MHOR Asset Management's Co-Founder and Fund Manager, Gary Rollo tells The Capital Network's Lelde Smits how he picks small cap stocks and highlights Topbetta Holdings Limited (ASX:TBH), Alliance Aviation Services Limited (ASX:AQZ) and LiveHire Limited (ASX:LVH).
Lelde Smits: Hello, I’m Lelde Smits for The Capital Network and joining me at MHOR Asset Management here in Sydney is its Co-Founder and Fund Manager, Gary Rollo. Gary Rollo’s Co-Founder is James Spenceley.
James is the former CEO of Australia’s fourth largest telco, Vocus Communications, and of course the Co-Founder of MHOR Asset Management. Gary welcome.
Gary Rollo: Hi, it’s great to be here Lelde.
Lelde Smits: Together you focus on small caps stocks. Why have you chosen to focus on this part of the market?
Gary Rollo: Small caps are an under-researched area of the market. The potential to find undervalued companies in this area really exists quite strongly. And, if you’ve got the right investment process you can unlock that value for your investors.
Lelde Smits: Everyone wants to unlock value, what are the three main factors that you look for in small cap stocks before you look under the bonnet?
Gary Rollo: That would be the what, the who, and the how. First of all, the what – there has to be something for us to go for here at MHOR. We are looking for hard dollar value upside in the investments that we make. Then we look at the personalities involved in each of these companies that we get invested it.
Are they suited to the task? Do they have the experience? What is their motivation for coming together to create this value for this company that they are running?
Then of course we look at how, and that is the strategy and the resources available to the company. Have they got the means with which to deliver on this opportunity that creates this valuation regime change that we are looking for when we make investments here at MHOR.
Lelde Smits: Over the last quarter what were MHOR Asset Management’s standout stock performers?
Gary Rollo: The first one would be a company called Topbetta Holdings Limited (ASX:TBH), it is a real disruptor. It’s got the potential to be one of these unicorn-type stocks. An Australian unicorn you might say. It’s a gaming platform that is disrupting some of the large incumbent gaming players here in Australia.
Another one is a classic value play, Alliance Aviation Services Limited (ASX:AQZ) they are a FIFO [Fly In Fly Out] operator. And, we can all see that the commodity price regime for Australia has changed.
This business has created a lot of value through the downturn by restructuring its operations. And, investors really haven’t reflected that in its valuation framework.
And finally, I’ll give you another stock, another tech stock. It’s a company called LiveHire Limited (ASX:LVH). LiveHire is the home of the talent community and that is just a better way for companies to recruit personnel into their business.
It is more efficient and it costs less money. And, they are taking that process global. That is another disruptive technology play here in Australia.
Lelde Smits: Great well Gary Rollo thank you for the update and stock picks for MHOR Asset Management.
Gary Rollo: It’s been my pleasure.