Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Q4 2024 Earnings Presentation
45 slides from Odyssean Investment Trust's earnings presentation, January 2025
Slide 1: Odyssean Investment Trust PLC Q4 2024 Update
Odyssean Investment Trust PLC Q4 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 – Q4 2024
Executive Summary – Q4 2024 Disappointing NAV performance despite mainly solid portfolio updates • NAV per share fell 9.7%1,2 in the period. DNSC +AIM ex IC index (“Comparator”) fell 1.6% 2,3 • We are a little bewildered by the absolute and relative performance, which was not reflective of overall n
Slide 4: Performance update
Performance update NAV per share fell 9.7% in Q4, wider market fell 1.6% Performance % Annualised Inception Since Q4-24 CY24 CY23 CY22 CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 -9.7% -0.8% -10.4% +5.5% +25.0% +13.1% +22.0% -3.7% +55.6% +6.9% Share price return3 -
Slide 5: Performance drivers in Q4 2024
Performance drivers in Q4 2024 Key stock contributors Largest positive contributors Largest negative contributors • Full year trading ‘in-line’ with strong H2 and • Disappointing outcome to US litigation – material cash generation provision booked with final outcome still uncertain • Positive outloo
Slide 6: Performance commentary
Performance commentary What have been the major drivers of underperformance of late? What are we doing? • Broad based industrial upswing delayed from Q4 2024 – this has Not panicking, but not being complacent been reflected in share prices and trading updates since • We do not believe the recent und
Slide 7: Summary of our investment strategy / portfolio positioning
Summary of our investment strategy / portfolio positioning Expect break ups/M&A could deliver non-market returns in 2025 Our corporate engagement has stepped up through H2 2024 1. Niche market leaders We typically engage in private, sometimes alongside multiple other institutions 2. UK quoted, but o
Slide 8: 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% 64% 50% 41% 44% 35% 29%26% 29% 30% 25% 25% 17% 19% 15% 9% 13% 10% 8% 0% 0% -5% -25% -16% -28% -25
Slide 9: UK SMID has grown Quest Fair Value similarly to US large cap
UK SMID has grown Quest Fair Value similarly to US large cap However UK SMID Market Value growth has lagged US large cap US LARGE UK SMALL MID £bn £bn CAGR CAGR 70,000 700 12% 60,000 600 50,000 64% Premium 500 9% 40,000 9% 400 27% Discount 5% 30,000 300 20,000 200 10,000 100 0 0 Quest Valuation Mkt
Slide 10: Russell 2000 vs. UK Mid Caps since 2000
Russell 2000 vs. UK Mid Caps since 2000 Historically closely correlated – but not since COVID Russell 2000 vs. UK Mid Caps 2000 to date 35,000 2,500 30,000 2,000 25,000 Russell 2000 1,500 FTSE 250 20,000 15,000 1,000 10,000 500 5,000 0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 20
Slide 11: UK Cap Goods companies trading at material discount to US peers
UK Cap Goods companies trading at material discount to US peers Currently 37% discount on a p/e basis UK Capital Goods p/e (discount)/premium to US Peers 10% 0% -10% -20% -30% -40% -50% Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 We believe that the de-rating
Slide 12: UK & Industrials/Chemicals are top targets for activists in 2025
UK & Industrials/Chemicals are top targets for activists in 2025 Indicative of absolute value, relative value and improvement potential? • UK market most tipped for investor activism vs other European markets • View as indicative of attractiveness of UK plc valuations and ability of shareholders to
Slide 13: Quest has also highlighted significant M&A potential in UK SMID
Quest has also highlighted significant M&A potential in UK SMID 9 out of top 10 OIT portfolio holdings feature in the report Portfolio companies appearing in Quest’s UK M&A targets lists report of 7th January 2025: Source: Canaccord Quest as at 7th January 2025 13
Slide 14: Portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ NCC • Top 10 holdings account for 80% of NAV XP Power 1.7% • No new positions initiated during the period. Elementis Strong share price performance moves ATG into 14.1% Gooch top 10 (new position initiated in year) 18.0% Genus 4.3% 13.4% Ja
Slide 15: Portfolio
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 Industrials 1.7% 1.7% 7.3% Sub £100m TMT 12.1% 9.8% £100m-£500m 15.9% Healthcare & Life Sciences £500m-£1bn 49.3% 25.6% Business Services Over £1bn 23.3% 53.3% Cash + Other Net cash • Industri
Slide 16: 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 17: 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 ✓ ✓ ✓✓ ✓ ✓ ✓ Scarcity value Manufacturing
Slide 18: Portfolio trading significantly below long run averages
Portfolio trading significantly below long run averages Significant value exists in the portfolio on any reversion to long run average valuations NTM EV / Sales - current and LR average 8.0 • Lower margin 7.1 divisions exited 7.0 • Remaining business should 6.0 make high teens 5.1 EBITA margins 5.0
Slide 19: Portfolio Detail - NCC
Portfolio Detail - NCC Leading Cyber Security player trading at significant discount to SOTP value Why do we own it? Valuation opportunity? • Cyber Security business in high growth market – NCC a • Two divisions have vastly differing financial profiles – leading independent global provider clear SOT
Slide 20: Portfolio Detail – XP Power
Portfolio Detail – XP Power Market leader at trough ratings on trough earnings? Why do we own it? Valuation opportunity? • Market leader, protected by IP and deep customer • Trading at near trough ratings at low point in cycle relationships • Current rating c.1.6x EV/sales vs 10Y average of c.2.8x •
