Hg Capital Share Discussion Threads

[robsy2] 14/3/2019 09:59

good spot.Thanks for sharing. It helps spike up the price.
R2

[robow] 14/3/2019 08:46

Questor in The Daily Telegraph likes it alot

Questor: buy this trust for a stake in ‘Europe’s third-largest software company’


The trust's name derives from the chemical symbol, Hg, as the management first emerged from the former Mercury Asset Management.
Richard Evans

Questor investment trust bargain: HgCapital buys stakes in unlisted firms, many of which operate in profitable niches. Collectively they would amount to a very large business
How would you like to own a stake in Europe’s third-largest software company – and buy that stake via an investment trust at a discount of about 6pc?

What is the name of this software firm, you may be asking. In fact, you won’t find it in any list of quoted, or even unquoted, businesses. This is because the “company”; we are referring to is actually the various software interests found in the funds in which a 
London-listed investment trust, HgCapital, invests.

This sounds like a complicated series of relationships and so it is. But it is worth understanding because HgCapital is regarded by many in the City, investors and analysts alike, as unique both in what it does and in the success it has achieved.


The HgCapital Trust, the entity in which readers can actually invest, is managed by a company called Hg (a name that nods to its origins in the private equity arm of Mercury Asset Management: Hg is the chemical symbol for mercury). Hg as a fund management firm also runs four unlisted funds (Saturn, Genesis, Mercury and Transition Capital). These four funds attract money from institutional investors but HgCapital Trust invests alongside the



The four funds invest in unlisted companies, many of which are software businesses. It is the four funds’ stakes in these software firms that would collectively amount to Europe’s third-largest software company. It could even be the 
second-largest before long, behind only Germany’s SAP.

This is not the only reflection of Hg’s importance as a backer of software firms: it was the most active global technology investor in 2018, according to PitchBook, a financial database. This may make it sound like a rival to the influential and admired tech funds of Silicon Valley, but it is not a “venture capital” fund because it invests in companies that have already become established and profitable.

Read Questor’s rules of investment before you follow our tips. See Questor's tips every day at twitter.com/DTquestor

Its aim is not, in other words, to nurture the next Uber or Netflix but to make steady returns from successful tech businesses and from some investments in other sectors such as insurance and the automotive industry.

Whether in software or not, all of Hg’s investments share the characteristics of recurring sales, intellectual property protection, a fragmented customer base (which avoids the risks involved when a few large customers provide much of a firm’s sales), services that are critical to the businesses to which they are sold but are relatively low-cost, and high profit margins, according to Numis, one of Hg’s brokers.

Hg’s investments concentrate on industries where it has made successful investments in the past, and it has identified eight market “clusters̶1;, such as healthcare, accounting and legal and compliance services, to focus on.

“It looks for business niches. Most of the firms it invests in are not household names,” said Charles Cade from the broker.

Like any private equity investor, Hg seeks to sell its holdings after a number of years. Mr Cade said it had typically been selling its stakes at 30pc above their “carrying̶1; value on its books. This partly reflected the firm’s “conservative” approach to valuation, he added.

“Everyone in private equity rates Hg very highly. When stakes in its unlisted funds change hands in private deals, they often do so at a premium,” Mr Cade said.

Numis described HgCapital Trust’s long-term track record as “impressive221;, with a total return of 13.9pc a year over the past 20 years on the basis of net asset value. The FTSE All-Share Index has risen by just 5pc a year over the period. “Performance has been particularly strong over the past five years, at 16.6pc annually against 4.1pc for the index, as the portfolio has become more focused on Hg’s ‘sweet spot’ of profitable growth businesses with a high level of recurring income,” the broker added.

“A favourable climate for realisations [sales] has been supportive, but the majority of Hg’s value creation has come from revenue growth, principally organic, and margin expansion.

“HgCapital is a unique vehicle that is clearly differentiated from other listed private equity funds.”

Questor says: buy

Ticker: HGT

[rambutan2] 11/3/2019 21:01

Well, if they (again) do a share issue at much of a discount, it won't go down well. And of course, historically HGT trades at a tighter, single fig discount, compared to the rest of the sector.

In any case, the results read well and it remains a long term hold in my portfolio.

[skyship] 11/3/2019 14:55

Hmm....2.3% Yield and 5.3% NAV Discount. Looks way too expensive and certainly out of step with their peers. Short-term top formation suggests a good sell for the time-being as better value everywhere else in the sector.

[robsy2] 11/3/2019 08:31

A very decent set of results. It all looks in good shape.Strong growth across the portfolio and a reasonable divi.
They also indicate that they see a lot of growth potential with the portfolio holdings they have.
R2

[rambutan2] 10/10/2018 21:53

Bonus!

Subject to court sanctioning the scheme of arrangement in relation to the stock offer for Virgin Money Holdings (UK, constituent) by CYBG (UK, constituent), please see details of affected indexes and effective dates below:

Virgin Money Holdings (UK, BQ8P064) will be deleted from the FTSE 250 Index.

HG Capital Trust (UK, 0392105) will be added to the FTSE 250 Index.

All changes effective from 15 October 2018.

[skyship] 15/6/2018 08:29

But then the MAY NAV shows an impressive jump of 4.3% to 1992.3p....perhaps the reason for the recent 3% run-up in the share price from 1870p to 1920p!

[skyship] 10/5/2018 11:52

April NAV drops by 1.1% to 1909.7p. They paid a final dividend of 30p at the end of April; so possibly the fall was because they went XD in April.

