Global smaller companies: investing in the time of Covid
World in Motion – Global equities blog

Global smaller companies: investing in the time of Covid

It’s a cliché that human beings quickly adapt to new circumstances, but that has certainly been the case for us as fund managers as we have adapted to this new world. In the past, we had always believed it is vital to conduct face-to-face interviews with managers of the companies we invest in. But following lockdowns imposed in the UK and other countries after the outbreak of Covid-19 earlier this year, companies have been just as (and, in some cases, even more) open to communicating with us at Columbia Threadneedle Investments.

Many corporate executives are working from home too, of course, and simply have more time to talk to us. So far this year we have had virtual meetings with around 150 companies, so it has been a fantastic opportunity to conduct face-to-face, direct research into companies.


While 2020 may have been a particularly dramatic year, it is important to recognise that the global economy is in a constant state of flux with new technologies, political upheavals etc, challenging business models year in year out.

However, our proven investment philosophy and process remains unchanged, with competitive advantage at the heart of our investment philosophy. It gives us the confidence that a company can maintain its market position and has the potential to deliver high returns and stable growth for investors over time. Our approach combines an analysis of company fundamentals, detailed industry research and a competitive advantage framework to identify the highest quality smaller companies from across the globe. When we do witness those economic challenges, these companies tend to be the more resilient.


Our universe provides many opportunities to find these types of companies. One good example is WD-40, founded in California in 1953. It supplies the eponymous line of lubricants, degreasers and rust removal products. But even though WD-40 produces what might be deemed a commodity chemical, its powerful brand enables the company to achieve gross margins of 55% and EBITDA of over 20% (21% in 2019)1.


We have also been finding new companies in which to invest during the lockdown. These include Games Workshop, which sells Warhammer, an incredibly popular tabletop board game with a medieval fantasy theme that simulates battles between armies from different factions. Revenue and profits were already growing strongly prior to the pandemic and sales have further benefited as people stay at home and look for new hobbies to pass the time2. The Nottingham-based group derives three-quarters of its revenue from outside the UK and overseas sales are likely to grow further as the company expands into the US and Asia. We were unable to visit the company during lockdown but met virtually with management – and it’s a company our UK team knows well.


We have a universe of more than four-and-a-half thousand stocks to choose from, but fortunately I can draw on the expertise of Columbia Threadneedle’s regional small cap teams, as well as the broader global research capability, to help source ideas for the global small cap equity strategy. They follow the same investment philosophy, so I am able to leverage their best ideas to create almost a best of the best portfolio of ideas in the global small cap equity strategy.

As an example, we collaborate closely with our colleagues in the United States. We have for instance, recently added Shift4 Payments, a leader in restaurant and hospitality payments, to the portfolio following research conducted by our payments analyst on the other side of the Atlantic.

So, while the coronavirus has had a dramatic impact on everybody’s working lives, the fundamentals of investment management remain unchanged. We are sticking to the investment philosophy and processes that have served our investors well in the past while exploiting the opportunities offered by new ways of working.

8 October 2020
Scott Woods
Scott Woods
Portfolio Manager
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October 2020
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1 WD-40 Annual Report 2019,
2 Trading update and dividend,, 10 September 2020

Important Information

For use by Professional and/or Qualified Investors only (not to be used with or passed on to retail clients). This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414. TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act and relies on Class Order 03/1102 in marketing and providing financial services to Australian wholesale clients as defined in Section 761G of the Corporations Act 2001. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This document has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the ce (Chapter 622), No. 1173058.

In EMEA: Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). For Distributors: This document is intended to provide distributors’ with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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