Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Q2 2022 Earnings Presentation
35 slides from Odyssean Investment Trust's earnings presentation, July 2022
Slide 1: Odyssean Investment Trust PLC Q2 2022 Update
Odyssean Investment Trust PLC Q2 2022 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 I
Slide 3: Executive Summary – Q2 2022
Executive Summary – Q2 2022 NAV decline c.4.5% over the period during a further challenging time for markets • NAV per share fell 4.5%1,2 in the period. NSCI +AIM ex IC index (“Comparator”) fell 12.3% 2,3 • NAV per share growth in the trailing twelve months of 1.4%. Net cash balance averaged 6%. Com
Slide 4: Performance update
Performance update NAV down c.4.5% in Q2 compared with a double digit fall in the market Performance % Annualised Inception Since Q2-22 YTD-22 LTM CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 -4.5% -4.1% +1.4% +25.0% +13.1% +22.0% -3.7% +59.2% +11.8% Share price ret
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 inception 1,2 30 June 2009 – 30 June 2022 CAGR CAGR 900 Over 13.0 years Whilst invested 800 17.0% 18.9% 700 Strategy out of 600 ma
Slide 6: Performance drivers in Q2 2022
Performance drivers in Q2 2022 Key stock contributors Largest positive contributors Largest negative contributors • Confirmed approach from private equity • Limited news flow from company in the period – last houses Epiris and Astorg at 1,461p per update remains expectations in-line for full year, w
Slide 7: Portfolio: High conviction portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ Elementis • Top 10 holdings account for 78% of NAV Euromoney 4.4% • Profits taken from names which have performed Curtis Banks well in tough markets (Chemring) alongside a minor 12.1% NCC sell down of Euromoney following bid approach 17.4%
Slide 8: Portfolio: Focused on core sectors and market cap range
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 4.4% 4.4% 3.8% 12.6% Industrials 17.3% Sub £100m 9.4% 32.3% TMT £100m-£500m Healthcare £500m-£1bn 9.3% Business Services Over £1bn Financial Services 33.1% Net cash 10.5% Other Equity Cash + O
Slide 9: Portfolio has higher proportion of international earnings
Portfolio Portfolio has higher proportion of international earnings than the FTSE Small Cap Revenue exposure of portfolio¹,² Revenue exposure of FTSE Small Cap Index3 (NAV weighted exc. cash) (% sales) 22.4% 17.1% UK UK 34.7% US US 10.6% Europe Other Europe / Other 18.6% 9.5% 62.8% RoW RoW 24.2% • P
Slide 10: 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 Plant footprint optimisation; more higher value add products; invest hect
Slide 11: Key portfolio themes by sub-sector
Key portfolio themes by sub-sector Account for almost 84% of NAV • Market leading positions – significant strategic value Cyclical • Revenue enhancements (new products; digital) and efficiencies driving self help Industrials • Achieving inflation+ price rises (23% NAV) • We believe potential not pri
Slide 12: Special situations across the portfolio
Special situations across the portfolio Material cost Margin Undervalued/ SOTP¹ Geographic Market share Holding synergies for a Other improvement hidden Growth discount arbitrage recovery trade buyer Mineral assets ✓ ✓ ✓ ✓ Sell Chromium Legacy ✓ ✓ ✓ ✓ ✓ perception Consolidating ✓ ✓✓ sector ✓ ✓ ✓ ✓ S
Slide 13: M&A across the portfolio
M&A across the portfolio We continue to see scope for M&A activity to catalyse value in the portfolio • M&A activity across UK public markets has accelerated UK Quoted M&A activity - FTSE250 and below through the year to date 2022 YTD 14 13 • PE remains active with significant ‘dry powder’ and debt
Slide 14: Quest analysis also suggests UK equities are undervalued
Quest® analysis also suggests UK equities are undervalued More recovery potential at the lower end of the market cap range? Aggregate Market Value (Discount)/Premium to Default Quest ® fair value 40% 37% 30% 25% 21% 20% 10% 5% 0% -10% -20% -21% -22% -30% -25% -26% UK Large UK Mid 1 UK Small and Mid
Slide 15: ESG - Portfolio company voting record over Q2 2022
