Strategic Equity Capital Share Discussion Threads

[mad foetus] 03/3/2017 07:09

The chairman did make it clear that the investments were high quality, long term holdings and that while SW was important, he was backed by a strong team at GVQ. I got the feeling that they were disappointed SW has left GVQ, don't know what he is doing or when, and so are reserving judgment until the picture becomes clearer. It was also made clear that the board appoint the investment manager and will do what they think is best for shareholders. Although he didn't say it, any of the board hold significant amounts of SEC, so there is additional comfort from that. Personally, I would like to see one of the portfolio companies start motoring - the NAV seems to have been static for a long time.

[peter27] 02/3/2017 21:41

That's very helpful. I wonder if the next step is sacking GVQ.

[mad foetus] 02/3/2017 20:43

Well, I got a response and it was very well written and reassuring. I don't want to break any confidences but clearly the board are truly independent and mindful of their duty to act in the interest of all shareholders.Of course the board can't do anything about the relationship between GVQ and Stuart Widdowson, and if he has non-competition clauses which GVQ don't want to waive (and to be honest, why should they), then really he is out of the investment management game for some time.Interesting share price movement and volume today.

[mad foetus] 02/3/2017 12:04

Just written to the chairman: [e-mail]
encourage you all to do the same

[spectoacc] 22/2/2017 10:09

A good read, thanks - exactly as we thought. I particularly noted the reference to solicitors:

"'It is disappointing that [trust chairman Richard] Hills has declined or ignored on more than one occasion an invitation to discuss with us, or our solicitors, a way forward for SEC which would enable shareholders to decide which fund manager they would wish to look after their money by splitting the trust into two new entities pro rata to shareholder election.'"

[mad foetus] 22/2/2017 10:05

hxxp://citywire.co.uk/money/chris-mills-attempts-to-pinch-strategic-equity-capital/a994223

[spectoacc] 21/2/2017 06:51

Completely agree that an amicable solution is needed - likewise that the major shareholders ought to be able to hold sway. The surprise is that the RNS implies the opposite. Benefits no one if it ends up in litigation, though the falling out clearly happened before SW quit.

[mad foetus] 20/2/2017 17:31

I think I'm going to drop the board a line asking that an amicable solution be found. Most investors want SW to continue managing the fund. He obviously wants to get back to work as soon as possible. What I would like to know is what role Lord R is playing and whether SW was a key person who, if he left, would give SEC the right to terminate GVQs appointment. Given the quality of the board I would be surprised if that was not the case.

[peter27] 20/2/2017 17:15

The 18 month ban only holds good if GVQ enforces it. Harwood could take over management if the major shareholders decide they want to keep Stuart's expertise. Money always talks!

[spectoacc] 20/2/2017 17:05

I'm not even sure what that RNS means - seems to be saying that nothing can be allowed to happen for 18 months, due to his association with Harwood & employment contract? Seemed a bad split before, but seems even worse now.

Presumably the major shareholders will put pressure on the Board as a result.

[mad foetus] 20/2/2017 16:09

Well, interesting RNS. As I suggested before, SW is likely to want meaningful stakes in some of SECs underlying investments. It is no surprise Harwood are talking to SECs shareholders.I personally think that SEC now needs to be wound up, and part of the winding up process could involve a sale of assets to Harwood new fund at close to NAV. If it wasn't for the fact that Lord Rothschild owns GVQ then I am sure this would be under discussion. As far as I see it, there is little reason to stick with the current manager.

[luckymouse] 17/2/2017 22:51

Weekly candles:

Before the 10 bag top: 30 White 6 Black 5:1

After the top: 29 White 50 Black 0.58:1

That's a change in ratio by a factor of ten - so yeah I reckon someone's been getting out - interesting to see if there's meaningful bite at the neckline

[spectoacc] 15/2/2017 14:03

No issues with the NAV RNS, but wouldn't mind seeing a "Holdings in..", or perhaps some block trades go through.

[bottomfisher] 15/2/2017 08:38

don't know about 'hand of god" but Ian armitage, widdowsons ex boss at Hg capital, was a steady acquirer of SEC shares at sametime as he ran down his very sizeabe holding in HG. I think he owns circ
a 5% of SEC. He is now ba king widdowsons new venture somake sense if he sells downhis SEC stake to fund widdowson.

[mad foetus] 10/2/2017 07:19

Yes, though GVQ do have a decent track record with their other fund and Lord Rothschild can presumably afford to buy in experience. I think they are going to have to look strongly at discount control here, 20% discount feels about right, though if the underlying investments perform, and they should, that will be of secondary importance.My feeling is that SW is going to raise 200m for his new fund and will want to take a big slug of some of the companies in the SEC portfolio. But they are too illiquid for that to be easily achievable. It's a right mess!

