River And Mercantile Share Discussion Threads

[topvest] 11/1/2021 19:12

You are welcome. Yes, the plot is thickening. I'm not sure why Martin Gilbert is a non-exec here if Assetco is to be his vehicle! Assetco are too small for RIV.

Harwood Capital are a different matter though. Anyway, I seem to be on all sides with holdings in NAIT and ORYX which are Harwood's two main investment vehicles.

[stockstockham] 11/1/2021 08:41

Market is more interested in AssetCo! I'm more interested in RIV.

Edit - ha, just needed more patience.

Topvest - thanks, don't think I'd have researched and bought RIV without your posts above.

[stockstockham] 11/1/2021 07:36

It's more interesting than I realised. From the front page of Business section of Sunday Times:

"Aberdeen swashbuckler Glibert plots comeback

Veteran fund manager Martin Gilbert is to take a 10% stake in a listed company and use it as an acquisition vehicle.
The former vice chairman of SLA will team up with former colleagues and other City figures at AssetCo...Sky News reported that Gilbert, 65, had decided to use it as his corporate vehicle after talks with Christopher Mills...
Gilbert is said to be planning to use AssetCo to carry out deals and consolidate the fund management sector. He is expected to have a non-exec role at AssetCo."


And the first deal appears to be the stake in RIV.


And this morning:

"Martin Gilbert and concert party acquire a 29.8% shareholding [in AssetCo]

Intention for Martin Gilbert and Peter McKellar to join the Board of AssetCo



AssetCo plc announces that Martin Gilbert, Peter McKellar, various associates and funds managed by Toscafund Asset Management, a multi asset fund manager, (together, the "Investor Group") have, in aggregate, acquired a minority stake of 29.8% of the issued share capital of the Company at 475 pence per share, which is approximately the estimated net asset value per share, from a number of institutional shareholders and the Board. Below is a table showing the resultant holding of Harwood Capital Management (by virtue of its association with Christopher Mills), Cadoc Limited (by virtue of its association with Tudor Davies) and members of the concert party."

[stockstockham] 09/1/2021 09:21

Topvest - that's the 2.5m. Traded yesterady, 8th, to Assetco.

Punter - couldn't make that name up. Still has nearly a quarter of the co, but clearly Assetco had to pay a premium for that 2.5m, so they must have approached PS rather than PS been looking to offload.

[topvest] 08/1/2021 20:52

It looks like Punter Southall might be offloading a few more.

I wonder if these have gone to a Harwood Capital vehicles as well?

[speedsgh] 08/1/2021 13:08

Looks like someone bought 2.5m shares at 186p this morning!

[topvest] 08/1/2021 11:44

Yes, this is interesting. I wonder whether Christopher Mills has a plan to merge some of his Harwood Capital business with this? Just a thought. Anyway, change is afoot if we have Martin Gilbert aboard and Christopher Mills sniffing around. Hopefully, change for the better as there is great potential here.

[stockstockham] 08/1/2021 10:53

We have another investor:

"Acquisition of minority stake in River and Mercantile Group Plc

AssetCo plc announces that it has acquired a 2.9% shareholding of 2,500,000 ordinary shares in River and Mercantile Group Plc (the "Investment"), an asset management business, at £1.86 per share representing a premium of 1.2 per cent to the closing share price of 183.75 on 7 January 2021, the last practical date prior to this announcement. The Investment totalling £4.7m is being paid out of cash."

[topvest] 07/1/2021 21:28

I think its a positive that Martin Gilbert is on the Board. I agree with your sentiment on acquisitions. However, they could do with an acquisition on the equity side as this is the segment that is holding them back. The equity side of the business is weak and sub-scale, and needs some sort of refresh.

[stockstockham] 06/1/2021 09:22

The spread isn't enticing, but that seems big news - Aberdeen was a giant, RIV still a relative minnow. Not sure about "acquisitions" but "..Develop...into a substantial growth business" appeals.

[speedsgh] 06/1/2021 08:07

Martin Gilbert, co-founder & former CEO of Aberdeen Asset Management, is joining the company as Deputy Chairman...

Directorate Change -

River and Mercantile Group PLC (RMG) announces that Martin Gilbert has today joined the Board as Deputy Chairman. Martin will bring to RMG his substantial experience and knowledge of the asset management sector. He is currently Chairman of Revolut Limited and Senior Independent Director at Glencore plc, as well as Chairman of Toscafund. However, he is probably best known as a co-founder and then Chief Executive of Aberdeen Asset Management plc which became one of the world's leading independent asset managers under his leadership.

