Paid to Wait

2022 is shaping up to be another strong year (9m NAV to 30 Sept TR +14%) unapologetically beating expectations, the political and macroeconomic weather and follows 2021s exceptional performance (NAV TR +35.8%). CTPEs 2022 share price decline & de-rating is consistent with the UKs mid-cap index. CTPEs share price has fallen 13.5%, its discount has widened by 25%pts to c40% and a look-through Portfolio valuation of 8.5x EV/EBITDA (10.8x, Dec 2022). For comparison, the UK mid cap index had declined

CT Private Equity

CTPE’s differentiated strategy continues to deliver strong results…

Final Results - Powering ahead, 35.8% NAV TR

In FY21, BPET delivered an exceptionally strong result (35.8% TR) on the back of an on-going COVID recovery and high levels of exit activity. The fund’s 10 year NAV TR is 14.1%pa. At 12.2x EV/EBITDA, the portfolio’s valuation multiple have expanded but are undemanding and unlikely to be under-pressure in the current market environment. Trading on a c25% discount to the December NAV (640.3p) versus a 3 year average of 15%, BPET is undervalued relative to its history and the wider sector (current

Don’t fear the reaper

With market direction hard to call, we consider the case for taking a long- term view in the investment trust sector...

Don't fear the reaper

Investors are increasingly unsure about what to do with their money, at least according to those we speak to. The reflationary rally seems to be over, and since the summer the market has gyrated between value and growth, pandemic optimism and pessimism, clean energy and fossil fuels, et cetera, et cetera… While the general consensus is now that inflation will remain high for a considerable period of time, it is unclear yet whether this is a bullish or bearish scenario. Unfortunately, an investm

BMO Private Equity - Overview

BMO Private Equity (BPET) trust has had a very strong period of performance so far over 2021, which builds on what turned out to be a stellar 2020 NAV return. That said, the latest NAV includes a 30 June valuation for only 23% of the portfolio, with the rest valued prior to this. Given the strength of the market, this suggests that there is potentially ‘juice left in the tank’. Due to buoyant valuations, it is no surprise to see BPET’s underlying managers capitalise: the value of realisations f

Even better than the real thing

Private equity investing has been around for many decades. However private equity is making the headlines like never before. The recent bidding war for Wm Morrisons is a case in point although, over the last decade or so, private equity has been steadily increasing as a share of global M&A transactions as the graph below shows.

Interim results - activity levels to remain elevated

Returning 15.4% over the 6 months to 30 June, BPET’s NAV TR was strong and its share price TR (+39.1%) was even stronger. The board declared a quarterly dividend of 4.7p (up 9.6%). Encouraging, the NAV return was driven largely by earnings growth and exit activity not multiple expansion. In our opinion, the pandemic has demonstrated the robustness of BPET’s portfolio. Discussions with management highlight a strong pipeline of opportunities (exits and investments) and an expectation for activity

A portfolio of niches

BMO Private Equity Trust (“BPET”) offers investors access to a diversified global (with a UK bias) hybrid private equity portfolio that is oriented to the lower mid-market. BPET offers a differentiated set of exposures to its peers and the wider sector. The fund has delivered strong long term ROEs (averaging c10%-12%pa), in line or better than the peer group and an excellent FY2020 +22.6%. Our expectation is for the fund to continue to deliver 10-12% (prefx) ROEs. In 2020 following the Covid cor

BMO Private Equity - Overview

BMO Private Equity Trust (BPET) offers investors a distinctive approach to accessing private equity, in that it invests with managers at a relatively early stage in their development. BPET’s manager believes this means being exposed to more motivated teams and to lower mid-market deals where BMO are more likely to be offered co-investment opportunities. The team aim to manage risks by deliberately diversifying across a wide range of underlying companies, funds and managers. Private equity has d

BMO Private Equity - Overview

BMO Private Equity Trust (BPET) offers investors a distinctive approach as a private equity fund of funds. Listed private equity trust NAVs have considerably outperformed the FTSE All Share and the Numis Smaller Companies Index over the past five and ten years. BPET aims to provide access to private equity’s strong returns, whilst also managing the risks by deliberately diversifying. Consequently BPET has c. 100 investments, in funds and co-investments, that are managed by around 50 underlying m

Uncertain outlook comes as no surprise

We take a positive view of Legal & General’s FY 22 results. Despite the tough environment, the Group managed to outperform expectations – something which was hardly a given for such a large asset manager. With L&G being widely exposed to the UK economy, it might be a call one does not want to make but the firm’s business remains one of spreads – as long as a default does not occur. We remain positive but concede that L&G embeds more risk than we had assumed.

