Welcome back to the Funds Fanatic podcast. In his first audio interview this year, Gavin Lumsden speaks to veteran activist investor and North Atlantic Smaller Companies (NAS) fund manager Chris Mills.
In the 33-minute podcast, Mills discusses how he is cautiously reinvesting the investment trust’s £107m cash pile after a series of successes, the biggest of which was the £390m bid for waste processor Augean two years ago.
Mills (pictured below) admits, ‘it’s hard to be optimistic’ with raging inflation and high interest rates while investors worry about a US market crash and the economic problems in the world’s second largest economy, adding, ‘I think people will be surprised at the mess China will turn into over the next 10 years or so.’
However, Mills, who wisely held high cash levels before the 1987 and 2000 crashes, insists he is not sitting on his hands and that he and his team have several deals in the pipeline in the UK and US that should reduce the 15% liquidity pool, although he adds Harwood’s private equity funds are poised to ‘spew’ out £25m of cash from profitable exits.
Although frank about the challenges facing the smaller company sector as individual and institutional investors disinvest from a neglected UK stock market, Mills is adamant that his firm’s active approach of taking big stakes in companies and securing board-level seats is the right way to make money.
‘I hope listeners aren’t discouraged because I’m saying there’s a lot of value out there. People like us are determined to get that value,’ he says.
The 71-year-old also talks about his ambitions for Harwood Capital, the investment boutique he founded in 2011, that has around £2bn under management in public and private equities.
In addition to employing his three sons Nicholas, Charles and Harry, Mills has attracted fund managers Stuart Widdowson (Oddysean OIT), Richard Staveley (Rockwood Strategic RKW) and most recently Alex Illingworth from Artemis, where he co-managed Mid Wynd International (MWY).
