Looking Beyond the AI Boom

The Fund has not kept pace with the AI-driven excitement of large-cap indices but we are pleased to report that the underlying growth of our investee companies has been impressive and in recent weeks share prices in our holdings have begun to pick up momentum, beginning to reflect the progress seen across our holdings in 2026, but still with plenty of upside on offer from here.

As a reminder to readers, with Human Capital we are focusing on mid cap businesses across the globe, offering high compounding growth through three primary themes:
-    Outstanding leadership
-    Decentralised structures, empowering action and an entrepreneurial culture
-    Acquisitive businesses

In a narrow and tech-focused market, such businesses have not been in vogue, but this has not stopped the companies we invest in from making progress and we see excellent value on offer here. Reflecting this, we were buyers throughout the quarter, adding one new name to the portfolio and adding across our core positions.

Investing Alongside Exceptional Entrepreneurs

Our new investment is in Tasmea, the Australian-listed provider of specialised services to the Mining, Resources and Industrial sectors. Tasmea was founded by Stephen Young in 1999, and he remains the CEO and majority shareholder. We met with Stephen in June at our offices and he exudes energy for his business and, having recently announced their largest acquisition to date, his drive to grow the company is as strong as ever. Tasmea has a strong record of buying service businesses on low multiples and, most importantly, integrating them into their model effectively and without compromising growth.

We spent a busy two days in the Nordics, meeting the management teams of all our holdings in the region, as well as some of the private family offices that have meaningful ownership positions in these companies. It was a fascinating trip that really deepened our knowledge of businesses such as Lifco, AddTech and Röko and the outstanding people driving performance. 

Portfolio Refinement and Capital Allocation

Of note are our three Japanese holdings, Hikari Tsushin, Noritsu Koki and Next Generation Technology Group which we have been steadily adding to. Japan is a particularly attractive market in which to be acquiring small, high-tech businesses at present. Japan has an ageing population of business owners that founded their companies during the 1980s boom years. These entrepreneurs are now at (or past) retirement age and are looking for long-term homes for their legacies. Such owners are happy to accept remarkably low multiples for their companies in return for the longevity and respect that, for example, Noritsu Koki offer. We met with the management teams of Hikari and Noritsu during the spring and were suitably impressed.

We sold two of our Nordic investments, AddNode and Indutrade, both of which we felt were not performing at as high a level as they had in the past. Both remain strong businesses but competition for a place in Human Capital is high and we saw better opportunities elsewhere.
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note that the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.