ESG - Portfolio company voting record over Q2 2022 Continued to follow our consistent guidelines and raise our concerns where appropriate Comment Number of meetings 7 Number of resolutions 113 Number voted 113 Voted with management 102 Voted against management 11 Applied standard voting policies – v
Slide 16: ESG performance and disclosure
ESG performance and disclosure Improving trend of performance and disclosure ESG performance and disclosure (out of 100) of portfolio companies 50 45 40 35 30 25 20 15 10 5 0 A B C D E F G H I J K L M N Company First year of analysis Latest year Source: CEN ESG Advisory; Odyssean Capital. As at 30th
Slide 17: Outlook & Data
Outlook & Data
Slide 18: Outlook
Outlook 2022 has been a poor period for equity investing. We expect more volatility over the rest of 2022 Overall market conditions • Market remains volatile with nervousness across many fronts – inflation/stagflation, energy prices, supply chain disruption, interest rates, recession risk, risk of p
Slide 19: UK equities have experienced material de-ratings over the last year
UK equities have experienced material de-ratings over the last year Ratings are assuming very bad future newsflow Forward NTM p/e multiple by FTSE Index1 FTSE AIM premium to FTSE Small Cap Index1 25x OIT IPO OIT IPO 100% 80% 20x 60% 15x 40% 10x 20% 0% 5x -20% 0x -40% May-14 May-07 May-08 May-09 May-
Slide 20: UK Equities appear very attractive vs other global markets
UK Equities appear very attractive vs other global equity markets Only US equities are trading at a premium to Quest® fair value Aggregate Market Value (Discount)/Premium to Default Quest ® fair value 80% 60% 41% 40% 35% 27% 26% 17% 20% 5% 5% 0% -20% -10% -8% -25% -40% World USA Europe ex UK AsiaPac
Slide 21: UK Small Cap at a discount to Quest FV for first time since 2002
UK Small Cap at a discount to Quest® FV for first time since 2002 UK equities pricing in deep, widescale and sustained earnings reductions? Aggregate Market Value Premium / (discount) to Default Quest ® fair value 70% 67% 60% 55% 50% 50% 46% 46% 46% 42% 40% 36% 33% 31% 30% 30% 27% 27% 20% 18% 18% 20
Slide 22: Lessons from the past: The early 1990s
Lessons from the past: The early 1990s The past offers some lessons for market performance, but each cycle is different! Early '90s - Growth outperformed when yields began to • All cycles are different, but today has some similarities to the Kuwait invasion fall early 1990s recession following the i
Slide 23: Quality growth – Have we reached the bottom yet?
Quality growth – Have we reached the bottom yet? Quality growth ratings highly correlated to real interest rates UK 'Quality Growth' basket PE rating vs 10 yr US real yields 33.0 -1.50 31.0 2021 av. PE = 27.6x -1.00 Real yeilds % (inverted scale) 29.0 27.0 -0.50 PE rating 25.0 0.00 23.0 Current PE 2
Slide 24: Portfolio sector exposure overtime
Portfolio sector exposure overtime Industry exposure shifts driven by where we believe there are opportunities 100.0% 4.4% 3.6% 1.6% 4.4% 10.2% 8.6% 10.0% 9.6% 8.9% 1.9% 10.9% 11.9% 12.0% 8.5% 14.0% 0.0% 3.1% 6.3% 21.4% 0.0% 4.0% 2.0% 2.0% 2.0% 9.4% 0.0% 4.4% 3.9% 3.9% 2.4% 4.2% 4.3% 4.6% 9.6% 3.2%
Slide 25: 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 26: 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 27: 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 15 ye
Slide 28: 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 29: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £157m1 Shares in issue 100,585,0531 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 30: OIT shareholder base
OIT shareholder base As at 30th June 20221 Shareholder base by investor type Shareholders >3% Harwood Capital 2.5% 1.0% Cazenove Capital Wealth Manager Brewin Dolphin 9.3% 16.4% Connected Parties Ian Armitage 30.9% Investec Wealth 11.8% Retail Investors 14.1% Raymond James 51.8% Institutions Close B
Slide 31: 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 32: 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 33: 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 34: 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 35: Contact details
Contact details Portfolio Manager Distribution 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 David Harris Tel: 07710 031620 Tel: 020 3008 4910 Email: info@odysseanc
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