Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Q1 2023 Earnings Presentation
38 slides from Odyssean Investment Trust's earnings presentation, April 2023
Slide 1: Odyssean Investment Trust PLC Q1 2023 Update
Odyssean Investment Trust PLC Q1 2023 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
Slide 3: Executive Summary – Q1 2023
Executive Summary – Q1 2023 A weak start to 2023, with mixed news (good and bad) across the portfolio • NAV per share fell 6.9%1,2 in the period. NSCI +AIM ex IC index (“Comparator”) fell 0.6% 2,3 • NAV per share performance impacted by stock specific news, with negative news outweighing positive ne
Slide 4: Performance update
Performance update NAV per fell c.7% in Q1, giving back some of the recent performance Performance % Annualised Inception Since Q1-23 CY22 CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 -6.9% +5.5% +25.0% +13.1% +22.0% -3.7% +63.1% +10.5% Share price return3 -5.9% +5.
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 30 June 2009 – 31 March 2023 CAGR CAGR 1000 Over 13.75 years Whilst invested 900 800 16.2% 18.0% Strategy 700 out o
Slide 6: Performance drivers in Q1 2023
Performance drivers in Q1 2023 Key stock contributors Largest positive contributors Largest negative contributors • Disappointing trading updates through the period • Announced completion of strategic review with weak demand from key large US tech customers and intention to break up the group to and
Slide 7: Portfolio takeover activity validates valuation discipline
Portfolio takeover activity validates valuation discipline Average completed day 1 bid premium of c.48%. Typically overseas trade buyers Announced/completed take over offer premia 2019 2020 2021 2022 2023 70% 65% 60% 59% 60% Average premia 50% 52% all bids 50% 48% 48% 39% 40% 40% Average trade acqui
Slide 8: Case Study: Hyve Group PLC
Case Study: Hyve Group PLC Returns accelerated and crystallised due to a bid within four weeks of purchase Hyve share price development • New investment in Hyve in Feb-23 a B2B events Feb-23 Mar-23 business with leading events 120 Stake purchased Stake sold post − Further investment in B2B media sec
Slide 9: NCC – what has happened
NCC – what has happened Difficult trading lead to profit warning in Q1. Considerable value recovery potential? NCC share price (last 10 yrs) • Cost of investment since 2018 £34m. Realised £16m. Unrealised £13m. 400 Historically we have been disciplined in taking profits • We believe that the strateg
Slide 10: Portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ Elementis • Top 10 holdings account for 77% of NAV Ascential • Completed exit of positions in Curtis Banks and 0.4% Devro following bids Xaar 13.1% NCC • Ascential position “left to run” given the break up 22.2% and conglomerate nature of c
Slide 11: Portfolio
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 0.4% 0.4% Sub £100m 9.4% 10.1% 18.1% Industrials 9.5% £100m-£500m TMT £500m-£1bn 51.5% Healthcare Business Services Over £1bn 23.0% 28.4% 49.1% Cash + Other Net cash • Industrials remains the
Slide 12: 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 • Portfolio revenue generation is balanced by Revenue exposure by geography1, 2, 3 geographic area, which we believe spreads political 100% and economic risk 90% ROW • UK exposure fell
Slide 13: 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 14: Key portfolio themes by sub-sector
Key portfolio themes by sub-sector Account for c.88% of NAV • Market leading positions – significant strategic value Industrial products & • Revenue enhancements (new products; digital) and efficiencies driving self help services • Achieving inflation/inflation+ price rises +4 others (30% NAV) • We
Slide 15: We see material medium/long term upside in B2B electronics
We see material medium/long term upside in B2B electronics Prospects not reliant on the UK economy. GDP+ growth potential with high margins Current 15 year range 15 year average Sales growth potential EBITA margin UK as % Holding Trade peers2 EV/Sales1 EV/Sales1 EV/Sales1 through the cycle2 potentia
Slide 16: Special situations across the portfolio
Special situations across the portfolio Lots of ways for companies to create/unlock value Material cost Margin Undervalued/ SOTP¹ Geographic Market share Holding synergies for a Other improvement hidden growth discount arbitrage recovery trade buyer Mineral asset ✓ ✓ ✓ ✓ ✓ backing Break up ✓ ✓✓ ✓✓ ?
