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"The scope for that as I look through the portfolio – I’ve got stocks that could double, but not triple or quadruple," he said.
"Just look at what the market has already done," he added.
Over the last 12 months, the UK mid cap index has returned 42.23 per cent compared with 29.15 per cent from its large cap counterpart, the FTSE 100.
Performance of indices over 1yr
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Source: FE Analytics
Spencer expects this outperformance to slow over the next year, although he says mid caps will continue to experience strong growth.
According to FE Analytics data, the Franklin UK Mid Cap fund has registered top-quartile performance in the IMA UK All Companies sector over one, three, five and 10 years.
It has also consistently beaten the FTSE 250 (ex IT) index.
Since Spencer took over the fund in February 2006, it has made 159.12 per cent, compared with 99.05 per cent from the index and 48.34 per cent from the average IMA UK All Companies fund.
Performance of fund vs sector and index since 2006
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Source: FE Analytics
Spencer says part of his long-term success comes from a square focus on the FTSE 250 index.
The manager took charge of the Franklin UK Smaller Companies fund in June last year, and has built a portfolio with a high weighting to the mid cap part of the market.
"Fifteen per cent of the assets under management in [Franklin UK Smaller Companies] are also owned by me in some shape or form in [Franklin UK Mid Cap]," he said.
"There’s always going to be some crossover, but Franklin UK Mid Cap is focused roughly above the £1bn market cap."
While Spencer says most of his personal money is invested in his mid cap fund, the most recent investment he made was in the smaller companies fund.
The manager often runs his winners to a much larger size, but says he always sells them when they enter the FTSE 100.
"Every time they’ve gone to the FTSE 100, I’ve sold them, but I wouldn’t want to be dogmatic that that happens every time," he said.
"Although every time thus far when one of them has gone into the 100, we’ve sold it."
The manager laments the fact that it looks inevitable the house builder Persimmon, a current holding he rates highly, will enter the UK blue chip index at the next rebalancing, meaning he will probably end up selling it.
Larger underperforming companies are likely to fall out of the larger index into his universe, the manager warns.
"The FTSE 250 swap at the moment doesn’t look good for me," he said.
Spencer expresses concern over the growing size of his fund. At nearly £830m in AUM he says there are some companies he cannot buy in significant enough positions to match his high-conviction style.
"As the fund grows, my investment universe shrinks," he said. "But we will have sufficient wiggle room for a while yet."
The biggest sector weighting in the mid cap fund is housing, which also features heavily in the small cap portfolio.
The largest holding in the portfolio is equipment rental firm Ashtead Group, which Spencer says is a play on his bullish view of the US economy.
He adds that there are many companies in the UK with significant US exposure, particularly in the defence, engineering and media industries.
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.58 per cent.
Charles Stanley Direct’s Rob Morgan says Spencer is an exceptionally good stockpicker and that he likes his mid cap focused fund.
"In the IMA UK All Companies sector, a lot of people might disregard mid cap funds because they have a smaller remit, but it’s an area where certain fund managers, Paul Spencer included, have shown a lot of value in stock selection."
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