Rangers collapsed into administration earlier this year and were kicked out of the Scottish Premier League, leaving them in the Scottish Third Division. The newly reformed club launched a share issue on AIM in December, and small cap stalwart Hargreave – along with FE Alpha Manager Paul Marriage – was a significant investor.
"It’s the 12th-best supported club in Europe, and in the UK, Manchester United are a bigger brand, but there aren’t many other brands that are bigger in the UK," he said.
"The club has said it will only stick one-third of its turnover into player wages and with the merchandising potential, if the club does that, it will be significantly profitable and remain so."
The company was launched onto the AIM index on 19 December 2012, and data from FE Analytics shows that the share price has risen 17.76 per cent already.
Performance of stock since launch
Source: FE Analytics
Hargreave says that one major advantage the stock has is that the company is free from debt, having recently emerged from administration.
It also owns its own stadium and training ground, and is still pulling in fans despite playing in a lower league, meaning that cash-flow remains healthy.
"The cash-flow, profitability and balance sheets – it ticks all the boxes," he said.
Investing in football clubs is often considered to be risky, as financial success is, at least to some extent, dependent on success on the field.
Not only are financial prizes awarded for wining competitions and achieving higher league positions, but the marketing potential of a club is hugely affected by its success on the field.
However, Hargreave thinks that the high likelihood of Rangers swiftly moving up the league system minimises the risk in this area, and means the stock is still undervalued.
The club is sitting 17 points ahead of its nearest challenger in the Scottish Third Division, making promotion this year look extremely likely.
The last home league game drew a crowd of 46,406, meaning that support is still strong despite the lowly league position, and suggesting that revenues – from ticket prices at least – will stand up.
Hargreave has previous experience of indirectly investing in a football club as a director of ENIC Group – the firm that bought Tottenham Hotspur Football Club – but he says Rangers is his first direct foray into the sport.
The five crown-rated Cazenove UK Smaller Companies portfolio, managed by Paul Marriage and John Warren, has also taken a position in the company, although it is not a top-10 holding.
Legal & General and Artemis Investment Management also hold large positions, amounting to 3.07 per cent and 6.58 per cent of the company respectively.
While Cazenove Capital Management holds 3.76 per cent of Rangers, Hargreave Hale is the second-largest shareholder after the company’s chief executive, holding 7.6 per cent of the club, according to figures from Investor Ease.