Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Oakley Capital Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
Oakley Capital Investments (OCI) has a portfolio exposed to companies that deliver products or services digitally in three sectors: technology, education, and consumer. In 2020 this could prove highly beneficial. As with many other tech-enabled businesses, digital growth trends have been hastened during 2020, which could be to the advantage of OCI’s portfolio companies. The upcoming trading update (to be announced on 27 January 2021) will provide more information for investors on progress. That said, the signs from comparators are good: equity markets are strongly ahead from 30 June levels (when OCI last provided a NAV) and other LPE trusts have reported strong valuation gains and realisation uplifts.
OCI trades at a big discount to the historic NAV, and to peers. We believe that its longer-term performance track record, its growth focus and exposure to businesses which deliver their goods and services digitally, as well as its significant cash balances which give it plenty of room for manoeuvre, mean that OCI deserves a premium rating to the average of its directly investing peers. The upcoming results should give more colour on how the portfolio has performed since June, and could show continued NAV growth. The portfolio is relatively concentrated, which does mean OCI could be exposed to disappointments. That said, if the strong performance over the first half of the year were to continue, it could be a catalyst towards a re-rating.
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