Mercia Asset Management Share Discussion Threads

[p1nkfish] 26/7/2022 07:31

Myhealthchecked - now on Amazon. MHC RNS today.

[davebowler] 15/7/2022 09:55

Edison research -

[p1nkfish] 07/7/2022 12:30

Decent Dir buys yesterday just announced.

[robsy2] 05/7/2022 16:41

Looks good , but it always does and the share price doesn't seem to respond much. Notes from the investor meeting - in no particular order .
no cash raises needed, got lots of cash on the B/S,debt free, cash generative , divis up again now yielding nearly 3%,progressive divi policy going forwards. Businesses are well funded. As at end of year 1 of their 3 year 20.20 plan,they are on track .This is the 20.20 target- 20% a year rise in profits and 20% a year rise in AUM. NAV around 50p ish. acquisitions being looked at again to raise AUM as potential purchase prices looking more interesting, opened a new office in Bristol. see lots of growth potential with BBB funding - with 1.6 billion due in 2023-2024 remember merc has 40% of this market. MERC doesn't capture that much of the new EIS and VCT raises , so a lot of room to improve there or they may just buy the AUMa sthey have done before- they have the money to do that .

Overall- pretty positive.

[columbarius] 05/7/2022 11:07

Very positive outlook as well. A good investment in uncertain times.

[weatherman] 05/7/2022 08:10

Great results today.

[columbarius] 25/5/2022 16:55

They saw it coming and wisely kept powder dry to take advantage.

[waterfall city] 25/5/2022 12:37

Im a holder of these from before their 25p fund raise. The flipside is the right downs in the listed tech sector and a probable recession coming, not the best environment for small companies short term.

[robsy2] 24/5/2022 17:33

Good summary. I am surprised by the weakness in the sp

[riverman77] 24/5/2022 14:28

Bought back in here after keeping an eye on this for a while. All the venture type funds have been smashed, but feel MERC should hold up better than others because a) its investments have not been pumped up to the same degree by expensive funding rounds so should be more conservatively valued b) they hold a big chunk in cash, I believe around 35% of NAV.

You are also getting the fund management business for free - brokers estimate this to be worth 8p (based purely on expected cashflows - probably worth more if you include the deal flow and insights this provides on a wealth of potential investments) . If you add this to 45p worth of investments held on balance sheet you have 53p.

So at current price of 29p you have 45% discount, or more than 60% on a cash adjusted basis!

[davebowler] 12/5/2022 09:51

Singer-
MERC has announced a fundraise of £20m for its first Knowledge-Intensive and annual Enterprise Investment Scheme funds. The former focuses on investments in high-growth businesses that generate a positive impact in-line with the UN’s sustainable development goals. The Group has raised ~£60m of EIS and VCT funds in aggregate over the last year. Impact on earnings & valuation The fundraise underpins our AuM growth expectations as well as the Group’s 10% organic AuM growth guidance for the year. We do not change our numbers on the back of this but see future growth potential on the back of further fundraises across new and existing strategies. We highlight the persisting valuation dislocation within Mercia Asset Management, where current share price levels (~36% of market cap are cash) fail to reflect the value of the balance sheet portfolio and fund management business within the Group. We reiterate our Buy rating on the back of our 64.5p TP.

[davebowler] 04/4/2022 09:43

nSinger -
New 64.5p TP – Reiterate Buy Recommendation After deducting both the value of the Group’s balance sheet portfolio as well as its current cash position (>35% of the Group’s MCap) from Mercia’s market capitalisation implies a negative value for the Group’s fund management business. We believe this is completely unjustified and significantly undervalues the high quality earnings streams derived from long-term capital and high management fee margins the Group generates. Our updated valuation ascribes separate values to management and performance fee earnings and takes into account the Group’s balance sheet portfolio and cash. This drives our new 64.5p TP, we reiterate our Buy recommendation.

[robsy2] 04/4/2022 09:14

Price target now 64.5p.

[the millipede] 30/3/2022 10:52

Thanks riverman.

[riverman77] 30/3/2022 10:32

I'm aware that MERC is a hybrid asset manager and investment company. The broker research from Singer and Canacord values the asset manager at 8p (based on expected management fees). The balance sheet holdings have an estimated value of 43p (would now be around 45p after yesterday's news). So the combined value would be around 53p.

In reference to your last point - as I've just explained, MERC holds an estimated 45p worth of assets on its balance sheet so NAV is very much a key metric (in fact a much bigger part of the value than the asset management company). I'd recommend reading the broker notes from Singer and Canacord if you need further details.

[the millipede] 30/3/2022 09:31

An investment in OCI etc is completely different from an investment in MERC.

With OCI, and other investment trusts, you are buying a share of the assets under management.

Here you are buying primarily into the management house, so your exposure isn’t so much to the investments themselves but the fees generated by Mercia when others invest in their funds.

As such, it makes sense to value OCI, for instance, at its NAV. But with Mercia it is not really clear why NAV is important at all. Makes more sense to look at cash generation and earnings per share etc.

BWDIK

[riverman77] 29/3/2022 12:01

Really don't want to waste any more time engaging with someone who is so utterly clueless and looking to cause trouble. You clearly have time to waste on such things, but I don't so FILTERED and good riddance.

FYI there are plenty out there - OCI, GROW, ICGT, NBPE - all on 25-30% discounts and very strong long term track records. The fact that you seem unaware of these confirms you are a clueless investor.

[columbarius] 29/3/2022 11:45

It touched a nerve then. Let's see some of your PE companies with much better track records and on similar NAV discounts to MERC when @31.5p

[riverman77] 29/3/2022 09:47

columbarius - what an incredibly passive aggressive comment. I wasn't making a negative comment, merely stating that they haven't yet established a strong track record (compared to many of the other PE funds which have 5-10y of consistent and strong NAV growth). I am therefore slightly cautious, although I continue to hold a small position and may consider adding after today's announcement as I think it does provide further evidence of the quality of the underlying portfolio.

[davebowler] 29/3/2022 09:21

nSinger

Mercia has announced a significant third-party investment into nDreams, its largest direct onbalance sheet investment. The transaction has driven a 46% fair value uplift with Mercia’s direct stake (now 33.2% on a fully diluted basis) valued at £25.8m. The strong fair value uplift underpins Mercia’s investment capabilities whilst the Group’s maintained significant stake in the business provides further upside potential going forward. We note the FV uplift adds ~1.8p to Group NAV and will positively impact adjusted operating profit, too. Mercia’s current market cap of £139m (o/w ~37% cash) implies a significant discount to the balance sheet portfolio and would not ascribe any value to the high quality fund management business, a clear dislocation of the Group’s valuation. We reiterate our Buy rating on our 50.0p TP.