Slide 21: Portfolio Detail - Elementis
Portfolio Detail - Elementis SOTP discount with overlooked asset value and self-help potential Why do we own it? Valuation opportunity? • Vertically integrated specialty chemicals company – Talc • Current share price underpinned by asset value of hectorite & Hectorite mineral assets underpin value m
Slide 22: Portfolio Detail – Gooch & Housego
Portfolio Detail – Gooch & Housego Market leader with significant self-help potential trading near trough valuation Why do we own it? Valuation opportunity? • Leading player in growing photonics market, significant • Trough ratings IP protection • Market giving little credit for initial signs of end
Slide 23: Portfolio Detail - Genus
Portfolio Detail - Genus Market leader with significant self-help, trading well below SOTP value Why do we own it? Valuation opportunity? • Global leader in growth markets, significant IP; growing • Recent comparable transactions materially above market recurring royalty revenue price • Material sel
Slide 24: Outlook - update
Outlook - update We remain optimistic for the medium term Overall market conditions • Market sentiment has continued to deteriorate, accelerating post budget • Further tax rises/spending cuts are likely as UK GDP growth is likely to be downgraded • Liquidity remains poor • US election result positiv
Slide 25: Singer Capital Markets’ Turning Point investment tool
Singer Capital Markets’ Turning Point investment tool OIT’s portfolio is heavily weighted to sectors in “early expansion” • We believe we are at or approaching “early expansion” • 74% of OIT’s portfolio is in industrials and TMT – early expansion beneficiaries • We believe that many of these stocks,
Slide 26: Supporting Portfolio & Market Data
Supporting Portfolio & Market Data
Slide 27: UK SMID valuations below long term averages
UK SMID valuations below long term averages US valuations materially above long term averages US 12m Cur US LRA UK SMID 12m Cur UK SMID LRA Quest market to 2.0 1.6 0.7 1.0 book EV/Sales 3.1 2.5 0.9 1.3 EV/EBITDA 14.1 13.2 5.7 9.8 p/e 22.8 20.4 11.5 20.0 FCF yield 3.5 3.9 6.6 4.5 Dividend yield 1.3 1
Slide 28: 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 CAGR CAGR Strategy NAV per share performance since inception1,2,3 Over 15.6 years Whilst invested 30 June 2009 – 31 December 2024 1000 900 13.9% 15.2% Strategy 800 out of
Slide 29: Generic investment types - illustrative
Generic investment types - illustrative Flexible on how we seek to make returns Solid line indicates share price movement. Dashed line indicates potential intrinsic value ‘Self-help’ ‘Fallen Star’ ‘GARP’ • Can a low growth • Even if the prospects are • Relatively light touch underperformer improve d
Slide 30: 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 31: Portfolio sector exposure overtime
Portfolio sector exposure overtime Industry exposure shifts driven by where we believe there are opportunities Sectoral split over time 100% 80% 60% 40% 20% 0% TMT Industrials Healthcare Business Services Consumer Other Equity Net Cash / Other • Focus on our 4 core sectors – Industrials, TMT, Health
Slide 32: Portfolio company voting record over Q4 2024
Portfolio company voting record over Q4 2024 Continued to follow our consistent guidelines and raise our concerns where appropriate Number of meetings 2 Number of resolutions 18 Number voted 18 Voted with management 16 Voted against management 2 Abstained 0 Source: Odyssean Capital LLP 32
Slide 33: 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 34: 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 35: 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 36: 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 37: 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 38: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £203m1 Shares in issue 132,369,2121 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 Managem
Slide 39: Further performance data
Further performance data As at 31st December 2024 Performance % 1 year 3 year 5 year NAV Total Return Per Share1 -0.8% -6.3% +32.5% Share price return2 -2.5% -7.2% +36.3% DNSC + AIM ex IC Total Return2 +5.0% -15.4% +6.6% Source: 1Link Asset Services, Bloomberg, Odyssean Capital; Deutsche Numis Small
Slide 40: OIT shareholder base
OIT shareholder base As at 31st December 2024 Shareholder base by investor type Shareholders >3% Harwood Capital 0.3% 1.4% Cazenove Capital Wealth Manager Close Bros 4.1% Connected Parties 12.8% Ian Armitage 12.0% RBC Brewin Retail Investors 7.2% 35.1% ii Institutions 47.4% 6.9% Hargreaves L 16.4% E
Slide 41: Disclaimer
Disclaimer The sole purpose of this document is to provide information on Odyssean Investment Trust Plc (“OIT” or “the Company”) and its underlying investment strategy. The information contained in this document is strictly confidential and is intended for the named recipient only. The unauthorised
Slide 42: 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 43: 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 44: 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 45: Contact details
Contact details Portfolio Manager Investor Relations Partner Odyssean Capital LLP Cadarn Capital Ltd 6 Stratton Street We Work, Moor Place London 1 Fore St Ave W1J 8LD London EC2Y 9DT www.odysseancapital.com www.cadarncapital.com Stuart Widdowson David Harris Tel: +44 (0)7710 031620 Tel: +44 (0) 20
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