Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Rockwood Strategic (RKW). 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.

Overview
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Overview

Manager Richard Staveley takes a value-orientated approach when constructing a portfolio for Rockwood Strategic (RKW). He looks to capitalise on the lack of research at the smallest end of the market cap spectrum in order to profit from the extreme price inefficiencies that exist as a result. He regularly targets companies below £150m market cap as these are often overlooked by other investors from which he has delivered strong Performance.

Richard primarily focusses on turnaround situations where there is scope for material profit and valuation recovery. He creates an exit strategy within the investment case and identifies the required catalysts for change. The strategy typically buys meaningful shareholder stakes, often well in excess of 5%. These provide the basis for constructive engagement where Richard will offer advice to help create value for shareholders, ensure catalysts are recognised, and eventually have a material influence on the outcome of the business. To do this effectively, he maintains a highly concentrated portfolio of c 20 companies split between ‘core’ and ‘springboard’ positions. These are backed with conviction, where the largest positions can be over 10% of the portfolio meaning each can have a significant impact on returns (see Portfolio).

The trust has had an eventful history, though this has now settled, with the manager and strategy in place for a number of years albeit with a short hiatus (see Management). This approach has been supported by the parent group and manager through a considerable shareholding. RKW has also delivered strong returns for shareholders under Richard’s strategy which is primarily due to realised returns from several individual stocks, although raised cash levels in market falls will have had an impact. That being said, RKW is one of the best-performing trusts in the UK smaller companies sector since the manager took over, which may be reflected in the considerable narrowing of the Discount.

Analyst's View

In a populous sector, we believe RKW stands out by offering a genuinely differentiated approach, that means it owns a portfolio of companies that are unlikely to be owned elsewhere (see Portfolio). Richard’s focus on the smallest companies in the market, selected with a valuation mindset, means that the factors driving performance are likely to be different to what can be found elsewhere in the peer group, or from an investment in a tracker. As such, we believe RKW could be considered as a complementary holding to balance more quality growth-focussed peers, as well as being attractive in its own right.

Not only has this differentiated approach led to a unique portfolio, but it has led to sector-leading Performance too. This performance hasn’t just been driven by a buy-and-hold approach seen elsewhere, but through constructive engagement by Richard and the experienced team at Rockwood (see Management). There have been higher cash levels though that will have contributed to relative performance in falling markets, but on the whole, we believe the trust is less reliant on market forces to drive returns as the manager can help instigate a performance turnaround, including through M&A activity which can be supported by the flexibility of the wider Harwood group, albeit we understand with strict rules in place. As such, we believe the trust can genuinely provide good performance in a variety of market backdrops. This is supported by the highly concentrated nature of the portfolio, meaning success in just one holding could have a material impact on the returns of the trust.

Bull

  • Strong performance since manager and strategy inception
  • Highly differentiated approach leading to a unique portfolio
  • Both manager and the supporting team are specialists in this market segment

Bear

  • Concentrated, high-conviction portfolio can add risk
  • Micro-cap investments can struggle from liquidity issues
  • The trust charges a performance fee which may not appeal to some investors
Continue to Portfolio

