ODYSSEAN INVESTMENT TRUST: A fund for special situations
ODYSSEAN INVESTMENT TRUST: a special situations fund that invests in small listed UK companies that are leaders in their respective fields
The Odyssean Investment Trust is a special situations fund. It invests in small listed UK companies that are leaders in their respective fields, undervalued by the stock market and where change for the better is on the way. He then waits for the holding company to realize its market potential before crystallizing the profits.
It’s an approach that managers Stuart Widdowson and Ed Wielechowski have mastered and that serves shareholders well.
While other funds that invest in smaller UK companies have had a tough year, Odyssean’s share price has held up well. Over the past one and three years, it has generated returns for investors of 2.7% (losses) and 62% (profits). To put these numbers into perspective, the average UK small business investment trust posted losses of 14.4% and gains of 26.6% over the same periods.
Investec Bank investment analysts like what Odyssean does. Just over a week ago, they described its stock as a “buy,” saying the trust could offer investors all-important portfolio diversification because of its “absolute return mindset.”
The success of the trust depends on a number of factors. First of all, the managers have 40 years of investment experience behind them, which reassures shareholders. In Widdowson’s case, he has spent 21 years investing in listed and unlisted UK small businesses, so he distinguishes a good company from a bad one.
Second, both managers have “skin” in the game. In other words, they are big shareholders in the trust, so they have every reason to make smart investments that keep driving the stock price higher. action of the fund. It currently stands at £1.62, up from £1 when it launched in May 2018.
Moreover, as managers, they are bold. The portfolio includes just 15 companies, with the largest holding, chemical company Elementis, accounting for 14% of the trust’s assets. This means that each holding contributes significantly to the overall performance of the fund, for better or for worse.
It’s a risky approach, but there are risk breakers in place. When making key investment decisions, they use a panel of industry experts as a sounding board. It includes John Poulter, former chairman of marketing firm 4imprint, and Lindsay Dibden, founding partner of private equity firm HgCapital and healthcare expert.
They are also not afraid to end an investment if they think they have made a mistake. Widdowson says the trust made a “small” investment in banknote company De La Rue earlier this year after shares plunged in late January. But it has since been sold at a small loss. “It wasn’t a clear market leader,” he says, “and we made a mistake.”
Widdowson is happy to engage with the management of the companies he buys from if he thinks doing so will help effect changes that will ultimately drive the company’s stock price higher. Which companies he speaks with, he is not ready to say, but the higher the stakes, the more influence he can have as a shareholder. He says two new positions at “market-leading” companies – he won’t reveal which ones – have been created since March, and they are considering two or three more.
“As a fund manager, you can find value in volatile markets,” he says. “Many of the companies we hold are cash-strapped, not exposed to the consumer sector and do not do business in the UK. We like global niche market leaders.
The Trust’s stock market identifier is BFFK7H5 and its ticker symbol is OIT. Including performance fees, the annual charges amount to almost 2%.