|A good read, thanks - exactly as we thought. I particularly noted the reference to solicitors:
"'It is disappointing that [trust chairman Richard] Hills has declined or ignored on more than one occasion an invitation to discuss with us, or our solicitors, a way forward for SEC which would enable shareholders to decide which fund manager they would wish to look after their money by splitting the trust into two new entities pro rata to shareholder election.'"|
|Completely agree that an amicable solution is needed - likewise that the major shareholders ought to be able to hold sway. The surprise is that the RNS implies the opposite. Benefits no one if it ends up in litigation, though the falling out clearly happened before SW quit.|
|I think I'm going to drop the board a line asking that an amicable solution be found. Most investors want SW to continue managing the fund. He obviously wants to get back to work as soon as possible. What I would like to know is what role Lord R is playing and whether SW was a key person who, if he left, would give SEC the right to terminate GVQs appointment. Given the quality of the board I would be surprised if that was not the case.|
|The 18 month ban only holds good if GVQ enforces it. Harwood could take over management if the major shareholders decide they want to keep Stuart's expertise. Money always talks!|
|I'm not even sure what that RNS means - seems to be saying that nothing can be allowed to happen for 18 months, due to his association with Harwood & employment contract? Seemed a bad split before, but seems even worse now.
Presumably the major shareholders will put pressure on the Board as a result.|
|Well, interesting RNS. As I suggested before, SW is likely to want meaningful stakes in some of SECs underlying investments. It is no surprise Harwood are talking to SECs shareholders.I personally think that SEC now needs to be wound up, and part of the winding up process could involve a sale of assets to Harwood new fund at close to NAV. If it wasn't for the fact that Lord Rothschild owns GVQ then I am sure this would be under discussion. As far as I see it, there is little reason to stick with the current manager.|
Before the 10 bag top: 30 White 6 Black 5:1
After the top: 29 White 50 Black 0.58:1
That's a change in ratio by a factor of ten - so yeah I reckon someone's been getting out - interesting to see if there's meaningful bite at the neckline|
|No issues with the NAV RNS, but wouldn't mind seeing a "Holdings in..", or perhaps some block trades go through.|
|don't know about 'hand of god" but Ian armitage, widdowsons ex boss at Hg capital, was a steady acquirer of SEC shares at sametime as he ran down his very sizeabe holding in HG. I think he owns circ
a 5% of SEC. He is now ba king widdowsons new venture somake sense if he sells downhis SEC stake to fund widdowson.|
|Yes, though GVQ do have a decent track record with their other fund and Lord Rothschild can presumably afford to buy in experience. I think they are going to have to look strongly at discount control here, 20% discount feels about right, though if the underlying investments perform, and they should, that will be of secondary importance.My feeling is that SW is going to raise 200m for his new fund and will want to take a big slug of some of the companies in the SEC portfolio. But they are too illiquid for that to be easily achievable. It's a right mess!|
|Indeed - mainly the last point re the overhang.
"Our new Lead Manager, Jeff Harris, is well acquainted with all the investments
held in our portfolio and has earned his position through his major
contribution to the Company over a period of several years. We are confident
that Jeff will enable the Company to continue delivering strong performance,
which should be reflected in a narrowing of the discount in due course."
They've talked him up several times but "..A period of several years" does not a star manager make.
And however you look at it, the team's just halved, even if you assume SW & JH were equal in their contributions.
Once again, a reminder how green he is:
"Assistant Manager: Jeff Harris Jeff joined GVQ Investment Management in 2012 as an Analyst. He was appointed Assistant Fund Manager of both Strategic Equity Capital and the GVQ UK Focus Fund in May 2014. Prior to joining he worked at PricewaterhouseCoopers within the Transaction Services Team on a number of private equity and corporate transactions. Jeff holds the ACA qualification. Jeff owns 17,163 shares in Strategic Equity Capital1. "|
|Half year report not proofed before publication, which is shoddy, but looks like GVQ are remaining as managers. Interesting to see how they control the discount and deal with major shareholders wanting out.|
|Make sense it may do; happen it hasn't.
Also get the impression SW wants to go much smaller, which is possibly outside of his mandate with SEC.
Hard not to get the impression that he's left under a cloud - the RNS didn't even mention his new venture.
I agree that many SEC holders will want to follow him - hence I think it's going a lot lower, perhaps to c.25% discount, which wouldn't be unreasonable for the reasons mentioned in posts above.
If I were SEC board, I'd be looking to move to a new - but well-respected - manager ASAP. Feels like bridges have been burned with SW, and isn't as if his recent performance was too great anyway.|
|Yes but the difference here is that SW is aiming to set up his own fund doing what SEC does. He will likely want to invest in many of the same stocks, most of the investors in SEC want him to manage their assets, there is the overhang you mention. It just makes sense for everyone to allow SW to move to Harwood and take the management of SEC with him. If Lord R didn't own GVQ I'm sure it would already have happened.|
|@mf - the p/e approach (inc some unlisted) means p/e discounts, which (ex iii) average about 20% with many higher. Look at OCL or MVI, both of whom hold some listed co's too.
And this is before considering the possible overhang on SEC from SW, LR etc.|
|Isn't the big issue here the fact that SEC takes a PE style approach: taking large stakes in companies you know intimately and working with the management to get big returns. Now, I understand SW is going to do something similar at his new business. Isn't it very likely that he will look at companies he already knows? And if he wants to acquire a stake in them, wouldn't it make much more sense to buy the stake SEC holds? Though if he doesn't it will drive the price up in the market.But in every way I can think it would be best for everyone (other than GVQ) to move management of SEC to SW/Harwood.|
|Discount probably isn't enough, for the sort of stocks it holds, IMO.
Eg ASCI holds, top 10:
On a 20% discount, yielding 3.3% (they also hold 10% in "fixed interest, convertibles, prefs", which funds some of the divi)
SEC hold (as of 31/12) top 10:
On now a c.14% discount, yielding 0.45%, with possible overhang issues (forgetting about the manager issues - as has been noted, a new manager could be appointed). Has cash more than equivalent to ASCI's FI/convertibles/prefs.|
|Also, I seem to remember the company issuing shares at a premium not long ago. Now the discount is somewhere around 15%. There will be a lot of unhappy people about this. It is a real pity, I cannot help buy wonder why an arrangement couldn't be found that suited SW. Being utterly cynical, I wonder if it was because last year the fund didn't generate a performance fee and he wants guaranteed millions.|
|good work chaps,the plot thickens. I guess Lord R is not used to paying for something and sitting by as it and the income stream walk out the door.|
|The plot thickens. Sir Clive Thompson, one of the directors of SEC, also owns over £4m in SEC shares and sits on an advisory board of GVQ. GVQ can be given 12 months notice at any time, but there is nothing about key persons mentioned in the reports.However, the board of SEC are top notch (it is the best board I've ever seen on an IT) and Clive T and Lord Rothschild have a lot of skin in the game. I am interested to see how this plays out.|
|SW & LR prob had lunch in Mayfair a few months back|
|I read it that GVQ had told the board who the replacement was. Of course, confusing matters further, Lord Rothschild (of RIT capital fame) liked SW so much that he bought GVQ and held 17% of SEC when I last looked. What will he now want? I am surprised they let SW leave to be honest.|
|@MF - not denying for a moment that manager changes happen - look at BIST.
But Board deciding to appoint Stuart's new co?
This doesn't make it sound like they'll be moving - though of course, when performance drops, they'll look elsewhere:
"Jeff Harris of GVQIM, who has worked with Stuart since 2014, will assume
responsibility for the portfolio management of the Company. "|