There aren’t many people who know more about successfully investing in small companies than Giles Hargreave. Along with Eustace Santa Barbara, the affable co-manager of his flagship Marlborough Special Situations Fund, we agreed to meet to chat about strategy, management and the intricacies of running a £1bn+ fund. The venue was a dazzling Michelin-starred Italian restaurant called Locanda Locatelli in Marylebone.

Apart from contending with a volley of questions from me, there were other matters to attend to. Between courses, Giles - who has a definite fun-loving streak - was on the phone directing Special Sits’ participation in an IPO the next morning of car retailer, Motorpoint.

At 68, Giles has stepped down from the day-to-day running of his investment management firm, Hargreave Hale. He continues as chairman and is hands-on in running £1.7bn across three of the seven Marlborough funds the firm handles. At any time he can tell you the precise details of any of his portfolio holdings, aided by a folded spreadsheet that he carries everywhere: Wherever I go, even at a cocktail party, you’ll find it tucked into my pocket.”

The joint venture with Marlborough - whereby Hargreave Hale manages the funds and Marlborough does everything else - works well. So well, in fact, that since the Special Situations Fund started in 1998, Giles has earned a reputation as one of the top performing smaller company fund managers in the UK.

What comes across more than anything is that Giles and Eustace have a determination for getting under the skin of the companies they invest in. In an area of the market that’s notoriously under-researched, they’ve created an edge by relentlessly meeting and re-meeting management teams and having a keen eye for detail. As for their strategy, they’re looking for fast growth and quality management in businesses that are simple to understand.

With a universe of 2,000 stocks, the £1.049bn Special Situations Fund has an eye-catchingly diversified 204 companies in it. But for anyone concerned about issues of liquidity and capacity, the answer is simple. Eustace believes the fund actually has the capacity to double in size without compromising the strategy or making any major alterations to the stocks it holds… 

Giles, it looks like you’re enjoying the freedom of focusing on managing these funds, is that right?

Giles: Absolutely, the funds is what I do! Over time the funds have got quite a lot bigger…

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