Company Touch Tracker
This quarter our team engaged with 455 companies across the world, putting our trailing 12-month company touches at 1,707.
In Q1, team members traveled domestically to Massachusetts, Minnesota, Kentucky, Utah, California, and Florida. Internationally, team members traveled to Japan, Sweden, and the United Kingdom and interacted with companies in 32 other countries. We track these interactions and share them on our Company Touch Tracker1.
United Kingdom Recap
Alex Watson, Juliette Douglas, and Phil Naylor, Research Analysts, traveled to the United Kingdom in January. Here are some of Alex’s thoughts on their research trip.
We met with both portfolio and prospective companies-mostly in London and surrounding areas. With Phil leading our Technology team, many meetings had a tech focus. The trip was efficient, and we met with a total of 25 companies over five days.
Where eligible, our portfolios have held an overweight to the United Kingdom for many years. As bottom-up investors, we have found and continue to find many high-quality, growth companies at attractive valuations in this region. The UK has faced headwinds—Brexit, COVID, and energy inflation after the 2022 Ukraine invasion. The UK now has the second-highest energy costs in the G7, after Italy.2,3 Government subsidies helped, but were not fully funded by spending cuts or tax increases, exacerbating inflationary cost pressures for UK-based companies and consumers.
Policy changes from the Labour government, including an increase to the National Insurance Contribution (NIC) and a reduction in AIM4 inheritance tax benefits (effective April 2026), have impacted sentiment. Some AIM-listed companies are even considering moving to the main market, and one company we met with may relocate its headquarters to Ireland. Nearly all the management teams we met expressed their dissatisfaction with the Labour Party, despite the party’s proclamations in support of business growth.
These policies have created an inflationary environment, and many companies are likely to pass along the additional labor costs to their customers. Those companies which cannot pass on the additional costs are likely to find ways to automate or offshore their business functions to avoid the additional expenses. Some UK companies we met with said that because of these UK-specific challenges, they will be prioritizing the non-UK segments of their business.
Despite three consecutive years of negative AIM index returns (2022-24), we believe these policy changes have limited financial impact on the companies we own. Relative to the FTSE 2505 and the Russell 20006 indices, AIM has underperformed by 53.20% and 41.10% respectively since Jan 2021.
Even with these macro headwinds, the UK remains a source of opportunity. The MSCI United Kingdom Small Cap Growth index trailing P/E ratio7 is currently 13.9, well below its 10-year average of 26.4. We continue to find many well-run companies at very reasonable prices.
Acquisitive companies, or “compounders” as we often call them, can take advantage of their group strength to buy businesses that might be challenged on their own. Certain exporters, or businesses with more significant global presence, have also been continuing to deliver on their strategic objectives by taking advantage of stronger demand in other parts of the world. Some businesses are also benefiting from increasing regulatory complexity.
We acknowledge UK small-cap growth space has been a contrarian position. However, shifting sentiment may lead to repatriation of foreign assets from the US. The UK’s relatively neutral trade relationship with the US could also shield it from potential tariff impacts8 – another potential tailwind for our UK overweight.
Over the long term, we believe financial performance matters more than asset flows, and we believe that by owning high quality companies, we could once again be handsomely rewarded, hopefully in the not-too-distant future.
[1] Grandeur Peak Global Advisors – About Us – Global Footprint, https://grandeurpeakglobal.com/global-footprint/
[2]“Cost of Electricity by Country,” 2025, https://worldpopulationreview.com/country-rankings/cost-of-electricity-by-country
[3]“Gas and electricity prices during the ‘energy crisis’ and beyond,” 2025, https://commonslibrary.parliament.uk/research-briefings/cbp-9714/
[4] Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange, composed of smaller, high-growth companies, with more flexible reporting and regulatory requirements.
[5] The Financial Times Stock Exchange 250 (FTSE 250 Index) is an index comprised of mid-cap, blue chip companies, ranked 101 to 350, listed on the London Stock Exchange (LSE).
[6] The Russell 2000 is an index of 2000 US, small-cap companies.
[7] A P/E ratio is the comparison of a stock’s price or current market value to its earnings per share over the last 12 months and can be used as a measure of relative valuation.
[8] “Who will benefit most from a new UK-US trade deal?”, 2025, https://www.the-independent.com/news/uk/politics/trade-deal-us-uk-tariffs-trump-starmer-b2733495.html
