Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Q1 2024 Earnings Presentation
38 slides from Odyssean Investment Trust's earnings presentation, 2024
Slide 1: Odyssean Investment Trust PLC Q1 2024 Update
Odyssean Investment Trust PLC Q1 2024 Update
Slide 2: Important Information
Important Information • The information contained in this presentation is for the use of Professional and Institutional Investors only • Past performance is not a reliable indicator of future performance and investors may not get back the value of their original investment • The value of Odyssean In
Slide 3: Executive Summary – Q1 2024
Executive Summary – Q1 2024 NAV flat in a down quarter • NAV per share rose 0.1%1,2 in the period. NSCI +AIM ex IC index (“Comparator”) fell 0.8% 2,3 • Key portfolio news: – Ascential announced tender offer and special dividend totalling £750m and a £100m buyback – Dialight announced new CEO – well
Slide 4: Performance update
Performance update NAV per share flat in Q1 despite a decline in the wider market Performance % Annualised Inception Since Q1-24 CY23 CY22 CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 +0.1% -10.4% +5.5% +25.0% +13.1% +22.0% -3.7% +57.0% +7.9% Share price return3 -1.
Slide 5: Our investment strategy has delivered strong long term returns
Our investment strategy has delivered strong long term returns Attractive absolute and relative performance, without any gearing Strategy NAV per share performance since inception1,2,3 CAGR CAGR 30 June 2009 – 31 March 2024 Over 14.8 years Whilst invested 1000 900 800 Strategy 14.8% 16.2% 700 out of
Slide 6: Performance drivers in Q1 2024
Performance drivers in Q1 2024 Key stock contributors Largest positive contributors Largest negative contributors • Downgraded outlook for FY24 on longer than • Full year FY23 performance at upper end of expected de-stocking cycle in industrial and guided range, with outlook noting a positive health
Slide 7: Portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ Elementis • Top 10 holdings account for 83% of NAV NCC • Concentration will fall as cash returned from 2.8% Ascential Ascential 15.5% XPPower • Two new positions initiated during the period – 13.9% both currently outside the top 10 with pot
Slide 8: Case Study – Exited investment: Wilmington ("WIL")
Case Study – Exited investment: Wilmington (“WIL”) Investment delivered 23.5% annualised return in a flat market • WIL is a leading provider of data and training services around WIL and Comparator TSR over life regulation and compliance. An early investment made in 2018 of investment (indexed to 100
Slide 9: Case Study – Current investment: Spire Healthcare
Case Study – Current investment: Spire Healthcare Undervalued self-help driving margins in a strong demand environment • Spire Healthcare is UK’s leading independent provider of healthcare services. Enjoys sector leading quality of care ratings across its network of 50+ clinical locations serving se
Slide 10: Ascential demonstrates persistent miss-pricings in the market
Ascential demonstrates persistent miss-pricings in the market Asset sales have revealed the persistent discount to SOTP value Ascential share price development • In October 2023 Ascential announced sale of its Digital commerce and Product 400 Design divisions for £1.2bn, with View of possible SOTP v
Slide 11: Portfolio: Focused on our core sectors and core market cap range
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 2.8% 2.8% 15.6% Sub £100m 10.5% 17.6% Industrials £100m-£500m 10.7% TMT £500m-£1bn 50.7% Healthcare Business Services Over £1bn 24.1% 25.3% 39.9% Cash + Other Net cash • Industrials remains th
Slide 12: Portfolio trading significantly below long run ratings
Portfolio trading significantly below long run ratings Any return towards recent average ratings suggests significant upside in the portfolio Implied share price upside Current 10 year av. Current 10 year av. on reversion to 10 year av. Company % NAV EV/Sales EV/Sales P/Book P/Book EV/Sales P/Book A
Slide 13: Significant potential upside from reversion to average ratings
