Marwyn Value Investors Share Discussion Threads

[mad foetus] 08/2/2016 14:23

thanks sky, although I think MVI is a little bit different in that it is mainly holding cash at the moment. If nothing else, that highlights how unlikely it is that new closed ended PE funds will be launched in future. Agree though that there is no reason to particularly buy in right now, though the long term record is of course very good.

[skyship] 08/2/2016 09:42

Hi MF. I would suggest that MVI is now more of an incubator fund, a specialist play alongside the likes of fellow private equity funds OAKLEY (OCL) & BP MARSH (BPM). SEC is more of a conventional IT, though admittedly with a very concentrated portfolio of 19 conviction investments.

Over the past 2-3 months NAV discounts have drifted out across the whole PE sector. An analysis of peers shows the current average at 27% versus 21% last November. OCL are at 27%; BPM at 33%. As Jonwig correctly states above, the MVI discount is hardly attractive; indeed against Friday’s stats the discount has shrunk to just 13.7%.

Historically MVI used to trade at a higher discount than the sector as a whole; that was one of the things that attracted me to it in the first place. It always seemed unjust considering their long-term growth performance; but the corporate structure perhaps merited the wider discount. Now, to trade at half the sector discount perhaps flatters management unduly. I would suggest that a 20% discount (183.5p) might be more realistic. The chart suggests support at 187p; but it is a rather long-term and tenuous trendline:


free stock charts from uk.advfn.com

[mad foetus] 05/2/2016 08:56

I don't agree with you about the dividend point, but we've been through that. It is private equity, but is quite different from most private equity plays in that it is very concentrated (only 4 investments - BCA, GLOO, ZEG and the boot maker) and the principals of MVI are heavily involved in each underlying company. Most of the quoted PE companies are much more diverse and "hands off". So really I see MVI as primarily a bet on the ability of Mark Watts and his team to source opportunities and the management teams that can make the most of those opportunities.

Although technically in a different sector and not an entity I know a huge deal about, my feeling is that the closest comparison to MVI would be Strategic Equity Capital.

[jonwig] 05/2/2016 08:56

At the moment, the market is stopping me from pushing the bull case for MVI any further. Discount to NAV of 15% is unlikely to narrow , so the assets will have to appreciate.

[skyship] 05/2/2016 08:36

jonwig

1. Good, we are agreed

2. No - I was not misrepresenting; but my inference was that the Company were doing so - see the discussion in October and my Post Nos 776 & 793

3. Tech stocks - how else would you describe GLOO & ZEGONA. They may well prove to be excellent investments, but they're not for me, as they are impossible to assess - that's all I said

4. Private Equity. MVI is assessed and listed as Private Equity by AIC, Trustnet, LSE - everyone. No argument - that is what it is; and they have a pretty impressive past record

5. Finally, as for LMS - that oil investment was a proposed strategy change last July; dumped in August as shareholders objected. You can read the story here. All turned out exactly as stated in my Post; and many of us did very well out of it in December. IMO the shares now represent good value yet again



I don't think there is anything we can disagree about in the above; so I'll leave it there - little point in further discussion not wholly MVI relevant!

[jonwig] 04/2/2016 19:27

Skyship, taking your points in turn:

1) Ignoring of pre-emptive rights - yes, this was unfortunate. I suspect the subsequent share price weakness has something to do with it, and the only other company which has done anything similar (JZCP, 2015) suffered, too.)

2) The "dividend" was never advertised as such, (RNS 22/09, 06/10). It was a return of capital. One way to play it was to front-run the distribution by buying shares in the market ahead of the event. If you believe the company's aims, that's effective, and probably tax-efficient, too. You only get 4p by misrepresenting it.

3) Tec h stocks investment. This isn't what they are doing. They are creating shells which will target existing, underperforming businesses and spinning them off. The BCA was a classic case here. And Gloo and Zegona are following this pattern. Again, believe it or don't.

Is MVI private equity? I'd say not, though it's hard to classify. And LMS .. it strikes me as an asset realisation play, though I'd want to know what "adopt a strategy of active investment in the energy sector" will involve. And it's not for me.

Unlike yourself, I've always been reluctant to push my own holdings (as stuff happens), but in PE, APAX is a recently-listed fund, and JZCP may now be lifting itself from the floor. Both have dividend yields of around 5%.

[skyship] 04/2/2016 18:03

Jonwig - ???