Jonathan Dawson, Chairman, commented:

"We are delighted that Martin has joined the RMG board. Martin has had an exceptionally distinguished career in asset management as one of the founders and Chief Executive of Aberdeen Asset Management. He brings huge experience of the sector to RMG and we all look forward to working with him to develop RMG into a substantial growth business."

Martin Gilbert commented:

"RMG is a business with great potential. In the current environment there are market opportunities for RMG, both organic and through acquisitions, that can drive shareholder value and I look forward to working with the Board to help progress this development."

[topvest] 15/11/2020 14:13

Had a look through the annual report. Overall, it looks like 2020/21 will be a flattish year as they invest in their new strategies and distribution capability. A 7% prospective yield rewards patience in the meantime.

The big picture is strong fiduciary management and derivatives (both growing nicely), offset by a declining equity business. Performance fees, I agree will be low, £nil to £2-3m in 2020/21, I suspect so much lower than historically. They have explained why Fiduciary Management and Micro-Cap performance fees are down. There may be a couple of £million from the micro cap strategy if there is a redemption event next year: the trust NAV is not too far off that. The performance fees are possibly a little bit too concentrated, so they need to develop more winning strategies.

I see that the James Sym European Value fund has now launched with a £1m seed capital and so it will be interesting to see how this goes. Overall, they need a few more winning equity strategies to get this side of the business back to growth. I think a small team / company acquisition might fit well if they could pull something off.

Anyway, more than happy to hold as 2 of their 3 divisions are doing well. Just need to get the equities side doing better. They talk about new credit, ESG and Quality Growth strategies, so let's see what happens. Most of their UK equity strategies are above their benchmarks so that is good.

[topvest] 21/10/2020 19:11

Yes, but performance fees are earned on-top. Provided their investment performance is better than average and above the watermark they will earn performance fees again in the future. It's only the icing on the cake for special dividends, so recurring revenue is the key measure. I expect improvement on special dividends when their investment style is working better. Agreed that fee rates are under pressure across the asset management sector, but there is still very good money to be made for good niche customer centric operators like River and Mercantile.

[essentialinvestor] 21/10/2020 08:29

* Because margins are continuing to be compressed in much of asset management
and the current economic dislocation is likely to accelerate that trend.

[topvest] 20/10/2020 19:18

Why not? Maybe not this year though. Typical short term approach taken by investors, rather than seeing the 6 year recurring revenue growth trend. Directors are buying, so they think the stock is oversold.

[essentialinvestor] 20/10/2020 16:23

topvest, will previous levels of performance fees be seen again?.

I would question that.

[speedsgh] 19/10/2020 14:43

Mrs Jean Hanratty (PCA to Mr David Hanratty, Global Head of Distribution) has bought 60,000 shares at 155p each = £93,000

[topvest] 08/10/2020 12:29

Looks like it will take 12m or so for performance fees to recover:

Performance Fees

Performance fees for the period were principally earned during the first half of the year. As explained in the Group Chief Executive's Statement the equity market downturn during the second half of the year impacted our ability to generate outperformance within Fiduciary and, while the Group has the potential to earn performance fees in the current financial year both within Fiduciary and Equity Solutions, this will be at significantly lower levels then we have historically generated. The business will have the ability to generate performance fees through some of the new strategies being developed and we will keep the market updated as this develops.

[topvest] 08/10/2020 12:01

Some thoughts ADDED IN CAPITALS:

Financial Highlights

· Fee earning AUM1 increased to £44.2 billion (2019: £39.8 billion) representing the sixth consecutive year of AUM growth; IMPRESSIVE

· Underlying revenue2 of £69.4 million (2019: £65.6 million), representing the fourth consecutive year of growth; IMPRESSIVE

· Performance fees of £1.2 million (2019: £12.5 million); NORMALLY ABOUT £10M AND SO MAY BOUNCE BACK!