Significant potential upside from reversion to average ratings Any return towards recent average ratings suggests significant upside in the portfolio Implied gross NAV/ Share on a re-rating of portfolio 300 276.2 264.9 250 +72% +79% 200 154.4 154.4 150 100 Current Revert to 10 yr average Current Rev
Slide 14: UK Smaller Companies can provide global exposure
UK Smaller Companies can provide global exposure OIT’s portfolio is more international currently than the FTSE 100 Revenue exposure by geography1, 2, 3 • Portfolio revenue generation is balanced by 100% geographic area, which we believe spreads political ROW and economic risk 90% 80% • Few companies
Slide 15: Top 10 holdings summary
Top 10 holdings summary Niche market leaders, often with international operations and self-help Holding Market position Self-help/engagement opportunities Global market leader with high quality industrial talc and high quality $30m cost savings to be delivered by end 2025. $90m incremental hectorite
Slide 16: Special situations across the portfolio
Special situations across the portfolio Lots of ways for companies to create/unlock value Material cost Market share Margin Undervalued/ SOTP¹ Geographic Holding synergies for a growth/ Other improvement hidden growth discount arbitrage trade buyer recovery Mineral asset ✓ ✓ ✓ ✓ ✓ ✓ backing ✓ ✓ ✓✓ ✓
Slide 17: UK equities have de-rated materially since OIT's IPO
UK equities have de-rated materially since OIT’s IPO UK Small companies appear significantly undervalued compared with history Aggregate Market Value (Discount)/Premium to Default Quest ® fair value 75% 50% 42% 41% 39% 41% 35% 27% 22%26% 25% 19% 16% 19% 25% 17% 6% 8% 10% 4% 3% 0% -25% -20% -30% -32%
Slide 18: Outflows from UK SMID OEICs still c.£100m per month
Outflows from UK SMID OEICs still c.£100m per month Mitigated by increased M&A? £bn Fund flows for UK SMID OEICs1 1.5 12.5% 10.0% 1.0 7.5% 5.0% 0.5 2.5% 0.0 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD -2.5% -0.5 -5.0% -7.5% -1.0 -10.0% -1.5 -12.5% Net fund flows £bn Fun
Slide 19: The investment cycle
The investment cycle Looking for signs of improving fundamentals in UK Equities? Market phase Bear Market Bottom Early Stage Mid-Stage Bull Peak of Bull Market Recovery Market General vertical direction (but not horizonal direction) of asset price movements Investment style Balance sheet Value Growt
Slide 20: Outlook - update
Outlook - update We remain optimistic for the medium term Overall market conditions • Market sentiment remains poor (with the exception of the Super 7 Mega Cap US Tech companies) • Moderate outflows continue at a lower rate in UK SMID OEICs, recently mitigated by M&A • Liquidity is poor Opportunitie
Slide 21: Supporting Portfolio & Market Data
Supporting Portfolio & Market Data
Slide 22: M&A continues to demonstrate value in UK market
M&A continues to demonstrate value in UK market Activity continuing at elevated levels Bid activity >£100m equity value - # of deals 20 • M&A activity continues to demonstrate level of value in UK markets – following c.40 bids in 2023, Q1 2024 has 17 started at a similar, elevated rate • Majority of
Slide 23: The threshold to get into the FTSE 250 / be ejected has fallen
The threshold to get into the FTSE 250 / be ejected has fallen Driven by ratings and takeovers of FTSE 250 companies At the time of IPO, the threshold market cap to get into the FTSE 250 was £800m Excluding Wincanton (subject to a bid) the threshold to get in is now £600m However there are at least
Slide 24: Portfolio sector exposure overtime
Portfolio sector exposure overtime Industry exposure shifts driven by where we believe there are opportunities Sectoral split over time 100.0% 1.6% 3.1% 0.4% 0.0% 2.5% 2.8% 4.4% 3.6% 4.4% 6.5% 1.0% 2.2% 10.2% 8.6% 10.0% 9.6% 8.9% 1.9% 10.9% 11.9% 12.0% 8.5% 10.1% 14.0% 3.1% 6.3% 8.6% 11.5% 9.7% 10.5
Slide 25: ESG - Portfolio company voting record over Q1 2024
ESG - Portfolio company voting record over Q1 2024 Continued to follow our consistent guidelines and raise our concerns where appropriate Number of meetings 4 Number of resolutions 61 Number voted 61 Voted with management 56 Voted against management 5 Abstained 0 Source: Odyssean Capital 25
Slide 26: Investment strategy recap – neither growth nor value
