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Offshore Investment Brokers Alexander’s top ten holdings currently make up 41.5 per cent of the fund. His belief that buying the new economy of IT, telecoms and media is buying the future is currently the overriding theme of the fund. “If you combine information, telecoms and media, it makes up 64 per cent of the fund. If you add in pharmaceuticals it is up to 71 per cent,” he says. “IT is the way forward. It is a must have. It has been suggested in the US that 60 per cent of US GDP will be conducted via e-commerce in the next decade.” The Henderson fund is more heavily weighted towards the service end of IT. “Indeed, our entire portfolio is very service-based - way over 75 per cent,” Alexander says. He has little faith in stock market indices. His fund is overweight in IT - 41 per cent against a smaller companies index weighting of 7 per cent. “I’m not interested in the composition of indices today. They are backward looking. Some 30 per cent of the All Shares Index is banks,” he says. “A large part of the investment community still doesn’t hold the stocks I hold. London is very pessimistic as an investment community. As a culture we are not entrepreneurial, although I think that is changing.” Offshore Investment Brokers - US Style “I think what I’m trying to get over is that I run the fund on a US-style growth or future-looking basis and leave stocks alone once I’ve bought them. Decide where the profits are going to be and go for it.” It has certainly been a successful formula. In the overall portfolio the book cost is US$15.5 and the market value is US$32. But don’t get the impression that Alexander is blinkered and ignores stocks in areas other than IT. One non-IT company Alexander has backed is Clinton Cards. “I like the fact it has got 20 per cent of the greeting cards market. It is a market leader and we have made money on it. It has gone up three times,” he observes. Alexander also likes the fact that the company has global aspirations. He might also mention leisure centre group Fitness First, which he bought when it had a market capitalisation of £28 million (it is now £330 million). Offshore Investment Brokers & Alexander's Fund Alexander’s fund defines a small company as having a capitalisation of below £600 million. Another reason for Alexander’s success is his ability to get inside the skins of the companies he is investing in. “I try to think of myself as a businessman, as a partner in their businesses. I see them as companies not as stocks,” he says. He rarely visits companies, however. “The asset is intellectual property. You need to understand this business. I’m interested in the corporate culture,” he says. “I think the migration of corporate profitability is going to run away from the manufacturing goods sector. The greatest value added will be at the service end.” Unfortunately, the investing public is yet to be convinced by the smaller companies argument. The fund is currently only US$30.8 million in size and, despite the minimum investment being only US$2,500, many of its investors are high net-worth individuals. Alexander reveals that on occasions he has had to sell stocks because of redemptions. This is undoubtedly because of the volatility that investors see as being intrinsically linked to such investments. Offshore Investment Brokers - Alexander But Alexander is convinced this is the wrong attitude. “Volatility is what you pay for the future,” he says. “People think something lowly priced with a multiple yield is good value but I think this is backward looking. “Look at the composition of the Dow Jones index. Old America is going out and new America - Microsoft etc. - is coming in.” Alexander’s vision of the future is that we will see the retiring of the ‘old world’ through takeover. The small-cap area is becoming increasingly dynamic as each day goes by, he suggests. “There is a culture of emerging growth companies going straight to the stock exchange and bypassing the venture capitalists. “We notice value is being destroyed in the large cap areas faster than anyone thinks and is being created in small caps. In large cap areas people are behind the curve all the time,” he says. 
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