[rambutan2] 10/3/2018 17:33

Quality outfit delivers with y/e nav at 1932 and a quarter of that in cash:

[rambutan2] 11/9/2017 10:56

Super interims and end aug nav at 1861:



Re Gentrack:

(see 29/03/17)

[rambutan2] 29/6/2017 11:34

Rejig of largest holding adds 86p to nav. Share price heading for 1700p.

[skyship] 28/1/2017 16:00

HGT became way overbought at 1530p on a sub-4% discount - now reality beginning to set in as they begin to pullback - yesterday at 1510p and likely headed back to c1400p...

[luckymouse] 13/9/2016 18:35

I'm not in - like the movement tho - cant be in everything!

[mad foetus] 13/9/2016 07:16

Isn't the share price now 14.00 and the NAV 15 something? Aren't Jeffries figures all wrong or is ADVFN giving the wrong prices?

[jaws6] 13/9/2016 06:45

LM you in this ? I got this and HVPE both.

[luckymouse] 12/9/2016 21:57

results received well - discount closing (or nearly closed) - something moving the SP

[david77] 12/3/2016 17:58

From Citywire:

Shares in HgCapital have surged after the private equity investment trust bucked the gloom that has surrounded the sector by posting returns well ahead of expectations.

HgCapital (HGT + You will receive email alerts for items in your favourites whenever we write about them
Add to favourites ) jumped 7.9% to £10.79 after the trust revealed a 14.1%
jump in net asset value over 2015, to £14.20, compared to £12.78 at the end of last year. The NAV rose a further 2.5% to £14.55 by the end of last month, largely due to foreign currency movements, taking it around £1 higher than estimates from analysts at Jefferies.

Like most private equity investment trusts, shares in HgCapital have traded at a heavy discountsto NAV. Since the financial crisis, double-digit discounts have become the norm, and shares in trusts across the sector have come under renewed pressure in the market turmoil since the turn of the year.

Matthew Hose, analyst at Jefferies, said the sell-off in private equity appeared 'indiscriminate', while Charles Cade, analyst at Numis, the trust's house broker, argued HgCapital's discount appeared 'excessive'.

Despite the jump in the shares, the discount to the updated NAV has actually widened, to 25.8%, compared to the 21.6% discount the shares were yesterday trading at relative to the prior NAV, of £12.75, updated in November last year.

'We believe that this discount is excessive given the quality of HGT's portfolio and the strength of its long-term track record,' said Cade.

more on

hxxp://citywire.co.uk/money/hgcapital-shines-as-trust-bucks-private-equity-gloom/a887672?re=39024&ea=99333&utm_source=BulkEmail_Money_Weekly&utm_medium=BulkEmail_Money_Weekly&utm_campaign=BulkEmail_Money_Weekly

[skyship] 07/4/2015 14:17

Even after the fall back to 1075pXD these are still overvalued on an 11% NAV discount.

A discount at that level is OK for a liquidating PE trust such as MTH (IMO a good buy @ 147p - see MTH thread for detail); but conventional peers can be bought at far better discounts and even with better portfolio performance records.

Two other PE trusts well worth considering:

# JP Morgan Private Equity – JPEL. This is now my largest holding thanks to continuing strength and a couple of top-ups lower down. In spite of its rise JPEL @ 93c offers a very attractive 23.8% NAV discount – much higher than the average of 18% for its peers. NB: Yes, JPEL is LSE listed but quoted in US$; so the currency has also added to past performance; and may continue to do so…

# BP Marsh – BPM. This is another small trust; and a bit of a specialist being solely in the Insurance broker sector – a Market sector doing very well and going through an active period of consolidation.

The major attraction here is the excessive NAV discount of 30%. That should close to something akin to the 18% sector average. That alone would raise the price 16% from the current offer price of 144p to 168p.

BPM's NAV is an historic 205p. The Finals in June should uprate that figure; and a rumoured portfolio sale may well confirm an increase before then.

[greenslug] 03/4/2015 21:08

Ah, that explains when the ex div date is then, I couldn't see it in the announcement. Thanks.

[skyship] 03/4/2015 08:39

Why the fall?

Firstly, IMO they had become rather over-valued - hitting 1150 for a miserly 8.5% NAV discount versus an average of 18% for their peers.

Secondly, no real fall yesterday. They had drifted on Wednesday from 1135 to 1120; then fell 37p to close at 1083p after going Ex the 32p dividend.

[jaws6] 17/12/2014 07:30

link of RNS today
hxxp://hgcapitaltrust.com/system/files/publications/Managers%20Update%20Dec%202014.pdf

[seekerofvalue] 16/12/2014 11:09

HGT is currently trading at £10.50p this after announcing the agreed acquisition of A-Plan Insurance ("A-Plan"),a leading UK insurance broker yesterday.


HgCapital, the Manager of HgCapital Trust plc, has agreed the acquisition of A-Plan Insurance ("A-Plan"),a leading UK insurance broker. The terms of the transaction were not disclosed 15/12/14.

[seekerofvalue] 03/11/2014 12:31

HGT is currently trading at £10.59p

Allocate Software plc Offer Update 3/11/14

[seekerofvalue] 14/10/2014 14:46

HGT is currently trading at £10.15p a two month low, this after announcing the
Recommended Cash Offer for Allocate Software plc.



This move by HGT is rather unexpected at the time when other Private equity investors are making divestments. HGT are clearly attracted to the Healthcare sector where the pursuit of efficiencies, could continue to drive revenues for Allocate for many years.