There are very few publicly quoted Private Equity plays - but MVI & LMS are two of them. I shouldn't have needed to spell that out surely. See the PE thread:



Now:

# can you question anything I've put in my MVI critique?

# has the price here perhaps reflected my earlier concerns, posted some 3 months ago?

# did you share in the profitable run many of we PE followers had from LMS in November/December?

# why do you believe my post to have been emotional? I was stating facts. MVI was my NAP for 2015 on the JDT thread. Made money out of it. Sold out @ c335p; but the events as listed changed my mind about getting back in at lower levels

# would you or anyone else care to answer p49b's question?

Lastly, don't want to row with you as I'm sure we've helped each other plenty of times over the years as we buy many of the same stocks - I recently helped you with the right stats on RECP I see. So I will assume you were just joshing with your last remark.

[mad foetus] 04/2/2016 15:31

I agree with tilts re LXB, but Marwyn still mainly holds cash and the management team at GLOO, which I presume is where the cash will go, is very impressive. MVI has a great track record and Invesco have bought a huge tranche and are one of the better fund managers. I went to the last AGM and Mark Watts said his aim is always to double money every 3 years. If you are patient, I think MVI will do well, but it is a different proposition to LMS or LXB.

[tiltonboy] 04/2/2016 15:21

p49b,

LXB a far better bet.

[jonwig] 04/2/2016 15:17

p49b - I don't know you, but do hope you research LMS in some depth before following skyship's last paragraph. Is the preceding one maybe a bit emotional? It strikes me these two companies have little in common.

skyship - have I ever accused you of ramping? Maybe.

[skyship] 04/2/2016 14:43

YES. A few of us held this one when it was an NAV discount play due to the holding in ETO and to a far lesser extent, BCA.

Two things happened. It sold ETO at what proved from subsequent events to be a great price; but a year ago most of us anticipated a sale on an ETO takeover at a far higher price!

Since then, it has done three things:

# had a share issue ignoring the pre-emptive rights of existing holders
# conned shareholders with a 4p dividend which they verbally dressed up as a 24p dividend
# invested in tech stocks which may well be clever, but impossible to assess

So, what was an asset backed investment in secure hands has transformed itself into a dubiously managed tech play.

Most of us sold out c220p; and I suspect will have to trade a whole lot lower than the current 198p before it becomes an interestingly oversold asset play again.

Get out now....and consider a re-entry into LMS @ 68p ahead of the Finals in early March.

[p49b] 04/2/2016 12:56

Does anyone know the reason for the falling price here.?

[davebowler] 29/1/2016 09:33

Gloo Networks Plc (“Gloo”) announced the appointment of Arnaud du Puyfontaine as Non­Execu�;ve Chairman. Arnaud is
currently Chief Execu�ve of Vivendi, the French media group and a Non­Execu�;ve Director of Schibsted, a Scandinavian
media group.
Arnaud joined Vivendi in November 2013 as Senior Execu�ve Vice President, Media and Content ac�vi �es and was
appointed Chief Execu�ve Officer of Vivendi in June 2014. Vivendi is the owner of Universal Music G roup, the world leader
in music, and Canal+ Group, a European leader in pay TV and European TV and film produc�on.
Previously, Arnaud was employed by the Hearst Corpora�on as Chief Execu�ve Officer Hearst UK. In 2011, he led the
acquisi�on and integra�on of 102 brands from the Lagardère Group, before being appointed Managing Director of
Western Europe in August 2013. Whilst at Hearst Corpora�on Arnaud worked alongside Gloo’s Chief Exe cu�ve Officer
Rebecca Miskin, and successfully managed an iconic media por�olio which included Cosmopolitan, Elle, Good
Housekeeping and Harper's Bazaar.

[davebowler] 18/12/2015 12:27

30 Nov report;
Zegona Communica�ons plc (“Zegona”;) announced the appointment of Richard Williams to the board as an
addi�onal independent non­execu�;ve director. Previously Richard was Investor Rela�ons Director at Virgin
Media, and prior to that, Al�ce. The directors believe that Richard’s experience and rela�onships with large
global equity investors will benefit Zegona.
BCA Marketplace plc (“BCA”) published their interim results for the nine month period to 4 October 2015. The
business con�nued to perform strongly with adjusted EBITDA (pre acquisi�ons) up 14.0% to £47.1m for the
period driven by organic growth in both the UK and Europe. BCA’s buyer finance division is exhibi�ng growth
with vehicle penetra�on increasing to 5.0% of vehicles sold in the UK (from 3.6%). A maiden dividend of 2.0p
will be paid on 18 December 2015.
Gloo Networks Plc (“Gloo”) announced its interim results for the period from incorpora�on on 16 February
2015 to 30 September 2015, with the business incurring a net loss of c. £1m. Gloo has not acquired a trading
business and con�nues to pursue its strategy in seeking to acquire trusted consumer brands in the media sector
that appeal to a�rac�ve socio­economic groups, and to use data and technology to change their business
models to ul�mately unlock value and increase profitability

[mad foetus] 15/12/2015 09:57

thanks dave
although the share price hasn't moved the owner base has massively and Invesco now own close to 40%
I think we are on the cusp of an exciting new chapter - £5 by 2018 imo!

