Odyssean Investment Trust PLC · LSE:OIT
Odyssean Investment Trust — Q2 2024 Earnings Presentation
35 slides from Odyssean Investment Trust's earnings presentation, 2024
Slide 1: Odyssean Investment Trust PLC Q2 2024 Update
Odyssean Investment Trust PLC Q2 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 – Q2 2024
Executive Summary – Q2 2024 Pleasing absolute NAV performance in a decent quarter • NAV per share rose 10.4%1,2 in the period. DNSC +AIM ex IC index (“Comparator”) rose 5.0% 2,3 • Key portfolio news: – Hostile approach for XP Power from its largest NASDAQ-quoted peer Advanced Energy (“AEI”) at a c.7
Slide 4: Update post period end
Update post period end • Small placing of £11.4m completed 18th July • Initiated by a large buy order from a new institution, the size of which justified a placing • Shares issued by a placing do not incur stamp duty • Decision made to open a placing for a short period of time, and undertake a WRAP
Slide 5: Performance update
Performance update NAV per share up c.10% in Q2, ahead of the wider market Performance % Annualised Inception Since Q2-24 CY23 CY22 CY21 CY20 CY19 since to Dec-18 inception inception NAV Total Return Per Share1 +10.4% -10.4% +5.5% +25.0% +13.1% +22.0% -3.7% +73.3% +9.3% Share price return3 +12.2% -9
Slide 6: 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 – 30 June 2024 Over 15.0 years Whilst invested 1000 900 800 Strategy 15.2% 16.7% out of 700
Slide 7: Performance drivers in Q2 2024
Performance drivers in Q2 2024 Key stock contributors Largest positive contributors Largest negative contributors • Trading updates inline with expectations, • Smaller weight position outside the top 10 with orderbook giving good visibility on FY24 • Shares fell following unexpected downgrade driven
Slide 8: Portfolio
Portfolio High conviction portfolio Top portfolio holdings¹ NCC • Top 10 holdings account for 80% of NAV – likely to fall as we deploy new capital from the placing Elementis 0.7% • Two new positions initiated during the period – XPPower four to date in 2024 - all currently outside the top 14.2% Xaar
Slide 9: XPP case study
XPP case study EV/Sales multiple positive correlated to organic growth – poised to recover • XPP received an unsolicited approach from US listed peer EV/Sales rating vs organic constant currency Advanced Energy on 21st May at £19.50 sales growth • Also confirmed previous bids of £17.00 and £18.50 on
Slide 10: Portfolio
Portfolio Focused on our core sectors and core market cap range Holding by sector 1 Holding by market cap 1 0.7% 0.7% 1.8% Sub £100m 11.8% 10.9% Industrials £100m-£500m 11.3% TMT 28.6% £500m-£1bn Business Services 53.2% Healthcare Over £1bn 23.9% Cash + Other 57.2% Net cash • Industrials largest exp
Slide 11: 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 12: 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 UK and US market leader in software Escrow services. Leading Medium term separation/sale of Escode; build out Assurance independent cyber securit
Slide 13: 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 Mineral asset
Slide 14: Significant margin opportunity across the portfolio
Significant margin opportunity across the portfolio Announced margin improvement plans support material profit growth • Margin improvement the most common area of ‘self-help’ across the portfolio • Significant margin improvement programs underway across majority of portfolio – driven by management a
Slide 15: 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% 72% 50% 41% 39% 41% 35% 28%26% 27% 25% 25% 17% 19% 16% 19% 7% 8% 10% 3% 0% 0% -25% -16% -22% -22%
Slide 16: Not all flows into UK equity funds have remained negative
Not all flows into UK equity funds have remained negative A lead indicator? Million Vanguard FTSE 250 Tracker – Units in Issue 100 90 80 70 60 50 40 30 20 10 0 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Oct-23 Cumulative net inflows for this tracker of c.£450m since March 2024, w
Slide 17: 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 18: 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 19: Outlook - update
Outlook - update We remain optimistic for the medium term Overall market conditions • Market sentiment seems to be improving – UK a relative “safe haven”? • Moderate outflows continue at a lower rate in UK SMID OEICs, recently mitigated by M&A. Positive passive flows into FTSE 250? • Liquidity is po
Slide 20: Supporting Portfolio & Market Data
Supporting Portfolio & Market Data
Slide 21: 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% 80.0% 60.0% 40.0% 20.0% 0.0% Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 TMT Industrials Healthcare Business Services
Slide 22: Portfolio company voting record over Q2 2024
Portfolio company voting record over Q2 2024 Continued to follow our consistent guidelines and raise our concerns where appropriate Number of meetings 10 Number of resolutions 162 Number voted 162 Voted with management 146 Voted against management 15 Abstained 1 Source: Odyssean Capital 22
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: Odyssean Investment Trust - key company facts
Odyssean Investment Trust - key company facts NAV £210m1 Shares in issue 123,527,053 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 29: Further performance data
Further performance data As at 30th June 2024 Performance % 1 year 3 year 5 year NAV Total Return Per Share1 +10.6% +10.4% +66.8% Share price return2 +11.9% +12.6% +72.8% DNSC + AIM ex IC Total Return2 +10.0% -13.5% +17.6% Source: 1Link Asset Services, Bloomberg, Odyssean Capital; Deutsche Numis Sma
Slide 30: OIT shareholder base
OIT shareholder base As at 30th June 2024 Shareholder base by investor type Shareholders >3% 1.3% Harwood Capital 1.4% 0.3% Cazenove Capital Close Bros Wealth Manager 9.4% 13.7% Ian Armitage Connected Parties RBS Brewin 30.8% Retail Investors 6.9% Raymond James 17.7% Institutions 6.6% Charles Stanle
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 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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