· Adjusted underlying profit before tax3 of £12.6 million (2019: £14.7 million); INVESTMENT IN DISTRIBUTION AND TEAMS HAVING AN IMPACT AND WILL IN H1

· Adjusted profit before tax4 of £13.2 million (2019: £20.9 million);

· Statutory profit before tax of £8.3 million (2019: £16.8 million);

· Adjusted basic EPS5 and statutory basic EPS were 11.79 pence (2019: 20.26 pence) and 6.39 pence (2019: 16.22 pence) per share respectively; PERFORMANCE FEE IMPACT MAINLY

· The Board of Directors has declared a second interim dividend of 2.81 pence per share; and

· The Board of Directors has also proposed a final dividend for the year ended 30 June 2020, subject to approval by shareholders at the Group's AGM, of 2.34 pence per share, of which 0.10 pence is a special dividend and relates to net performance fees, taking the total dividend for the year to 9.54 pence. 6% SUSTAINABLE YIELD PRETTY GOOD, BUT OVER 10% IF PERFORMANCE FEES COME IN FOR FY21



Operating Highlights

· Net AUM flows of +£3.7 billion (2019: +£5.4 billion); FIDUCIARY AND DERIVATIVES STRONG. EQUITY POOR AND NEEDS TO IMPROVE.

· Investing for profitable growth in distribution and product; CAUSING HIGHER COSTS SHORT TERM, BUT BETTER THAN EXPENSIVE ACQUISITIONS

· Augmentation of operational infrastructure underway; and AS ABOVE

· Key hires made within investment management, distribution and corporate. AS ABOVE. SHOULD HELP GROWTH GOING FORWARD.

RISK TRADE-OFF IS GOOD UNDERLYING RECORD, DISAPPOINTING EQUITY SIDE WITH VALUE NOT IN VOGUE, INVESTMENT IN BUSINESS NEEDS TO PAY-OFF. ON-BALANCE, I THINK THINGS WILL CONTINUE TO IMPROVE, BUT MAY BE A FLATTER FY20 AND FY21 H1 THAN IDEAL.

HOW MANY COMPANIES WITH 6 YEARS OF UNDERLYING REVENUE GROWTH AND A HIGH QUALITY TEAM TRADE ON A 6-10% DIVIDEND YIELD?

[topvest] 08/10/2020 10:56

Well its certainly a bargain for a growth business. Revenue before performance fees increased by nearly 6%. Earnings for FY20 are lower simply because of an £11.3m reduction in performance fees. Obvious COVID-19 and lack of a growth focus has impacted.
I think that you will find that the forward dividend and EPS don't factor in any upside on performance fees. FY21 cannot be lower than FY20!
Outlook short term was a bit muted which I think has caused the drop. Medium term I am very optimistic still. Key to the valuation though is growing the Equity AUM again as this has much higher management fees than the other 2 divisions.
Happy to hold for the future and for better times!

[its the oxman] 08/10/2020 08:02

Growing aum I but earnings forecasts have collapsed and seem stuck in 11-12p area. Feel like I should want to add but hard to see what will get the share price moving.

[aspringo] 08/10/2020 07:15

Topvest, looks like our enthusiasm for river, doesn't seem to be shared by the market. A longer term hold for our leaders growth plan to materialise

[topvest] 01/9/2020 08:44

Added a few more ahead of the year-end results. When we get back to decent performance fees then this will be on a near 10% dividend yield. 6.5% yield currently. Not bad for a steadily growing and cash generative business.

[topvest] 27/7/2020 19:30

A very impressive update. This share is towards the top end of my hold and add list. I don't think that the market really appreciates the strengths of RIV. It's a pretty impressive business in my view. I keep chipping away and adding more like I did on Impax 3 or 4 years ago.

[speedsgh] 27/7/2020 07:48

Trading Statement -

River and Mercantile Group PLC ("R&M"), the asset management business, today provides its unaudited trading update for the three and twelve months ended 30 June 2020.

James Barham, Group Chief Executive commented:
"We look forward to the new financial year with confidence. We have and will continue to make some significant investments in our business to boost our distribution capabilities and to enhance and deepen our investment resources to meet our clients' needs. We are beginning to see some very positive signs following the investment in distribution we have made over the past year and this places us in a strong position as we head into the new financial year."

Summary of the three months ended 30 June 2020:

• Fee earning AUM/NUM increased in the quarter by 9.3% to £44.2 billion.
- Gross sales were £3.1 billion;
- Net flows were £1.5 billion;
- Net flow ratio was +3.7% of opening AUM/NUM; and
- Investment performance was positive £2.3 billion or +5.6% of opening AUM/NUM.

Summary of the twelve months ended 30 June 2020:

• Fee earning AUM/NUM increased in the twelve months by 11.1% to £44.2 billion.
- Gross sales were £8.2 billion;
- Net flows were £3.7 billion;
- Net flow ratio was +9.3% of opening AUM/NUM; and
- Investment performance was positive £0.7 billion or +1.8% of opening AUM/NUM.

[cont'd]