Ascribe plc, mentioned here on 9 May 2006 at 34p and a security held by the scribe both for its investment merits and as a hedge against troubled fellow holding iSoft plc, today saw Hargreave Hale Limited take a 4.85% stake at circa 50p.

Is this notable?

Private stockbroker Hargreave Hale is 35% owned by Investec, the specialist South African banking group. But there is no obvious connection between Investec’s corporate clients and a medical software maker like Ascribe. The significance of this purchase, besides putting Ascribe plc more firmly in the investing public’s eye once the likes of report the purchase, probably lies elsewhere.

Hargreave Hale is also investment manager to four UK unit trusts, the relevant one in this case being Marlborough UK Micro Cap Fund. The manager of the fund is Giles Hargreave; and software is by far his favourite sector amongst micros. Nothing especially unusual there.

However, the timing is surprisingly confident: Ascribe reports interim results on 21 March and buying ahead of results is not always a terrific strategy. Additionally, the magnitude of the holding is striking (at least on the face of it): Hargreave Hale now own 4.85% on top of the 5.89% Marlborough Fund Managers Limited already holds in its own name. Together theirs is the third largest shareholding.

According to the blurbs Marlborough make available, the Hargreave style is aggressive, detailed and usually involves company visits. And so it appears he and the team left Ascribe HQ on their last visit feeling comfortable enough to double-dip (although this is not the only possibility).

Small caps frequently explode - either upwards or downwards – in a way larger firms rarely do. Get the research right and the rewards are generous. And vice-versa. Readers may want to take a look and decide if this might be one of those situations.

Usual disclaimers.


Update @ 9 March: Next day gain, net of spread, +15.6%. ASP mid-price at close = 59.5p

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