Pollen Street Share Discussion Threads

[spectoacc] 24/1/2024 08:41

On main market as of today - which is confusing HL, who've valued my holding at zero for the moment ;)

Listing move doesn't seem to have stimulated many trades, but might account for recent pull-back?

[casholaa] 15/1/2024 19:08

wtf happened???

[34adsaddsa] 15/1/2024 12:46

A female CFO. Let's get those diversity dollars rolling in.

[catabrit] 20/12/2023 15:29

Also you are paying buttons for the going concern value of the alts business and whilst it is small and U.K. focused if they keep performing they ought to grow AUM and scale into new geographies. Particularly with that balance sheet helping them. This has always felt like a bit of a no-brainer investment to me. Very happy to own and add as when the opportunity presents itself. I do think the change of corporate structure will be a major catalyst but let’s see!

[2wild] 20/12/2023 15:03

Paid just under 608p this morning, already showing a nice gain.. With 10-year UK gilts now yielding below 3.55% and 5 Year Gilts yielding 3.41% these should have a lot further to rise.

[catabrit] 20/12/2023 14:25

This moves REALLY fast on quite low buying volume. Think we are in for a fun ride once the corporate changes come into effect late January.

[catabrit] 20/12/2023 10:28

Yes I agree on the diversity bit. Kinda silly really but it is what it is. Doubled my holding today!

[34adsaddsa] 18/12/2023 12:21

The diversity point is pretty tragic but I'll take your word for it.

[catabrit] 15/12/2023 10:49

Agreed. I am back into this after selling it in March to buy APO at $58 (now $92!) as I think the moving to the main market in 2024 will act as a catalyst. I think there’s a safe 20-50% upside in capital appreciation alone which leads to a good IRR when you factor in the dividend too. It’s still a very small alts business but the balance sheet - and focus on credit and FinTech - will likely act as an accelerator in terms of flows.

I also can’t stress enough just how important diversity is becoming with institutional LPs and with the main shareholder and founder being female, I think that will help a lot.

[topvest] 14/12/2023 13:01

I've changed my view here and opened a small opening position after further research. The Pollen Street alternative asset manager looks like a high quality and successful operation. It was purchased for £285m versus the 2022 NPV of £300m, which is quite a high valuation on existing business. However, its fundraising and trackrecord is good, so it should achieve £5bn in a few years. The valuation could look much more attractive as the group heads towards £10bn in say 5 years time.The bull case is that this becomes a mini Intermediate Capital Group in 5-10 years using its own balance sheet to seed investments, as ICG did. The bear case is that it eats itself and becomes a Tetragon. I've decided that the current valuation is quite attractive in both scenario's. There may be more selling as it moves to being a trading company rather than an investment company early in 2024. The share price is definitely very weak, particularly given current strength in pretty much everything else. There's an 11% yield dropping to 9% in due course though to compensate.

[34adsaddsa] 09/10/2023 10:44

Shawbrook (50% owned by Pollen Street's PE funds) reportedly making moves for both Co-op Bank and Metro Bank. If they succeed, it could be where the new PE funds and some balance sheet funds get involved as Shawbrook may need to raise funds for the purchase(s).

[topvest] 24/4/2023 19:12

Thanks - interesting comments. I just feel that the investment manager saw an opportunity to grab a chunk of the investment trust - that has happened, and could happen again through share buy-backs etc. if the dividend is cut at some point. I will keep watching but I am not convinced that shareholder value creation is at the top of their list. The B share scheme was a bit odd and would have created excess complexity. As for the net asset value, its very difficult to assess given the outsize goodwill number in the balance sheet. Of course Pollen Street now have to eliminate the fees on the investment trust which was a fairly sizeable part of their reenue pre-transaction. On reflection, its not one for me at the moment but happy to keep monitoring.

If you don't like the Tetragon example, then maybe they are following the Intermediate Capital approach...if it works like that then shareholder value creation will be good / outstanding. Watching the motives and actions of Pollen Street and the board for a year or two is the way to go for me.

[catabrit] 24/4/2023 13:20

I would be amazed if they hit those margin targets on 4-5bn AUM. If they do, they're *potentially* starving the business of resources. The larger alts didn't hit those sort of margins until they were much much bigger.

I agree on b/s point.

[34adsaddsa] 24/4/2023 11:48

"This certainly looks interesting, but I think they definitely paid a high price for the asset manager, and I'm starting to think this was a better deal for Pollen Street management than original holders."

