Complete your registration today for a chance to win £50 John Lewis vouchers in our weekly draw Enter now
Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Rockwood Strategic. 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
RKW’s focus on micro-caps with a value mindset offers a differentiated approach, with differentiated performance…
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

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

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.