Mercia Asset Management Share Discussion Threads

[weatherman] 10/3/2023 20:43

Some VC banks, esp. crypto specialists, have been falling over in the US, which might explain weakness.

[reabank] 10/3/2023 17:05

I'd forgotten about the share options! An additional £600k expense not included in the £10m quoted above. So still profitable although I recall accounting for share options is a bit weird? (not Mercia in particular just share options in general.)

[riverman77] 10/3/2023 16:28

Yes that's a good point, so to a certain extent the investment management side is self financing. However, does that £10m factor in the share options, or is it just the salaries?

[reabank] 10/3/2023 16:24

Hi Riverman 77, just on the charges point. Yes Mercia does incur the costs of the investment management operation which were about £10m for the first half. But it also gets all the fees for the management of third party funds which were £12m. So that's £2m profit which you don't get in a more typically organised investment fund.

[pavey ark] 10/3/2023 15:52

Over the last three years I have bought six tines (61.5k) and sold three times (25k)

Cost of net 37.5k shares comes out at 16.2p/share

In the interests of transparency I had a c. 30k shares when I transferred to my new spreadsheet three years ago but not going back to dig through those ( I certainly bought a fair few when the price fell below 30p in 2018)

Now I overlaid five PE funds against MERC over a three year range (easy to do on ADVFN) and found that only one outperformed MERC over these three years (and not by much).

Note : not all of the PE funds pay a dividend.

I consider MERC to be a PE firm and their portfolio of investment has always looked attractive to me.
I have no gripe with the management ....they are what they are ....I don't want to be their pal.
I consider that this management team know what they are doing and they appear to do things well.
Happy to hold so will put these back to one side as they certainly fill a space in my range of investments.

[riverman77] 10/3/2023 13:59

I wouldn't be too sure about the lower charges point - it may be internally managed but they ultimately still have to pay for the investment management - it will be through salaries and bonuses of Merica staff rather than as a management fee. If anything it could be worse as the bonuses look pretty high to me, whereas at least with an external management fee it's all very transparent and you know what you're being charged.

[reabank] 10/3/2023 13:41

Some interesting comments. I'm invested in Mercia, but always find it an "on the other hand" investment. The good news is that unlike most private equity funds the fund manager isn't external. Therefore whilst other funds get slapped with an investment management charge, Mercia gets an income from managing other funds and makes a profit on investment management. I'm not convinced that is reflected in the share price. On the other hand there's an issue around how management is valuing investments. I accept where Mercia sells out it's generally at a premium to the previous accounts valuation but what about investments that don't work out? There must be a temptation to let these run rather than face up to losses. That's an issue for all private equity funds. Best way to handle it is a steady stream of disposals and management generally acting in an appropriate fashion to give investors confidence in their valuations. I guess Oakley have made a better job of that than Mercia over the last 12 months.

[p1nkfish] 10/3/2023 12:40

This applies to MERC too. Agree, if higher income and growth potential possible elsewhere, move out of MERC. You might be here a while and the divi doesn't compensate.

I'm in the money here, filled boots around 18p but temptation is strong elsewhere.

"Anything long dated & liquid, unless it's lucky enough to have some positive momentum, is way out of favour. Value doesn't matter currently as money could be stranded and dead for ages in such vehicles. Jam tomorrow, irrespective of NAV discount, isn't enough. IPO an example."

[weatherman] 10/3/2023 12:06

Agree the discount to NAV is far too high, and out of line with potential. With developments and work with Meta, nDreams must be worth more than the current valuation.

[pavey ark] 10/3/2023 11:46

Well I appreciate the recent posts as they did encourage me to have a look (again) at the recent figures and news from MERC.

The company figures show that things are certainly going in the correct direction.

I expect the dividend to increase yet again so should be over 1p.

The cash balance is close to 50% of the market cap and the discount to (very real) NAV is probably over 40%.

As MERC usually sell their holding at above their listed value this discount could be even greater.

Once again private investors fail to grasp that management have little control over the share price.....but the market and the market makers do call the shots.

This management are probably simply average in their desire to make as much from the company as they can but they do seem to be good at running MERC which is better than the greedy AND incompetent management teams that can be found.

MERC is profitable , cash rich and has the means to increase the value of their investments significantly.

They certainly get more right than they get wrong ....if this is not reflected in the share price buy more or sell your holding ....thems the rules !!

[p1nkfish] 08/3/2023 18:04

You certainly did.
Another one that has been good for management.

[riverman77] 08/3/2023 15:26

Surprised how weak this has been recently, I guess anything venture related is heavily out of favour. I did highlight on here around a year ago that I saw much better value in something like OCI if you want exposure to the venture space. An incredibly aggressive poster seemed to take offence when I dared to suggest that there might be better alternatives to MERC - but OCI is up 23% over last year while this is down 28% so I think I made the right call!

[robsy2] 03/3/2023 17:21

Yep. This is not really working at the moment… well, not for a while really .
R

[p1nkfish] 03/3/2023 13:27

All that matters is money flow and its not heading here currently.
Payout not high enough and valuations largely dependent on UK holdings.
This too will pass, some time. Might be a while though.

[kasspass] 03/3/2023 13:16

Can't understand why the share price doesn't reflect the apparent positive outlook projected by management. Sp has been on a downhill for a while now.

[growthpotential] 04/2/2023 23:43

This any good?

[growthpotential] 27/1/2023 21:11

Any good analyst coverage for this?

[robsy2] 18/1/2023 09:07

Another decent sale and some bullish broker reports that highlight how nicely positioned the company is, profitable asset management business that covers all the companies expenses and provides a steady flow of investment opps. Maturing portfolio and a track record of lucrative exits validates the valuation of the investments. PT 60p

[robsy2] 06/1/2023 11:12

Bit of upside movement here.

[pavey ark] 22/12/2022 16:08

I don't know how I missed that but when nDreams lists or is bought out it will be for multiples of the current valuation.

A very big payday for Mercia !!!

[cordwainer] 20/12/2022 14:40

nice nDreams update.

[columbarius] 13/12/2022 11:42

Greed, fear, envy. Good luck with tackling those emotions.

[pavey ark] 07/12/2022 17:45

Certainly not wanting to get in this bun fight but just a bit confused.

redartbmund, not sure what you mean by "return to shareholders" ....if there is a venture fund and the assets do well (sold) then the cash can be returned to the fund and ultimately taken out.

If MERC shareholdings do well (sold) the asset value of the shares increase but it is then up to the "market" to put a value on these assets.

All types of management will tell you that they have little control over the share price.....I usually doubt that but it is the oft quoted line.

Again , not going to get involved in any slagging match here but just wondering if I've missed something regarding any bias/favoured treatment given to MERCs funds under management over shareholders.(I have a reasonably large holding here but I just assume it is jogging along without any need for me to monitor things )

Regarding the management I don't consider them better or worse than any other and they are rather obviously here to make as much money as they can.....for themselves !!

[columbarius] 07/12/2022 15:10

Clearly returns are a movable feast in both aspects of the business depending on realisations.

redartbmud 18 Nov '22 - 15:49 - 1203 of 1215

"No need for bile and ire, and you can be fileterd if necessary."

Then follows up with:

"I have no words to describe you other than supercilious prat of the first order."

[redartbmud] 07/12/2022 14:49

columbarius.

I have no words to describe you other than supercilious prat of the first order.

If they aim at 15%IRR for both that doesn't answer the question. That is a pipe dream aspiration. What is the position today? That is the question.
retiurns to investors in some VCT's running at 11% to 15% from what I read. The return to shareholders, according to H-L is 2.52% pa.

Youa are filtered, like the rest of your ilk.

red