Ambitious winds of change

M&G’s FY 22 results were strong. It was also the opportunity for new CEO Andrea Rossi to depict clearly his strategy for the upcoming months. While the impetus is clear and the objectives are ambitious, we rather believe in a structural improvement of the business (driven by the higher rates environment) than a commercial one.

Sentiment is changing

Interims show continued progress, as Made Tech has built on its FY22 break-out performance (sales: +120%) by growing sales a further 75% in 1H23. An exceptional feat, achieved through a strong b/f backlog (+133% y/y) and excellent sales execution in 1H23. This second point is pertinent, as it highlights how (notwithstanding macro headwinds) Made Tech has been able to land nine new customers in H1 (and more in Q3) such achieving >£60m bookings YTD. This achievement materially de-risks FY23&24 exp

Hybridan Small Cap Feast - 06 Mar 23

6 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objective

TVL highlighted as strategic component of the UK’s critical minerals sector

Alkemy and its 100%-owned subsidiary Tees Valley Lithium (TVL) report that TVL’s planned lithium hydroxide refining facility at the Teesside Freeport, UK has been featured extensively in a new paper entitled “Midstream Processing and Refining: Unlocking Security of Supply”. The paper was published by the Critical Minerals Association United Kingdom (CMA UK) which aims to support the development of critical mineral supply chains in the UK.

Hybridan Small Cap Feast - 09 Mar 23

9 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objective

Hybridan Small Cap Feast - 14 Mar 23

14 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

LIBERUM: Harworth* - Resilient performance in a rapidly changing property market

PCI Pal - 1H sees accelerating revenue growth as TACV builds

The interims confirm acceleration in the already rapid revenue growth (+29% yoy in 1Q and now +33% yoy across 1H23), keeping the LBITDA in line with last year despite increased investment in product development and sales and marketing to seize new market opportunities (notably in Canada and Australia). PCIP remains on track for FY forecasts, which remain unchanged. Investment in the channel sales strategy is paying off with continued strong new customer sales; a record number of new contracts we

Oakley Capital Investments Ltd (OCI): 2022: NAV returns driven by EBITDA growth

The January trading statement announced NAV (662p per share), total NAV return (24%), NAV growth driven by EBITDA growth (65%), modest multiple expansion (35%), investments (£271m), realisations (£244m), available finance, including cash (£210m), and commitments (£929m). The detailed results announcement highlighted i) 2022 exits, on average, 70% above carrying value, ii) 22% investee company average earnings growth, iii) weighted average EV/EBITDA of 15.9x, below listed market levels, iii) a PE

H&T (initiation of coverage): Pawnbroking royalty, with strong, profitable growth

Founded in 1897, H&T is the UK’s leading pawnbroker, with 269 stores, and it has gained a strong pawnbroking market share in recent years. While it is growing ancillary gold buying and forex products, its core is pawnbroking and related retail services. As other small-sum, short-term lenders have withdrawn, H&T’s well-capitalised, low-risk proposition has unique growth opportunities, with the pledge book up over 50% in 2022. The lessening of legitimate competition at a time of heightened demand

FLASH: Pre-close update indicates a beat to our forecasts

LIBERUM: CLS Holdings* - Values down but performance significantly ahead of expectations

Foxtons Group - New CEO targets recurring income streams

Foxtons’ new CEO has identified historical failings that are expected to be addressed by upgrades to data infrastructure, investment in staff and a reinvigoration of the Foxtons brand. If successful, over the medium term Foxtons expects margins to expand 500bp and hopes that operating profit will more than double. Importantly, it aims to increase the proportion of recurring income from c 65% currently, thereby reducing cyclical income and increasing the quality of income. We have raised our FY23

HgCapital Trust - Improving its commitment coverage ratio

HgCapital Trust (HGT) posted a 5.4% NAV total return (TR) in FY22, mostly assisted by continued good earnings momentum (revenue and EBITDA across the top 20 holdings increased in 2022 by 30% and 25%, respectively) and the average 28% uplift to end-2021 carrying value achieved on exits. This was only partly offset by lower multiples and higher net debt across HGT’s portfolio (with net debt to last 12-month EBITDA for the top 20 holdings at 8.0x at end-2022). HGT’s recent balance sheet measures st