[davebowler] 15/12/2015 09:50

Liberum;
Marwyn Value Investors
Gloo Networks - Vivendi CEO joins as non-exec Chairman

Event
Liberum's Technology & Gaming Team has published the following comment on Gloo Networks. MVI LP (the Master Fund) was the cornerstone investor in the Gloo IPO and holds 34.9% of the equity.

Gloo Networks IPO’d in August at a placing price of 120p and raised £30m as a basis to undertake due diligence on potential large acquisition targets; Gloo’s declared strategy is to acquire and operate consumer brands in the media sector with an EV in the range of £250 million to £1 billion.

The Company is led by digital transformation experts Rebecca Miskin (Chief Executive Officer), formerly Digital Strategy Director and Change Agent at Hearst Magazines UK, and Juan Lopez-Valcarcel (Chief Product and Operations Officer), who was previously Chief Digital Officer for Pearson International.

Today Gloo has announced the appointment of Arnaud de Puyfontaine – the CEO of Vivendi as Non-Executive Chairman – and there are three key takeaways:

1. The appointment of the current CEO of a €26bn mkt cap Group highlights the serious ambitions of Gloo

2. The Chairman’s current company and experience perhaps offers some pointers as to which elements of the media industry Gloo’s ambitions are focused upon (TV, Music, Content etc.). Note that he and the CEO of Gloo also worked together at Hearst

3. The timing of the announcement may suggest that talks with potential targets are advancing

We look forward to seeing how Gloo’s ambitions develop during 2016 and the Company potentially offers a focused vehicle to accelerate the digital transformation of well-known media content providers.

[ceaserxzy] 07/12/2015 20:05

looking at the eto share price one has to applaud the MVI management for exiting eto with perfect timing.

[mad foetus] 24/11/2015 09:01

There seems to be a consensus that this is, at best, unethical practice. It is good to see a director purchasing on the open market, but it is difficult to see what justification there is for compulsorily redeeming shares at NAV one month and then issuing shares at a discount to NAV the following month.

Having attended the AGM earlier this month I also find it a little concerning that this was not mentioned as something the board were considering. Reading between the lines, MVI want to keep the institutional investors onside, particularly Invesco. However, institutions will generally vote in accordance with best practice, particularly the guidelines issued by PIRC, and if MVI's brokers had been a less "spivvy" firm than Liberum I suspect they would have been discouraged from taking this approach. It will be interesting to see how the votes fall at the EGM, as institutions don't generally vote against PIRC recommendations.

[jonwig] 24/11/2015 07:57

Numis critical of Marwyn:



It appears that MVI can ignore pre-emption considerations because they are listed on the specialist fund market, not the main market.

[hpcg] 23/11/2015 15:39

Management appears to have stopped working in the interests of shareholders. I'm glad I am no longer a holder (not that I was for any length of time).

[davebowler] 23/11/2015 15:35

Liberum;
Event
MVI has conditionally placed 22,727,273 shares at 220p per share with institutional investors (raising gross proceeds of £50m). The new shares will represent 28.7% of the enlarged issue share capital of the company.

James Corsellis and Mark Brangstrup Watts, the founders of MVI, have agreed to subscribe for new ordinary shares at an aggregate value of £2 million.

Completion of the placing is subject to a number of conditions, including shareholder approval of the special resolution to be proposed at an EGM on 10 December 2015. Notice of the EGM will be included in a circular which is expected to be posted to shareholders today. A prospectus is also expected to be published today.

[jonwig] 19/11/2015 09:10

"Eligible Investor" - a holder on Liberum's contacts list.

[mad foetus] 19/11/2015 08:53

Thanks Jon - I stand corrected. I'd assumed that because the AGM was in Jersey the company was a Jersey one.

Mind, it doesn't change my key point, which is that the ability to issue shares without offering them to existing holders is something that PIRC want to limit to 10% of the share cap in any year, and instis don't like to vote against PIRC recommendations. Therefore I think MVI may be using an authority which they currently have but which may be increasingly hard to renew.

Not helped of course by the fact that from what I can see, "eligible investor" is not defined in the RNS.

[jonwig] 19/11/2015 08:48

Not this ... ?