Record Share Discussion Threads

[konradpuss] 17/10/2022 20:59

trident5, collateral calls? I thought this company offered hedging advice and strategies. O.K. some of their clients might be geared, however most are blue chip.

[bingobanjo] 17/10/2022 17:15

https://finance.yahoo.com/news/investors-record-lon-rec-made-054049363.html

[trident5] 17/10/2022 15:13

Strikes me that some of their clients will have seen huge collateral calls lately, which may impact business here.

[hammergaumet] 17/10/2022 14:21

Thanks topvest. We earlier shared messages on agfx. What risks can you identify here? Any risk that their clients could have seen aum fall due to market losses and even in worst case there could be a big client whose fund has to close? No sign of that in recent comms tho of course

[manrobert] 17/10/2022 08:32

hopefully we can be optomystic on a favourable trading upate.

[dogwalker] 13/10/2022 08:21

Why has topvest's post been given two thumbs down ? What's the objection?

[robsy2] 12/10/2022 19:02

I think and hope that Topvest is correct.

[manrobert] 12/10/2022 14:46

i with trading update shortly.am i the m feeling a bit lonely having added a further 1000 sharestrading update shortly.am i the only bull///???

[topvest] 04/10/2022 14:57

Remember you can borrow in yen at c3-4% less than you can earn in US$. There has been a massive move into the US$ in recent months anyway, so I'd be surprised if they haven't earned some impressive performance fees. Even if it hasn't, half of their fee income is in US$, with the Swiss France next, so that will be a tailwind as well given their cost base is in £. Being a currency manager is one of the few hotter spaces at the moment, I would suggest.

[trident5] 04/10/2022 10:27

I suspect the appetite for new ways of picking up pennies in front of a steamroller has abated with the LDI debacle. The carry trade will be a very hard sell right now.

[topvest] 04/10/2022 10:05

I've added a few more. Surely their currency for return business should be prospering along with all other aspects of a currency manager in these markets? Presumably the borrow in yen buy US$ and earn high interest trade is back in fashion. That's what made the bulk of Record's profits, before the diversification strategy, when it originally listed. Argentex have also just reported excellent trading. Not the same kind of business, but shows currency in the place to be at this moment.

[robsy2] 02/10/2022 15:32

They certainly do Trident.most of the retained profits will be used to fund the share purchases under the various schemes that employees benefit from.we will get the bulk of the current earnings in dividends.

[trident5] 02/10/2022 13:50

They acquire skin in the game with regular and very generous share handouts.

[konradpuss] 02/10/2022 12:26

Wolsey, a great overview.

Lesley is also no 'spring chicken'.

I think they (Neil and Leslie) would both like to exit in the medium term.

I have spoken to Lesley and found her very focused and down to earth.

The problem I can see is that the remainder of the management do not have anything like the 'skin in the game' as Leslie and Neil have. O.K. there appears to be a succession strategy, however what happen to these large shareholdings?

[trident5] 02/10/2022 10:08

Any LDI arrangement involving currency risk is likely to see that currency risk managed by the LDI intermediary, thus negating the need to post two lots of collateral(one to the LDI manager and one to the currency hedger.

Currency volatility should be good here, so long as the risk is well managed. Rising interest rates may see a return to the carry trade, although institutions having been burnt with swaps in the LDI arena may be wisely hesitant to engage.

[smidge21] 02/10/2022 10:08

Unfettered, their process would currently lead them to be long USD. Great perhaps for their US clients but for UK PFs however the only active absolute long is GBP and this will not have been a source of profit. So it will depend on whether perf fees are calculated vs cash or a benchmark (often a 50% hedge).Of greater interest is whether clients remain happy with the margin calls sometimes needed. It would not surprise for leveraged positions, across the board, were reduced.

[smidge21] 02/10/2022 10:01

In my experience, UK pension funds that engage in LDI are unlikely to employ a currency hedge manager. LDI is about minimising interest rate/duration risk and it would be strange to retain managed FX risk.

[wolsey] 02/10/2022 09:49

I thought I would share some views on Record, both to clarify my own thoughts and invoke some responses/alternative views.

It is an interesting time for Record, given the current macro landscape and the position they find themselves in re the implementation of their own strategic plan. I am impressed with the clarity and openness of Leslie and team. I like the relatively conservative approach to expenditure and the alignment of management (internal shareholdings), staff (profit share) and external shareholders. They have delivered some good new mandate wins over the last 12-15 months and set out their intentions for the continued development of new products/revenue streams well.

Next trading update is due on 21 Oct. I will be surprised if they have been unable to capitalise on the current market volatility and continue to secure good performance fees. Any additional mandate expansions/wins will give me great confidence. I want to see continued progress against their stated plan.

I did/do believe an exit of Chairman Neil Record will serve as a catalyst to share price, eventually. I do not expect this to take place any time soon given the market but an interesting one to keep an eye on.

The share price appears to have consolidated around the 70 mark since the beginning of the year. The fact that there was no material negative reaction at UK pension fund concerns last week, suggests to me that Mr. Market sees limited downside to the current market price. At an ex-cash PE of circa 14x for what is a well positioned business with a clean balance sheet, this seems like a reasonable view. I may be too early in stating this as things are still playing out there.

I'd be very happy to get the views of others who have been following this company over recent years.

[cockerhoop] 29/9/2022 20:59

retsuis,

Not completely straightforward as total fees are a combination of AUM, product mix, exchange rate and for performance fees interest rate differentials.

My understanding is performance fees are more likely to accrue in a market with increased interest rate differentials which can been seen by performance fees of £0.5m in Q422 and £2.3m in Q123 after a period of no fees.

AUM may be subdued due to underlying assets falling in value but exchange rates although hedged to an extent are skewed so a weak pound v dollar and swiss franc increases profitability.

[retsius] 29/9/2022 08:16

Does volatility in the markets increase Rec.`s profit?

[konradpuss] 28/9/2022 09:23

Wolsey, I think you will find many of their core U.K. clients are Local Authorities - surprisingly.

I agree, in respect of volatility. Maybe some performance fees are being learnt?

[wolsey] 28/9/2022 09:18

smidge21, I am not necessarily following your concerns re REC's exposure with GBP weakness. Yes, some of their core GBP based client's may be under pressure. My view is fx volatility generally works to REC's advantage. Please elaborate if you can.

[trident5] 28/9/2022 09:16

? UK PFs hedging their overseas assets will need to be short GBP.

Currency volatility and rising interest rates are all tailwinds for Record.

[konradpuss] 28/9/2022 08:57

smidge21, I think you have the wrong company and the wrong board.