Investment Policy

  • UK small company investments, primarily publicly listed equities <£250m
  • Majority of capital in top 10 holdings, target <£100mcap
  • Rest of capital ‘spring-board’ investments or liquid opportunities
  • Primarily recovery, turnaround and special situations
  • Seeking influential equity stakes and proactive engagement
  • Up to 15% in private companies or instruments

The Company will have an active investing policy predominantly in publicly listed UK equities capitalised under £250m at point of investment. Investments will be sought where the shares are valued at less than the manager’s view of their intrinsic worth. They will primarily be businesses which offer opportunities for value to be un-locked or created through strategic, management or operational changes, typically leading to improved returns, profits and growth. The company will seek investments that can generate a 15% IRR over the medium to long term principally through capital appreciation

The Company intends to invest the majority of its capital in a concentrated portfolio of up to 10 ‘core’ investments years (initial holding weightings 4-15% of NAV). For these holdings the company will seek to acquire influential block stakes (typically between 5% and 25% of their issued share capital) for cash or share consideration and would typically expect a holding period of at least three to five years. This may be in conjunction with other funds run by the manager when additional capital is needed. The remainder of the portfolio will be invested in a focused group of between 15-25 investments. These will meet the investment criteria but are where the opportunity to establish a ‘core’ size investment has not arisen yet, or are more liquid corporate recovery/’special’ situations where the targeted return objectives can be expected but where a large stake is not deemed necessary to influence or generate change.

Significant due diligence will be completed on all ‘core’ investments by the manager and the Company will seek to incorporate the benefits of the networks, experience and insights of both its Board and the members of its Investment Advisory Group to enhance this process. No ‘core’ investment will be made until the above have been consulted.

For maximum flexibility, given the full range of potential future corporate situations ‘core’ investments may result in, the Company may invest in OECD countries (e.g. demerged overseas division or a re-listing elsewhere). The investment policy will not be to seek or target investments in privately held companies, however, in order to ensure maximisation of shareholder value, these will be allowable if a public-to-private transaction occurred. Additionally preferred equity and convertible debt instruments are allowable to enable flexibility of exposure within the capital structure when ‘core’ investments are identified. Non-listed investments are not anticipated to exceed 15% of NAV in the above circumstances.

The Company may put a bank facility in place but will limit borrowing to no more than 20% of gross assets.

a few major opportunities clearly recognisable as such will usually come to one who continuously searches and waits with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favourable using resources available as a result of prudence and patience in the past"

Charlie Munger