IN FOCUS: RENISHAW ‘ THE STOCK MARKET KEEPS THINKING IT’S ALL OVER’

AC:

The company designs and manufactures high-technology precision measuring and calibration equipment. This aims to enhance efficiency in medical diagnostics, neurosurgery and machine calibration.

It has excellent levels of intellectual property, a founderowner in charge, has grown its distribution network, always takes the long view and has world-beating products.

The company’s orders can come in lumps. Apple might need to equip a new factory, for instance, and need a whole load of Renishaw’s measurement probes. Then it can be quieter again. The stock market thinks it’s all over any time it talks about a worse quarter and overreacts, which is when we buy. Then it gets over-excited on good news.

We have weighting bands of 1pc, 2pc and 3pc, and companies that are doing well can run up another percentage point, so no holding ever exceeds 4pc.

A risk-scoring process drives the decision on the weighting.

Renishaw doubled last year, which has forced us into selling a bit. We’re very happy to buy again if the price comes back down.

JF: JF:

We don’t have the sort of investments that go up 50 times. They tend to be quiet compounders.

Medical software company Craneware, engineer Spirax Sarco and wealth manager Brooks Macdonald are examples of companies that have just got on with it.

We haven’t had any major disasters, but have had disappointments. We owned UK Mail, which faltered because of price competition and, more recently, the AA wasn’t a great investment.

AC: JF:

Yes, and in other Liontrust funds. The same – as a percentage of my funds invested in the stock market, it’s a dominant part.

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