Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Investor Presentation (July 2023)
40 slides from Odyssean Investment Trust's investor presentation, July 2023
Slide 1: Odyssean Investment Trust PLC Q2 2023 Update
Odyssean Investment Trust PLC Q2 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 In
Slide 3: Executive Summary – Q2 2023
Executive Summary – Q2 2023 NAV declines in a weak market • NAV per share fell 3.9%1,2 in the period. NSCI +AIM ex IC index (“Comparator”) fell 1.6% 2,3 Performance impacted by mixed portfolio news and ongoing weak sentiment towards UK equities • Key portfolio news: James Fisher completed refinancin
Slide 4: Performance update
Performance update NAV per fell c.3.9% in Q2 in a weak market Performance % Annualised Inception Since Q2-23 YTD-23 CY22 CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 -3.9% -10.5% +5.5% +25.0% +13.1% +22.0% -3.7% +56.8% +9.1% Share price return3 -4.9% -10.5% +5.0% +2
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 – 30 June 2023 CAGR CAGR 1000 Over 14.0 years Whilst invested 900 800 Strategy 15.6% 17.2% 700 out of
Slide 6: Performance drivers in Q2 2023
Performance drivers in Q2 2023 Key stock contributors Largest positive contributors Largest negative contributors • Q1 trading update flagged ‘resilient’ performance • In-line interims showing good revenue with pricing and mix offsetting some volume growth and a strong orderbook supporting weakness.
Slide 7: Portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ Elementis • Top 10 holdings account for 81% of NAV Ascential • Quieter period for new positions and exits – single, 1.0% smaller position in Medica exited during the period NCC 12.2% Xaar • Material further investment made into NCC 18.4% fo
Slide 8: Portfolio
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 1.0% 1.0% 1.3% Sub £100m 9.6% 10.8% Industrials £100m-£500m 11.5% TMT 34.3% £500m-£1bn 48.1% Business Services Healthcare Over £1bn 28.6% 53.7% Cash + Other Net cash • Industrials remains the
Slide 9: 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 • Few companies wit
Slide 10: Top 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 c.98% of NAV • Market share recovery following improved supply chain and new product introductions • Low capital intensity and well invested -> growth not capex hungry Specialist B2B • Products enable substantial energy cost savings Electronics (31% NAV
Slide 12: 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 13: US equities peaked at >100% premium to Quest during 2021
US equities peaked at >100% premium to Quest during 2021 UK equities trade at the largest discount to Quest® fair value of major markets Aggregate Market Value (Discount)/Premium to Default Quest® fair value 75% 71% 50% 39% 41% 23% 27% 25% 19% 25% 16% 3% 3% 0% -4% -25% -23% -25% -34% -50% World USA
Slide 14: 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 15: Potential upside even if partial/full reversion to mean ratings
Potential upside even if partial/full reversion to mean ratings Top 10 holdings – weighted mean analysis. Current sales growth + FCF = 13% Annualised potential upside from re-rating alone – reversion to 10-year mean EV/Sales 3 year 5 year 25% 25% 20% 20% 15% 15% 23% 10% 10% 18% 13% 13% 5% 5% 11% 7%
Slide 16: Flows into UK SMID OEICs continue to be very negative
Flows into UK SMID OEICs continue to be very negative £1.9bn outflows since end 2021 £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 -12.5% Net flow (£bn) % o
Slide 17: UK All Companies OEICs have experienced high outflows YTD
UK All Companies OEICs have experienced high outflows YTD YTD outflows running at annualised c.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 -
Slide 18: Case Study: James Fisher and Sons PLC
Case Study: James Fisher and Sons PLC (“FSJ”) In-house trader supported building stake at recent lows from forced sellers FSJ share price development • FSJ is a provider of a range of specialist marine services supporting the offshore renewables and energy industries. 450 12.0 Investment thesis unde
Slide 19: Case Study: Gooch & Housego
Case Study: Gooch & Housego (“GHH”) A “fallen star” with significant self-help potential GHH share price development • GHH is a global leader in the manufacture of niche optics and photonics products sold into industrial, life science 12.0 and A&D end markets 1,600 • Shares had fallen c.70% from pea
Slide 20: 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 21: Supporting Portfolio & Market Data
Supporting Portfolio & Market Data
Slide 22: Outlook - update
Outlook - update We remain optimistic for the medium term Overall market conditions • Market sentiment is poor (with the exception of the Super 7 Mega Cap US Tech companies) • Outflows continue in UK SMID OEICs • Liquidity is poor Opportunities & reasons to be positive • Quest® indicates that UK equ
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 OIT IPO 100% OIT IPO 80% 20x 60% 15x 40% 10x 20% 0% 5x -20% 0x -40% Mid 250 Small Cap AIM Al
Slide 24: UK pension allocations to UK equities have been slashed
UK pension allocations to UK equities have been slashed In real terms, allocations have fallen from £589bn to £189bn 1997-2021 UK pension fund asset allocations UK pension fund real terms asset £bn exposures 100% 3,000 90% 2,500 80% 70% 2,000 60% 50% 1,500 40% 1,000 30% 20% 500 10% 0% 0 1997 2001 20
Slide 25: UK Pensions and Insurance have almost exited UK equities
UK Pensions and Insurance have almost exited UK equities Combined holdings decline from 52% to 4% of UK market since 1990 Share of UK stock markets owned by UK pensions and insurance 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1990 2000 2010 2020 UK Pensions UK Insurance Other Source: New Financial
Slide 26: Portfolio sector exposure overtime
Portfolio sector exposure overtime Industry exposure shifts driven by where we believe there are opportunities Sectoral split over time 0.4% 1.0% 100.0% 1.6% 3.1% 0.0% 0.0% 4.4% 3.6% 4.4% 6.5% 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% 0.0% 0.0% 2.0% 9.4%
Slide 27: ESG - Portfolio company voting record over Q2 2023
ESG - Portfolio company voting record over Q2 2023 Continued to follow our consistent guidelines and raise our concerns where appropriate Comment Number of meetings 10 Number of resolutions 180 Number voted 180 Voted with management 161 Voted against management 16 Abstained 3 Source: Odyssean Capita
Slide 28: ESG performance and disclosure
ESG performance and disclosure Improving trend of performance and disclosure ESG performance and disclosure (out of 100) of portfolio companies 70 60 50 40 30 20 10 0 A B C D E F G H I J K L M N O P Q Company First year of analysis Latest year Source: CEN ESG Advisory; Odyssean Capital. As at 30th J
Slide 29: 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 30: 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 31: 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 32: 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 33: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £176m1 Shares in issue 114,327,053 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 34: Further performance data
Further performance data As at 30th June 2023 Performance % 1 year 3 year 5 year NAV Total Return Per Share1 -1.5% +51.5% +56.6% Share price return3 -1.9% +61.7% +47.9% NSCI + AIM ex IC Total Return3 -2.8% +19.9% -0.7% As at 30th June 2023. Performance measured from COB 1/5/18, share performance sin
Slide 35: OIT shareholder base
OIT shareholder base As at 30th June 20231 Shareholder base by investor type Shareholders >3% Harwood Capital 1.5% 0.9% Cazenove Capital Wealth Manager RBC Brewin 9.2% 15.6% Ian Armitage Connected Parties 28.5% Investec Wealth 15.6% Retail Investors 11.2% Raymond James 50.9% Institutions JM Finn 3.6
Slide 36: 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 37: 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 38: 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 39: 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 40: 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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