Seasoned investor Richard Penny (pictured below) says the UK is cheap, particularly further down the market capitalisation scale. The fund manager also believes that financial sector firms have become ‘somewhat de-risked’ following the Conservative Party’s thumping general election victory.

The well-followed manager of TM CRUX UK Special Situations (BG5Q5X2) is also palpably excited about the upside potential on offer at biotech minnow MaxCyte (MXCT:AIM), one of two out-and-out biotech bets in Penny’s carefully-assembled portfolio.


‘We are predominantly a mid and small cap fund,’ Penny informs Shares, ‘and I think the UK is a cheap market. The small stuff is very cheap. But it is also true that the large stuff is cheap’. However, some of these are banks, insurance companies and oil companies, ‘so there is a reason why some are cheap’.

Nevertheless, Penny thinks post the election the financials ‘are somewhat de-risked’ and his £49.1m fund has exposure through the likes of Prudential (PRU), M&G (MNG) and Barclays (BARC).

‘I think there was some sort of binary risk around a “crash-out” Brexit and Jeremy Corbyn on the financials,’ says Penny, who was lured to CRUX Asset Management in 2018 from Legal & General, where he had amassed a loyal following through his stewardship of the award-winning L&G UK Alpha Trust (B28PT70).

Indeed, between May 2005 and December 2017, under Penny’s management, L&G UK Alpha delivered a total return of 319.20% compared with a gain of 161.96% for the average IA UK All Companies sector fund.


The TM CRUX UK Special Situations Fund was launched on 1 October 2018 with the objective of achieving long-term capital growth. In the current UK market, there is ‘quite a lot of yield around’ stresses Penny, whose quest for growth at a reasonable price (GARP) ‘takes me down the cap scale’.

He is finding most of these GARP opportunities below the FTSE 350, ‘so below £600m market cap because I don’t really like paying 25-30 times earnings for a business that has been growing for five or 10 years. You can justify paying higher ratings for things that have got more years of growth ahead of them.’

Penny is currently excited by ‘things like IP Group (IPO)’, where Neil Woodford used to hold sway but has excited the shareholder register after becoming a forced seller. ‘I am buying what I believe is a pretty contrarian life sciences portfolio with some interesting tech and some really interesting green tech,’ continues Penny.

This includes a 20% stake in fuel cell technology company Ceres Power (CWR:AIM), whose shares have rocketed higher after backing from Germany’s Bosch alleviated investors’ funding concerns.

TM Crux UK Special Situations is also in the market for what Penny describes as ‘value with a catalyst’ opportunities, a prime example being the low valuation being ascribed to Standard Life Aberdeen (SLA), ‘a strange beast’ where ‘a lot of the value lies in two Indian-quoted subsidiaries’.


Penny also tells Shares that ‘30% of what I do is in small and micro cap’, an area of the market that is not for widows and orphans. He is currently excited by the upside potential on offer at MaxCyte, one of only two out-and-out biotech stocks in the portfolio, the other being IP Group spin-out Avacta (AVCT:AIM).

Cell-based therapies-to-life sciences counter MaxCyte has ‘made really good progress’ and is ‘trading ahead of expectations’ according to Penny. But the basic thesis on Maxcyte is ‘the company is in there with most of the major companies in gene therapy. It is thought that up to a third of drugs in 2030 or 2040 will come from gene therapy. And MaxCyte is a portfolio play on this area, which is huge.’

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Issue Date: 21 Feb 2020