we’re looking at them for potential investment. And the other thing people need to bear in mind, is small caps are a lot riskier than large caps. There’s not a lot of research on them, there’s not a lot of liquidity and there’s a lot of volatility.
 
A lot of our clients have tried to manage small caps themselves and decided they can give that money to a professional manager, because they haven’t had a great track record there. But they like the characteristics of small companies,growing into larger businesses over time.
 
John Treadgold: Michael, thanks for the update and good luck with the listing.
 
Michael Glennon: Thank you.
 
 
Ends

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