Britain’s ‘Warren Buffett’ to launch trust to buy small businesses

Mr Ashword-Lord said he and his team had identified some 30 candidates from existing holdings in UK Buffettology and his firm’s other fund, Free Spirit.

The trust would not be a “mirror” of either of those portfolios, he said, because the valuation was more important when buying new stocks and the trust would have to worry less about “liquidity”. The funds must keep holdings in businesses that are easy to sell in case investors demand their money back at once.

However, the trust would be run “in exactly the same way” as UK Buffettology and Free Spirit. “We are one-trick ponies. We only know one way to invest,” he added.

It is expected to cost about 1.1pc a year if the hoped-for £100m is raised in the flotation.

Investors will also be able to cash in their entire holding at close to net asset value after five years. This is to reassure savers who fear such a trust could trade at a discount to Nav  – not uncommon for smaller company funds.

Mr Ashworth-Lord said no new shares would be issued to meet demand once it reached a value of £500m and shares would be allowed to trade at a premium –  a likely outcome if the trust is in demand. 

All the holdings would be British stocks. “It’s a good time for them – Britain, and its smaller companies in particular, have been out of favour so there is value around,” he said. 

“It’s an interesting time and valuations are not demanding in that part of the market. We want a few great businesses that we can buy at sensible prices.”

He said many smaller British firms had been tested by the pandemic and had proved themselves to be resilient. 

“The likes of Focusrite and Games Workshop have been resilient and that tells us that our investment methodology is working. Coronavirus is another filter – it’s a case of if it can come through this, it must be a strong franchise.”

Private investors will be able to take part in the flotation via a number of stockbrokers and investment shops.