UK small cap markets were broadly flat in July, pausing for breath after a strong year so far.

The Fund initiated a new position in gaming company Frontier Developments at the end of June, and continued to pick up more of the stock as opportunities arose during the month. Otherwise, the portfolio remains unchanged. Best performers this month have been Beazley, Trainline and Kainos.

Beazley jumped on recent strong results, returning to profit with a 22% increase in gross written premiums to $2,035.3 million with all divisions across all territories increasing their rates during H1 2021. This has been driven by Beazley diligently deploying their capital and specialist underwriting in the most effective value add manner in a hardening market, particularly cyber, with ransomware and cyber-crime being an important societal risk to combat.

Trainline are having a positive run, after their shares were previously spooked by the Williams-Shapps review in May. Group net ticket sales increased to their highest level since the beginning of the pandemic, up 324% year-on-year. This was boosted largely by UK ticket sales (up 269%), with more tickets sold in Q1 2021 than the same quarter in 2019. International ticket sales also soared (up 432%), largely driven by the key markets of France, Italy, Germany and Spain. Trainline are leading the market shift to online ticket sales and have continued to invest in their product and technology throughout, leaving them in a prime position to benefit from the lift in lockdowns and restrictions.

We trimmed Tritax Eurobox on recent strength and took the opportunity to add to Nasdaq listed Simulations Plus (SLP) on share price weakness. SLP provide modelling and simulations solutions for pharmaceutical, biotech and consumer goods businesses. Total revenue has increased 4%, with software revenue +21% due to product improvements and opportunities for cross selling, while services revenue has been hit by project delays and drug development program cancellations due to the pandemic. We maintain SLP to be a quality company poised to benefit from the increasing adoption of AI simulation software, which increases time efficiency and savings to R&D costs.

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