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Tuesday, 31st July 2007

Market Reports

Sat 28 Jul 2007

Entrepreneurial executives are the key to Renaissance success

ROSEMARY GALLAGHER

THIS week we are looking across the Atlantic Ocean with Fund in Focus = to the=20 Renaissance US Growth Investment Trust.

It is actually a UK investment trust investing in privately placed=20 convertible debentures issued by specially selected US companies quoted = on a US=20 stock exchange.They must have a market capitalisation - at the time of=20 investment - of not more than $100 million (=C2=A348m).

Fund manager Russell Cleveland, who is based in Dallas, said: "The = trust has=20 been very successful. Ten years ago it started with $30m. As of 29 June = it was=20 worth around $135m - representing a growth over ten years of 384 per = cent.=20 That's about 16 per cent compound growth each year and it's a track = record we're=20 very proud of."

An insight into Cleveland's management approach can be gained from = his recent=20 book, Finding Midas, which focuses on investing in entrepreneurial chief = executives. As Cleveland states, entrepreneurs are responsible for most = growth=20 in the US, the UK and China.

Cleveland said: "Most large US companies were started by = entrepreneurs. An=20 example is Walmart which was started by Sam Walton. Our whole challenge = is to=20 find new entrepreneurs.

"As a screening tool, we don't invest where the chief executive does = not hold=20 the majority of share options, where there is no clear vision about = market=20 potential, where the company is not currently profitable and where it's = not=20 reasonably priced. With almost all the companies we invest in, we meet = the=20 management first. We will see between five and 20 companies every week." =

He emphasises the importance of Chinese companies in the US economy = and some=20 are featured in the trust.

For example, one of the biggest holdings is China Security and = Surveillance=20 Technologies. And Cleveland has built up a lot of contacts among Chinese = entrepreneurs.

He said: "If there's a Chinese company in the US it will be coming to = Dallas=20 sooner or later."

When it comes to sectors, the trust is well diversified and despite = its=20 location it has moved away from large holdings in oil and gas to find a = range of=20 stocks.

Cleveland said: "I'm very interested in software firm BPO Management, = which=20 does outsourcing for mid-sized companies. Another success is Aura Sounds = which=20 has just gone public. It takes large speaker technology, used at rock = and roll=20 concerts, and miniaturises it - it has received a huge number of = orders."

=E2=80=A2 The Renaissance US Growth Investment Trust is PEP = compatible. For further=20 information visit http://www.rencapital.com/

This article:=20 http://business.scotsman.com/markets.cfm?id=3D1176192007

Last updated: 28-Jul-07 01:00 BST