They did and it was, that has been obvious for a while. It's unfortunate for people who have owned it throughout but it's irrelevant for people buying in subsequently.

"Is there a risk that Pollen Street is going to end up like Tetragon with management benefiting at the extent of other holders later on down the track.....I still prefer Foresight and Gresham where owners are better aligned with minority holders."

Pollen street management aren't majority holders and they own the same share class as everyone else. Tetragon has a crooked share structure which does screw over everyone except insiders. The withdrawal of the B class preferred share proposal due to lack of shareholder support is evidence of that lack of control.

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I've never looked at Foresight or Gresham - I may do so and get back to you - but POLN keep repeating that they will get AUM up to £4-5B. If they can then the operating leverage mean revenues will pretty much drop straight to the bottom line and the current implied valuation of old Pollen Street means it looks cheap.

There's one other point: POLN's existing balance sheet investments average 2-3 years in duration from the beginning. They were therefore made in the ZIRP era. As those investments are repaid, the money will be re-invested in loans at significantly higher interest rates. A US investment manager recently said he was getting rates of 12-15% on what he regards as safe loans because rates have gone up so much and small banks have pulled back.



P.S. I didn't downvote you.

[topvest] 23/4/2023 20:50

This certainly looks interesting, but I think they definitely paid a high price for the asset manager, and I'm starting to think this was a better deal for Pollen Street management than original holders. Petershill had very high valuations when they came to market. It's now halved but valuations still look on the expensive side. Surely Pollen Street isn't worth more than say 5% of AUM (the average in fund management is 2%) at the very top end. On fee paying assets that's about £100m? Is there a risk that Pollen Street is going to end up like Tetragon with management benefiting at the extent of other holders later on down the track? Anyway, think I will just keep watching.
I still prefer Foresight and Gresham where owners are better aligned with minority holders. Those excellent managers which are growing and highly profitable are only valued at 4% of AUM.

[rambutan2] 26/3/2023 21:03

Am happy to watch from the sidelines, see how PE V gets on with its raise efforts, whether probs start to arise on the credit side, particularly the 38% in real estate, and how it fares on exiting the investment trust classification.

[catabrit] 23/3/2023 10:05

Morning. I thought the results were ok. I’m going to read them in more detail later. I think the move to change the status from listed trust to corporate makes a lot of sense and will hopefully act as a positive catalyst. See lots of upside here over the coming years but it’s inevitably going to experience the same short term negative sentiment as other finance co’s. I’ll post again if I discover anything noteworthy in the report.

[catabrit] 24/2/2023 15:34

Yeah this has been well flagged from the larger alts with much longer track records and deeper / consolidated relationships with LPs. A lot of the smaller firms like Pollen will take longer to raise. If they have invested in staff ahead of time, then we know the biz model has a degree of operating leverage in it which will affect margins.

[rambutan2] 24/2/2023 15:13

"Progress continues towards the launch of flagship Private Equity V in 2023. The Private Equity business has not been in active fundraising in 2022 whilst Fund IV is deployed."

The above is a BIG test. PE fund raising for all but the elite is on the back burner at the moment due to overindulgence and indigestion from 2021, the denominator effect and a raft of other issues. At best, a raising will be a long slow effort. Pollen have staffed up. So costs aplenty, but likely lack of fees...

[catabrit] 24/2/2023 14:41

Yeah for sure.

[riverman77] 24/2/2023 14:35

I wouldn't compare this too much with the likes of KKR and Apollo - their AUM is multitudes higher than Pollen so operate on a completely different scale. They have built their track record and reputation over many years and their stock market valuation reflects that. Would take POLN many many years to get close to those sort of names and acheive their ratings.

[catabrit] 24/2/2023 12:55

Yeah, I think your suspicions are right CC. That I concur with. They got a great price for it and I agree that prior shareholders got screwed - at least in the short to medium term.

[cc2014] 24/2/2023 12:19

My suspicion which I wrote about at the time is that management were looking for an exit for their stock by way of the merger with HONY and if the share price was still £10 I think they would be selling in the market.

Anyways good luck.

[catabrit] 24/2/2023 12:06

I remember people saying the same to me about Apollo and KKR back in early 2016 when both were priced for death. They turned out to be complete home runs.

I think I would be more sceptical with this feedback if management didn’t own so much stock.

[catabrit] 24/2/2023 11:56

It’s nice to get a counter. Thanks for sharing your thoughts.