Fund Profile

Disclaimer

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.

Overview
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Overview

Oakley Capital Investments (OCI) differs from other trusts in the AIC’s listed private-equity sector, as its investment adviser Oakley Capital typically aims to be the first institutional investor in the entrepreneurial businesses it backs, giving OCI’s portfolio a very different feel.

OCI has historically seen strong performance delivered from a portfolio focussed on the technology, education and consumer sectors. A number of profitable realisations made recently meant that OCI went into the market sell-off with net cash on the balance sheet of c. £250m, or 36% of estimated net assets. This fortunate position leaves OCI with a lot of liquidity as Oakley looks to invest funds during a period of significant opportunity.

Notwithstanding OCI’s strong cash position, the COVID-19 crisis left the shares trading on a very wide discount to NAV. Based on Numis’s adjusted 31 December NAV, the current discount is 37%. As an expression of how wide the discount is, balance-sheet cash equates to 58% of the current share price.

Within the portfolio there will be winners, and likely also losers, from the economic slowdown. We expect more information with the end June NAV, released at the end of July. At the end of March, Oakley Capital noted that 70% of portfolio companies operate a subscription-based or recurring-revenue business model, and 65% of portfolio companies either deliver products or services digitally, or have the ability to shift to digital delivery in a short time frame. As such, despite the uncertainty, many of the companies within the OCI portfolio may have benefitted from recent events, or could be in a position to bounce back strongly.

Analyst's View

OCI has suffered a significant de-rating. The next potential catalyst for a reversal will come with the half-year NAV to June, due to be announced at the end of July. Adjusting for cash on the balance sheet, investors today are buying OCI’s investment portfolio on a discount of 57% to the 31 December 2019 valuation.

Longer term, Oakley’s track record is strong. For investors who want a focussed private-equity portfolio, OCI has delivered excellent returns – especially over the last three years, which we illustrate in Performance. At the same time, the shares trade on a significantly wider discount than those of peers.

As we discuss in the Portfolio section, several of OCI’s companies are likely to have benefitted from the lockdown, although some were undoubtedly negatively affected. That said, the OCI portfolio has potential to provide resilience during the disruption.

OCI has the best liquidity position of the entire sector, yet trades on one of the widest discounts.

bull bear
Strong long-term NAV growth, driven by portfolio-company performance Concentrated portfolio returns can be materially impacted by an underperforming investment
Cash representing 58% of current share price (and 36% of estimated NAV) means manager has a lot of flexibility Private companies offer limited liquidity, and returns can be lumpy
Shares trade on a 37% discount to NAV, with several potential catalysts on the horizon Private-equity funds charge relatively high fees
Continue to Portfolio

Fund History

11 Mar 2022 Results analysis: Oakley Capital Investments
OCI’s annual results provide more colour on the exceptionally strong NAV performance in 2021...
02 Mar 2022 Spread 'em!
We explore how much dispersion in returns of stocks drive the differing fortunes of trusts…
02 Feb 2022 Getting in on the act: Private markets
Private markets could be the next big opportunity for investors…
27 Jan 2022 Flash update: Oakley Capital Investments
OCI reports very strong NAV growth, up 21% (or 95p per share) since 30 June…
12 Jan 2022 Bargain hunt
We survey the discount opportunities in the market and update on the performance of our Discounted Opportunities Portfolio…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
14 Dec 2021 Fund Analysis
OCI’s historic NAV potentially belies progress made by its underlying companies...
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
23 Sep 2021 Even better than the real thing
We explain private equity and examine why tweaks to listed private equity trusts give the sector an advantage over the direct route...
15 Sep 2021 Bargains galore
We review our discounted opportunities portfolio, with one constituent rallying more than 30% in just two months…
10 Sep 2021 Results analysis: Oakley Capital Investments
OCI provides more detail on the drivers behind its strong NAV performance and repeatable investment process...
04 Aug 2021 60/40 and other dinosaurs
A simple practical step to take your portfolio from the 1990s into the 2020s...
14 Jul 2021 Grade inflation
We look at how our discounted opportunities portfolio has done in the first half of the year and update on the performance of our long-term rated funds…
29 Jun 2021 Fund Analysis
OCI’s capital markets day provided valuable insight into opportunity...
19 May 2021 The complexity premium
We examine the idea that extra returns can be obtained from buying investments which are perceived to be more complex by most investors...
14 Apr 2021 Wide Boys
We review our portfolio of chonky discounts as one star performer hits its target…
17 Mar 2021 Results analysis: Oakley Capital Investments
The results for the year ending 31/12/2020 reaffirm that OCI offers exposure to resilient growth businesses...
28 Jan 2021 Trading update: Oakley Capital Investments
OCI reports a strong NAV, up an impressive 14% since 30 June 2020…
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
23 Dec 2020 Flash update: Oakley Capital Investments
OCI’s NAV announcement next month will update investors on what is a potentially high growth portfolio...
05 Nov 2020 The haves and have nots
With listed private equity trust discounts widening, are investors mistakenly assuming that underlying portfolios will perform worse than public market indices?...
07 Oct 2020 Flash update: Oakley Capital Investments
Oakley Capital (OCI) trades on a 28% discount despite the majority of its portfolio companies showing resilience to COVID...
22 Jul 2020 A game of four quarters
Seven trusts, two quarters. Are our team still happy with their trust picks for 2020?
15 Jul 2020 Fund Analysis
OCI, trading on a historically wide discount, is approaching an important NAV update/capital markets event...
03 Jun 2020 Price is what you pay, value is what you get
The listed private equity sector has seen discounts widen markedly, but does this present an opportunity?
25 Mar 2020 Of mice and men
Our ‘best laid plans’ have somewhat ‘gang aglay’ since the KTI team put forward its best ideas for 2020 in early January…
18 Mar 2020 Their darkest hour?
We update our shortlist of discount opportunities...
12 Mar 2020 Results analysis: Oakley Capital Investments
Oakley Capital Investments (OCI) released a strong set of results this morning, delivering shareholder returns of 56% over the year to Dec 31, 2019...
14 Nov 2019 Fund Analysis
OCI is a focused private equity trust, trading on a 29% discount…
13 Nov 2019 The parallel worlds of listed private equity
Some private equity trusts are on an average premium of 18%, whilst others trade on discounts of 15%. Are we missing something!?
01 May 2019 Sweet or sour?
Three months in, we check up on our list of discount opportunities...
26 Mar 2019 Fund Analysis
Aiming for long term capital appreciation through investments in Oakley Capital Private Equity Limited Partnerships.
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