Derek Pain: Athelney has turned out to be a trust you can trust
Friday 16 May 2014
Investment trusts come in all shapes and sizes. Most are allied to major fund managers like the highly diversified Aberdeen Asset Management with nearly a score of quoted investment vehicles. A few are more individualistic, not exactly one-man bands but often regarded as such. I am not a great fan of entrusting my hard-earned cash to fund managers but some of the smaller players – as well as the big guns – are more than capable of filling the gap created when investors have not the time, inclination or are far too cautious to manage their own shareholdings.
One of the smaller, unattached players that I have watched since it started life 20 years ago is Athelney Trust, run by ex-stockbroker Robin Boyle. The shares, at the time of writing, are near their year's peak at 245p. In the past five years they have been below 100p.
Mr Boyle, the managing director, has, like his boardroom colleagues, been involved in the City for many years. He launched a stockbroking firm, Dunbar Boyle & Kingsley, before descending on his investment project. For a time the 69-year-old conducted the trust's affairs from the West Country but is now London-based.
Athelney is a small cap player, prepared to invest in companies capitalised at less than £50m. It has, according to its last balance sheet, an impressive array of investments with support services the largest segment. None of the no pain, no gain portfolio constituents are involved although it owns 8,000 shares in one former member, S&U, a doorstep lender. That was an early recruit to my portfolio. The shares were sold, at what I regarded at the time as a handsome profit, in 2005. If I had held on the portfolio would have been much richer as the price has recently topped 2,000p, approaching three times more than my selling level.
Earlier this month Athelney, capitalised at only £4.9m, said its investments represented 224.8p a share. At the end of last year the corresponding figure was 219.3p. The last dividend was 5.5p against 5.0p.
Like with one or two other standalone investment vehicles I have encountered, the chairman's message at Athelney is often amusing with off-the-wall blasts at the world in general. Hugo Deschampsneufs does, however, concede that providing economic news remains good and companies continue to perform "a decent year for asset prices may eventually result".
Now to my own portfolio. Brightside, an insurance broker constituent, has collected another bid. Last year it was involved in a takeover imbroglio. Now an offer of 25p a share has arrived. It comes from a private equity firm, AnaCap, that already embraces an insurance broker, Simply Business.
Brightside, which has found trading difficult in the past year or so after recording 10 years of successful growth with pre-tax profits hitting a peak of £17.5m, is recommending acceptance of the bid, which values it at £127m. There is always the chance of a counter-bid, though I would be surprised if one materialises. Markerstudy, a Gibraltar-located group, was behind last year's attack and is still a substantial shareholder. But AnaCap has already received conditional acceptances, which includes Markerstudy, totalling more than 50 per cent of Brightside. The offer is to be completed through a scheme of arrangement.
The portfolio paid 18.5p two years ago. Not a huge profit then but one worth taking. I had wondered if I should sell the shares in view of the difficulties endured by the group since its brighter days. But hanging on has produced a modest return.
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