Slide 17: Quest analysis suggests UK equities are cheap in absolute terms
Quest® analysis suggests UK equities are cheap in absolute terms Within UK equities, most potential upside from UK Small valuations Aggregate Market Value (Discount)/Premium to Default Quest ® fair value 50% 41% 40% 30% 19% 20% 8% 10% 3% 0% -10% -20% -19% -20% -21% -30% -25% UK Large UK Mid 1 UK Sma
Slide 18: Flows into UK SMID OEICs continue to be very negative
Flows into UK SMID OEICs continue to be very negative LTM outflows of £1.3bn equivalent to 8% of starting AUM £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 ytd -2.5% -0.5 ann -5.0% -7.5% -1.0 -10.0% -1.5
Slide 19: UK All Companies OEICs have experienced high outflows YTD
UK All Companies OEICs have experienced high outflows YTD YTD outflows running at annualised 10% of starting AUM £bn Fund flows for UK All Company OEICs1 7.5 7.5% 5.0 5.0% 2.5 2.5% 0.0 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 -2.5 ytd -2.5% ann -5.0 -5.0% -7.5 -7.5% -10.0 -10
Slide 20: Global equities about fair value. US equities below LT average
Global equities about “fair value”. US equities below LT average UK equities trade at the largest discount to Quest® fair value of major markets Aggregate Market Value (Discount)/Premium to Default Quest ® fair value 80% 62% 60% 39% 40% 27% 25% 19% 16% 20% 1% 3% 0% 0% -20% -19% -40% World USA Europe
Slide 21: 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 22: Supporting Portfolio & Market Data
Supporting Portfolio & Market Data
Slide 23: UK equities have experienced material de-ratings since May-21
UK equities have experienced material de-ratings since May-21 Absolute ratings are undemanding relative to recent history Forward NTM p/e multiple by FTSE Index1 FTSE AIM premium to FTSE Small Cap Index1 25x 100% OIT IPO OIT IPO 80% 20x 60% 15x 40% 10x 20% 0% 5x -20% 0x -40% May-07 May-09 May-11 May
Slide 24: UK Small continues to trade at a rare discount to Quest fair value
UK Small continues to trade at a rare discount to Quest® fair value UK Small trading at a historic wide discount and a wider discount than UK Large Aggregate Market Value Premium / (discount) to Default Quest ® fair value 80% 67% 60% 55% 50% 46% 46% 46% 42% 40% 33% 36% 31% 30% 27% 27% 20% 18% 18% 20
Slide 25: Portfolio sector exposure overtime
Portfolio sector exposure overtime Industry exposure shifts driven by where we believe there are opportunities Sectoral split over time 0% 100% 2% 3% 0% 4% 4% 4% 6% 10% 9% 10% 10% 9% 2% 11% 12% 12% 8% 10% 14% 3% 6% 9% 21% 4% 2% 2% 2% 9% 9% 4% 4% 4% 2% 4% 4% 5% 10% 3% 7% 4% 5% 10% 35% 5% 9% 3% 80% 10
Slide 26: ESG - Portfolio company voting record over Q1 2023
ESG - Portfolio company voting record over Q1 2023 Continued to follow our consistent guidelines and raise our concerns where appropriate Comment Number of meetings 6 Number of resolutions 64 Number voted 64 Voted with management 58 Voted against management 6 Abstained 0 Source: Odyssean Capital 26
Slide 27: ESG performance and disclosure
ESG performance and disclosure Improving trend of performance and disclosure ESG performance and disclosure (out of 100) of portfolio companies 60 50 40 30 20 10 0 A B C D E F G H I J K L M N O P Q R Company First year of analysis Latest year Source: CEN ESG Advisory; Odyssean Capital. As at 31st De
Slide 28: 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 29: 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 30: 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 19 ye
Slide 31: 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 32: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £181m1 Shares in issue 112,945,0531 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 33: OIT shareholder base
OIT shareholder base As at 31st March 20231 Shareholder base by investor type Shareholders >3% Harwood Capital 1.6% 0.8% Cazenove Capital Wealth Manager RBC Brewin 9.0% 15.3% Ian Armitage Connected Parties 28.8% Investec Wealth 13.4% Retail Investors 11.7% Raymond James Institutions JM Finn 53.3% 3.
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: 07710 031620 Tel: 020 3008 4910 Email: info@odysseancapital.
Odyssean Investment Trust — Q1 2023 Earnings Presentation on 6ix