[spectoacc] 10/2/2017 07:13

Indeed - mainly the last point re the overhang.

Also:

"Our new Lead Manager, Jeff Harris, is well acquainted with all the investments
held in our portfolio and has earned his position through his major
contribution to the Company over a period of several years. We are confident
that Jeff will enable the Company to continue delivering strong performance,
which should be reflected in a narrowing of the discount in due course."

They've talked him up several times but "..A period of several years" does not a star manager make.

And however you look at it, the team's just halved, even if you assume SW & JH were equal in their contributions.

Once again, a reminder how green he is:

"Assistant Manager: Jeff Harris Jeff joined GVQ Investment Management in 2012 as an Analyst. He was appointed Assistant Fund Manager of both Strategic Equity Capital and the GVQ UK Focus Fund in May 2014. Prior to joining he worked at PricewaterhouseCoopers within the Transaction Services Team on a number of private equity and corporate transactions. Jeff holds the ACA qualification. Jeff owns 17,163 shares in Strategic Equity Capital1. "

[mad foetus] 10/2/2017 07:06

Half year report not proofed before publication, which is shoddy, but looks like GVQ are remaining as managers. Interesting to see how they control the discount and deal with major shareholders wanting out.

[spectoacc] 09/2/2017 10:03

Make sense it may do; happen it hasn't.

Also get the impression SW wants to go much smaller, which is possibly outside of his mandate with SEC.

Hard not to get the impression that he's left under a cloud - the RNS didn't even mention his new venture.

I agree that many SEC holders will want to follow him - hence I think it's going a lot lower, perhaps to c.25% discount, which wouldn't be unreasonable for the reasons mentioned in posts above.

If I were SEC board, I'd be looking to move to a new - but well-respected - manager ASAP. Feels like bridges have been burned with SW, and isn't as if his recent performance was too great anyway.

[mad foetus] 09/2/2017 09:20

Yes but the difference here is that SW is aiming to set up his own fund doing what SEC does. He will likely want to invest in many of the same stocks, most of the investors in SEC want him to manage their assets, there is the overhang you mention. It just makes sense for everyone to allow SW to move to Harwood and take the management of SEC with him. If Lord R didn't own GVQ I'm sure it would already have happened.

[spectoacc] 09/2/2017 08:56

@mf - the p/e approach (inc some unlisted) means p/e discounts, which (ex iii) average about 20% with many higher. Look at OCL or MVI, both of whom hold some listed co's too.

And this is before considering the possible overhang on SEC from SW, LR etc.

[mad foetus] 09/2/2017 08:51

Isn't the big issue here the fact that SEC takes a PE style approach: taking large stakes in companies you know intimately and working with the management to get big returns. Now, I understand SW is going to do something similar at his new business. Isn't it very likely that he will look at companies he already knows? And if he wants to acquire a stake in them, wouldn't it make much more sense to buy the stake SEC holds? Though if he doesn't it will drive the price up in the market.But in every way I can think it would be best for everyone (other than GVQ) to move management of SEC to SW/Harwood.

[spectoacc] 08/2/2017 14:36

Discount probably isn't enough, for the sort of stocks it holds, IMO.

Eg ASCI holds, top 10:

XPP
RPC
Dechra
Chesnara
ERM
Wilmington
ELM
AV.
BBA
VCT

On a 20% discount, yielding 3.3% (they also hold 10% in "fixed interest, convertibles, prefs", which funds some of the divi)

SEC hold (as of 31/12) top 10:

Equniiti
E2V
Servele
Clinigen
Wilmington
Tribal
EMIS
4Imprint
IFG
Goals

On now a c.14% discount, yielding 0.45%, with possible overhang issues (forgetting about the manager issues - as has been noted, a new manager could be appointed). Has cash more than equivalent to ASCI's FI/convertibles/prefs.

[mad foetus] 08/2/2017 13:30

Also, I seem to remember the company issuing shares at a premium not long ago. Now the discount is somewhere around 15%. There will be a lot of unhappy people about this. It is a real pity, I cannot help buy wonder why an arrangement couldn't be found that suited SW. Being utterly cynical, I wonder if it was because last year the fund didn't generate a performance fee and he wants guaranteed millions.

[edwardt] 08/2/2017 10:17

good work chaps,the plot thickens. I guess Lord R is not used to paying for something and sitting by as it and the income stream walk out the door.