Investment strategy recap – neither growth nor value Based on 3 pillars: Valuation, Quality and Engagement, with Sector focus Target Zone Valuation • Invest at a significant discount to owner’s valuation • Look for businesses with multiple drivers of equity value growth (sales; margin; rating; free
Slide 27: Sectors we focus on
Sectors we focus on We focus on four key sectors we know well • We believe the best investment decisions are made from a Odyssean: view of main sectors base of knowledge and experience High Low Sector B2B focus ROCE/cash • We focus on sectors where the team has expertise and where cyclicality expert
Slide 28: Corporate engagement
Corporate engagement Goal to augment returns from stock selection • We use engagement to create, defend or recover value • Operational efficiency • Fixed assets and to deliver differentiated returns • R&D allocation • • IP maximisation Capex allocation Asset • The investment team has more than 23 ye
Slide 29: Spectrum of our engagements
Spectrum of our engagements Level of engagement • Exec • Chairman • Chairman & • Seek Board meetings meeting NED seat or • Proactive • Broker meetings change board voting engagement • Writing members • Other formal letter • Propose shareholder to Board resolutions at discussions • Specific either AG
Slide 30: Portfolio construction
Portfolio construction Our strategy is more similar to Private Equity than other Public Equity funds Typical Long Only Odyssean Strategy Typical Private Equity Number of positions 50-100 Up to 25 10-15 Typical position size 1% 3-8% at cost, max 20% 10% Typical holding period Variable 3-5 years 3-5 y
Slide 31: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £188m1 Shares in issue 121,452,053 Domicile UK Full listing, London Stock Exchange Board Fully independent. Owns c.1% of issued share capital. Will use all fees, post tax, to buy shares Internally managed, small registered UK AIFM. Portfolio Manageme
Slide 32: Further performance data
Further performance data As at 31st March 2024 Performance % 1 year 3 year 5 year NAV Total Return Per Share1 -3.7% +10.9% +60.3% Share price return3 -5.2% +20.5% +56.7% NSCI + AIM ex IC Total Return3 +3.0% -12.7% +14.9% As at 31st March 2024. Performance measured from COB 1/5/18, share performance
Slide 33: OIT shareholder base
OIT shareholder base As at 31st March 20241 Shareholder base by investor type Shareholders >3% Harwood Capital 1.5% 0.3% Cazenove Capital Ian Armitage Wealth Manager 9.6% 13.9% RBC Brewin Connected Parties Close Bros 31.5% 9.0% Retail Investors Raymond James 19.0% Investec Wealth 49.4% 6.3% Institut
Slide 34: Disclaimer
Disclaimer The sole purpose of this document is to provide information on Odyssean Investment Trust Plc (“OIT”) and its underlying investment strategy. The information contained in this document is strictly confidential and is intended for the named recipient only. The unauthorised use, disclosure,
Slide 35: Disclaimer
Disclaimer No representation or warranty, either expressed or implied, is or will be made or given and no responsibility or liability is or will be accepted by Odyssean Capital LLP or by any of their respective directors, officers, employees, members, agents or advisers in relation to the accuracy o
Slide 36: Quest Disclaimer
Quest Disclaimer Appendix: Important Disclosures Quest® is at this stage registered in the UK and in the USA, and common law trademark rights are asserted in other jurisdictions. For the purposes of UK regulation Canaccord Genuity Limited (“CGL”) produces non-independent research which is a marketin
Slide 37: Quest Disclaimer
Quest Disclaimer objectives, and investors should make their own independent decisions regarding any securities or strategies discussed herein. Please contact your salesperson for more information regarding Canaccord Genuity’s research. General Disclaimers See “Required Company-Specific Disclosures”
Slide 38: Contact details
Contact details Portfolio Manager Investor Relations Partner Odyssean Capital LLP Frostrow Capital LLP 6 Stratton Street 25 Southampton Buildings London London W1J 8LD WC2A 1AL www.odysseancapital.com www.frostrow.com Stuart Widdowson Tel: +44 (0)7710 031620 Tel: +44 (0)20 3008 4910 Email: info@odys
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