Mercia Asset Management Share Discussion Threads

[pavey ark] 29/3/2022 09:06

Yes, the market has this wrong....very wrong !!

The fund management side is a regular earner, massive pile of cash and the direct investment portfolio is constantly producing the goods.

Today's announcement is significant and shows a nice tick up in carrying value of nDreams but that is only for starters.

When these games companies go they seem to go for multiples......certainly one to watch.

[columbarius] 29/3/2022 08:27

Fine timing with your negative comment riverman. We needed a boost. Good luck with your investments outside MERC.

[riverman77] 25/3/2022 13:34

Does it pay a good dividend? I'm not sure about that. MERC hasn't yet demonstrated consistently strong NAV growth like many of the other PE funds (OCI being a particular favourite of mine). Not saying it won't do well in the future but there are plenty of others out there that have a much better track record and on similar discounts.

[waterfall city] 25/3/2022 13:03

Performance wise do we ever think we will see strong nav growth like some of the PE trusts, or is it seen more as a well run company that pays a good dividend.

[columbarius] 27/1/2022 00:19

I saw some commentary that MERC was affected by the sell off in tech stocks. Some people just don't get it. The exuberance was with tech stocks traded on the open market, the prices of which can go to astronomical levels in a bubble. Tesla went over 30 times book value. We would consider ourselves lucky if MERC reached book value. I've been invested nearly two years and I haven't yet seen that happen. Mercia keeps a conservative lid on its valuations. If anything a tech correction is good for us as we have lots of cash waiting for opportunities.

[p1nkfish] 21/1/2022 16:48

It's taking a break along with a lot of other stuff but should currently be solid 40p+ imho.

[columbarius] 07/1/2022 15:39

Canaccord Genuity have increased their price target to 55p. Conviction buy.

[columbarius] 05/1/2022 19:51

Solid business with growth as well as defensive qualities and under-valued intangibles - regional network and the connected capital model.

[daicaprice] 05/1/2022 19:07

Happy to have got a few, relative newbie here but it looks great to me and I’ll just sit but pick a few more up if it ever dips.

DC

[columbarius] 05/1/2022 13:16

Nice to see the CFO adding. Don’t forget the big director buys last July at 38-40p

[davebowler] 05/1/2022 09:46

Singer -
Valuation: further emphasis of embedded value, upside to our 50p SOTPFor the moment, we retain our 50p 12m Target Price but see considerable upside. As emphasised by the Faradion disposal, there are potential for further gains in the portfolio. We make the conservative assumption that there is only +10% upside. We continue to use a 10x EBITDA multiple on asset management earnings – this could be more highly valued given longevity in fund structures (15x = +5p/share to our SOTP). Finally, we carry net cash at book value – a significant £65m FY22e. There is scope for this to be deployed to create shareholder value. In short, we believe the +30% return indicated by our Target Price is only the beginning of potential upside.

[redartbmud] 05/1/2022 07:59

Mercia Asset Management PLC (AIM: MERC), the proactive, regionally focused specialist asset manager with c.£948million of assets under management, is pleased to confirm completion of the sale of Faradion Limited ("Faradion") for a total enterprise value of £100.0million to Reliance New Energy Solar Limited, a wholly owned subsidiary of India-based Reliance Industries Limited ("Reliance"), the multinational conglomerate.

The unrestricted cash proceeds of £18.6million result in a profit of 5.7million above Mercia's direct investment holding value in Faradion of £12.9million as at 30 September 2021. The sale has generated an initial 4.2x return on Mercia's direct investment cost of 4.4million and a c.72% internal rate of return ("IRR").

[p1nkfish] 05/1/2022 07:16

This is a key point for shareholders imho.
Mention of unrealised value.

"This latest cash exit, which is 43.5% above September 2021's carrying value, also demonstrates the significant potential unrealised value in the Group's direct investment portfolio"

[daicaprice] 05/1/2022 07:11

There’s the clarification and wow.

DC

[pavey ark] 02/1/2022 20:33

Now there's a payday worth waiting for.....well worth a look.

[columbarius] 31/12/2021 14:59

Cash will be around 70m, over 40% of market cap.

[gfrae] 31/12/2021 11:55

I would have said that this announcement is significant. The holding is direct therefore the company will be receiving more than 10% of it's market cap in cash in January ie nearly 4p per share.

[pavey ark] 31/12/2021 10:36

It is Edison and they are paid by MERC but I always find the Edison company reports a good source of data .....just remember that they are paid by MERC.

Obviously the update was before today's news.

I did like the bit about company targets for the next three years.

Dividend should rise to 2% or more and I'm certainly happy to hold and let them get on with things.

Just had a look at my purchases and I snapped up plenty in the low 20p area (2020)...even 19p....sold 20% in three lots Sept/Oct but now content to let things go and will think about a 25% sale at 50p...if we get there.
If I do sell some at 50p I would be happy to hold the rest...long term.

Still not sure about the management but best to take the very realistic view that they are like EVERY OTHER management team and out to make as much as they can for themselves.

The recent options award was a bit of a warning but they certainly look like they know what they are doing with the business so .....lets go with greed ....theirs and mine !!!

[bisiboy] 31/12/2021 09:57

it annoys me when we are sent looking to see what the carrying value is. why not just say in the RNS was last valued at ......

[columbarius] 31/12/2021 09:11

Good point. Even if you park the fund management business the book value of the portfolio alone is 44p and Mercia are developing a track record proving their valuations are conservative.

[pavey ark] 31/12/2021 08:47

Turning a figure that MERC "think" a holding is worth into hard cash at a figure 50% higher simply proves my point.....the direct holding portfolio is..and always has been...seriously undervalued.

[reabank] 31/12/2021 08:39

I don't think that is right. Last accounts show cost of investment of £5.7m but that had been revalued to £13m. So quite a lot of the good news was already in the book value. But always good to see paper gains turned into cash.

[pavey ark] 31/12/2021 08:35

It is obviously wrong to look at this one deal and say it is a gain of £X m so the share price should rise by Y pence ....especially when the whole company is undervalued.

This deal ...together with other recent deals...shows just how undervalued the direct holdings portfolio is.

The return on investment here is massive and there is much more to come with any number of their holdings.

[undervaluedassets] 31/12/2021 08:14

Thank you for that

[cordwainer] 31/12/2021 08:09

just went to the interim 2021 presentation notes the faradion stake valuation was about £5.75m. Multiply by 100 / 15 get £38m. Except they're saying the direct holding is 16.8% today.