Henderson likes small caps with international exposure

By David Brett

LONDON (Reuters) - UK smaller companies with a strong presence in overseas markets will help drive the next stage of a revival in interest in companies beyond the blue chip spectrum, a fund manager at Henderson Global Investors said.

Neil Hermon, who manages the 210 million pound Henderson Smaller Companies Investment Trust, said companies active internationally looked more attractive than those with a mainly domestic focus.

"Recovery in 2010 will be led by Asia and the U.S., so exposure to those areas is probably a good thing," he said.

He likes Victrex Plc (VCTX.L), a manufacturer of specialised chemicals, which he said will benefit from its international reach and diverse customer base.

"It exports 98 percent ... supplies into broad range of industrial industries and it has got a decent medical implant business going strongly. I think it will do pretty well."

Hermon is also keen on Carillion Plc (CLLN.L), which accounts for around 2.2 percent of the fund, and has operations in Canada, the Middle East and North Africa, as well as Spirent Communications Plc (SPT.L), a telecoms testing company whose network extends to Japan and the United States.

He said the fund had just started a position in Spirent as its growth outlook was improving.

Hermon also recently increased his position in Northgate Plc (NTG.L), a commercial vehicle renter which has operations in mainland Europe as well as the UK, after the company repaired its balance sheet via a rights issue and reported a stabilisation in trading.