The world’s greatest investors: Giles Hargreave

Giles Hargreave was born in Preston in 1948. He dropped out of Cambridge to become an analyst with securities firm James Capel and would later join Management Agency and Music, managing money for musicians such as Tom Jones.

In 1986 he founded Hargreave Investment Management. He then merged it with Hargreave Hale & Co, a stockbroker owned by relatives, to form Hargreave Hale, which he still chairs. Since 1998 he has run the Marlborough Special Situations, Marlborough UK Micro Cap Growth, and Marlborough UK Nano Cap Growth funds.

What is his strategy?

Hargreave has focused on small- and micro-cap shares because he thinks that this sector has been neglected by most institutional investors. He thinks that the most important thing for small firms is the management, as a company operating in a bad industry can still do well if the management is good enough.

However, he also has a checklist of other factors he takes into consideration, such as the strength of the balance sheet. His strategy is to own small stakes in what he thinks is the best 10% of companies, and then increase his position if he thinks they are successfully carrying out their strategy.

What are his biggest successes?

One of Hargreave’s biggest successes was Advanced Computer Software. He invested in the firm in 2008 with the shares at 18p as he was a big fan of its CEO, Vin Murria. Six years later it was taken over by Vista Partners for 140p a share, a return of 678%, or 41% a year. Hargreave also achieved a return of around 40% a year with Renew Holdings, which he bought in 2011 at an average price of 64p. It now sells for 478p.

What lessons are there for investors?

There are many opportunities in the small-cap sector, so you shouldn’t neglect this segment of the market. But you need to make sure the management is trustworthy and the company’s finances are sound. The idea of letting your winners run but selling your losers might also help reduce your downside risk, though such a strategy also comes with additional trading costs.

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