Fund History

04 Feb 2025 Trust issues: investing in UK small-caps with RKW manager Richard Staveley
We speak to Richard Staveley, manager of RKW, about the shining stars in the UK small-cap sector...
19 Jan 2025 The top 10 best-performing sectors of 2024
We run the rule over the best-performing sectors of 2024…
01 Jan 2025 Our top picks for 2025
We put a finger in the air and name the trusts we think will deliver the best share price total returns in the year ahead…
20 Dec 2024 The little trust that could
A plucky performance saw this small cap trust end the year ahead of a strong pack in our annual top picks challenge...
15 Dec 2024 Get Rich Slowly: when to fold, raise or go all-in?
Our investment specialist explores the all-important decision of when to press the sell button…
09 Dec 2024 Monthly roundup: updates from the property sector, our income event and digital infra news
Jo, David and Ryan discuss the latest news, reviews and interviews in the investment trust world...
24 Nov 2024 Risky business
Addressing the concentration conundrum in US equities doesn’t have to mean sacrificing returns…
20 Nov 2024 Big wheels keep on turnin’
The US election throws up several investment ideas from the mainstream to the more idiosyncratic...
19 Nov 2024 Results analysis: Rockwood Strategic
RKW continues to deliver stellar returns, despite the challenging backdrop for UK small-caps…
06 Oct 2024 Get Rich Slowly: How I invest my money
Our investment specialist reveals the winners and sinners in her portfolio…
25 Sep 2024 No place like home?
Our analysts debate the benefits and drawbacks of investing in what you know best…
18 Sep 2024 Fund Analysis
RKW’s high conviction approach has led to sector-leading returns…
28 Aug 2024 Dream team
Our analysts review how their fund picks for 2024 have done…
10 Aug 2024 Don’t tell ‘em your name, Pike
Market turmoil throws up opportunities…
27 Jul 2024 We are the champions
We run our rule over the sectors gunning for glory in 2024…
13 Jul 2024 Ch-ch-ch-changes
Politics isn’t the only place where there are big changes at the top, but for shareholders change is often a good thing…
06 Jul 2024 America for growth, Japan for value
Different investment styles are needed for different regions…
21 Jun 2024 Ready for lift-off?
Managers at our small-cap event discuss the potential for smaller companies…
19 Jun 2024 Results analysis: Rockwood Strategic
RKW’s results show strong performance, with the momentum continuing post period end…
14 Jun 2024 Three ‘chiers’ for Macron
Whatever the outcome of the French president's gamble, turgid politics in Europe have far-reaching implications for investors…
07 Jun 2024 Monthly roundup of investment trust news - #1
Jo and Ryan discuss the latest news in the investment trust world...
04 Jun 2024 Investing in UK micro-caps with investment trusts
How investment trusts can provide investors with access to the high-growth UK micro-cap sector…
19 Jun 2024 Rockwood Strategic
Richard Staveley
Rewatch this webinar as part of our week-long June online series 'Small caps - a lost decade' hosted by the team at Kepler Trust Intelligence...
Watch Recording
29 May 2024 It’s a small world after all
A recent rally in smaller companies could be the start of a long-term recovery…
17 May 2024 The opportunity in UK small-caps with Rockwood Strategic manager Richard Staveley - Podcast: Trust Issues #30
We discuss opportunities for investors in the UK small-cap sector with RKW manager Richard Staveley...
07 May 2024 Thomas McMahon speaks on the Money Makers podcast
Thomas McMahon, Head of Investment Companies Research, appears on the Money Makers podcast to discuss three current themes in the investment trust sector: BCPT and commercial property, ASIT and split-level trusts, and the UK micro-cap sector...
19 Apr 2024 (Don’t) forget the price tag
With the dollar rallying once again, investors ignore foreign currency movements at their peril…
10 Apr 2024 Micro-managing
What opportunities exist in the smallest part of the UK market?
03 Apr 2024 Tall poppies
We highlight those trusts having to print new shares to keep up with demand…
08 Mar 2024 Ready steady go
We look back at the first week of our event, discussing sectors ripe for recovery…
28 Feb 2024 Catch a falling star
Our analysts discuss three discounted sectors that could be due a rebound…
20 Feb 2024 Talking Trusts: Interview with Richard Staveley, fund manager of Rockwood Strategic
We talk about the attractive valuations in the UK small-cap sector, M&A activity and the outlook for the sector…
04 Mar 2024 Rockwood Strategic
Richard Staveley
Rewatch this webinar as part of our month-long online series 'Themes for your ISA in 2024' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
15 Dec 2023 Outpacing the herd
RKW continues to unlock value for investors in the small-cap sector, with subdued valuations attracting bargain-hunters…
08 Dec 2023 Time to tell Sid?
British investors could be missing a trick by ignoring out-of-favour UK equities…
24 Nov 2023 An informational edge
Low levels of research create opportunity but aren’t enough to drive returns…
24 Nov 2023 Results analysis: Rockwood Strategic
RKW still has an exceptional long-term track record, despite a dip in the latest half-year period…
01 Nov 2023 Back to basics
Higher rates mean re-visiting portfolio construction...
20 Sep 2023 How small is small?
Rockwood Strategic's unique approach to UK small caps has delivered strong returns for shareholders…
15 Sep 2023 Pizza Tiger
You don’t need to reinvent the wheel to deliver good returns on your investment...
14 Sep 2023 Fund Analysis
RKW’s focus on micro-caps with a value mindset offers a differentiated approach, with differentiated performance…
View all

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