aclelland
15 Nov 2019
Solid performance from LMS Capital For LMS Capital Investors, here are links to important documents ahead of the shareholder vote on the investment management arrangements on November 28th. Here is the link to the LMS Capital circular regarding the Recommended Proposal for the Company’s Investment Management Arrangements: greshamhouse.com LMS-Circular-5-November-2019-4157-2816-6944-v1.pdf 184.17 KB And also the EGM Presentation: greshamhouse.com LMS-EGM-Shareholder-Presentation-Final-131119.pdf 663.03 KB These are important documents that support the Board’s proposal to retain Gresham House as investment manager.
tiltonboy
25 Aug 2017
Re: Anyone else get shafted on buyback?? It is quite clearly incorrect!
myepic
25 Aug 2017
Anyone else get shafted on buyback?? Soo.. I expected to have around 1320 shares bought back - my broker has credited me for 881 bought back ... so I contacted them as below - their response below that , anyone else have a similar experience?"dear broker" - sic4496 tendered Basic entitlement 16.29% x 4496 = 732Remainder = 3764 shares 3764 x 15.65% (as announced by LMS) = 589732 + 589 = 1321 I accept that LMS does say approximately 15.65% - when seeing two decimal places it is realistic to expect that approximately will mean very close to the whole number eg. 14-16 %So why 881 ???RESPONSE FROM BROKERAfter the basic entitlement was fulfilled, which was also the case for your account, a further 15.65% of all the shares of all holders were tendered as well. Please note this does not mean that this was evenly spread throughout all shareholders. There is no specific explanation from our side why exactly 149 additional shares were tendered in your case, as this was the company's decision, but as far as the corporate action notice explained, this is correct.Thank you for your understanding.
Roverite
31 Jul 2017
Re: Tender offer I agree Jacko. Theoretically the SP shouldn't change after the offer completes as the asset value/share of the reduced No. of shares should be the same as pre offer. If it falls it will be on sentiment. I'm going to tender my whole holding even though I know that I won't be able to get shut of them all. Like you I will consider topping up if the asset value/share holds up and the SP drops in a similar manner as post the previous tender offer.
Another Jacko
31 Jul 2017
Re: Tender offer Hi TiltonboyYes you could be right, I read the announcement wrong. It appears the concert party do not intend to tender any of their shares. On that basis I may sell and take the profit and buy back in if the price falls back to around 40p.I could also do with the cash for another investment I wish to make.
tiltonboy
30 Jul 2017
Re: Tender offer The Tender should work out at around 25%. Could be more if holders with your provider do not tender.
Another Jacko
30 Jul 2017
Tender offer So they're making another tender offer at 70p for just over 40% of our shares. I don't know what to do now the price has risen to 56p. Do I sell and take the profit on 100% of my shares or do I hold on and sell 40% for 70p and then watch the price fall significantly afterwards?On balance I think it's better to hang on as I will make a good profit on 40% of my shares and even if the price falls back to around 40p I will still own shares at a substantial discount to TNAV.
Another Jacko
23 Feb 2017
Bought in HiI bought a few of these today as I feel the discount to NAV is now too wide and even if the protfolio investments they have remaining are not the best ones and are hard to sell the NAV has already been marked down heavily to take account of this.Looking foward to another tender offer.
r21442
01 Feb 2017
Re: All very quiet ... So, I'm surprised but here it is.....To put it mildly, the trading update from small-cap private equity fund LMS Capital (LMS:47p), a company I last rated shares in a buy at 60p ('New mandate for LMS', 17 August 2016), was not what I was expecting.Last summer, Gresham House (GHE:305p), a specialist asset manager and a constituent of my 2016 Bargain shares portfolio, took over the mandate to run LMS’s portfolio with the aim of maximising shareholder value through the sale of legacy assets in the near-term, some of which will be returned to shareholders through tender offers, and redeploying the balance of the cash proceeds on new investments in the smaller quoted company and private equity space. At the time, LMS returned £6m by purchasing 7.14m shares at 84p each from shareholders through a tender offer. I advised tendering 10.45 per cent of your holdings which lowered your entry price to 57p.So, adjusting for the cost of the tender offer, this implies a pro-forma figure around £85.2m, or 88p a share. However, the company has just reported that its likely year-end net asset value will be £67m, or 69.5p a share, reflecting a deterioration in the performance of some of the legacy investments in LMS’ portfolio. Even taking into account one-off costs which will deliver annual costs savings of £1m, this is a massive hit and one that is hard to explain.Firstly, around two thirds of LMS’ portfolio is invested in the US, so the sterling value of these investments should have benefited from a very positive currency tailwind since the end of June last year. LMS does not hedge its currency risk, so was a beneficiary of the 7 per cent weakening of sterling against the greenback in the second half of last year. Secondly, equity markets on both sides of the Atlantic have been riding high and mergers & acquisition activity has hardly been subdued, so the financial back drop is favourable even for unlisted investments.Thirdly, £10.5m of the £91m net asset value of LMS’ portfolio at the end of June 2016 was in cash, and Gresham House has since made realisations of £6.9m, so even after allowing for the £6m tender offer, then this implies the portfolio of legacy investments has effectively lost a quarter of its value in constant currencies in the second half last year. That’s truly remarkable, and raises serious question over the valuations attributed to these investments by the previous fund managers. So, although the investment managers of Gresham House are in no way to blame for the write-downs on LMS’ legacy investments, and their investment strategy is clearly working at Gresham House Strategic (GHS) as I noted in my column earlier this week (‘Value opportunities’, 30 January 2016), the valuation downgrades has weakened the investment case for LMS as well as wiping 15 per cent of its share price.It’s a company I have covered for almost six years, having originally recommending buying the shares at 54.5p ('Capital returns', 11 February 2011). Longer term holders will have made hefty gains because the company has made substantial capital returns in the past six years through tender offers pitched at net asset value per share: a buyback of 17.4 per cent of the share capital at 84p in December 2012; a buyback of 17.2 per cent of the share capital at 90p in July 2013; a buyback of 22.5 per cent of the share capital at 95p in May 2014; a buyback of 28.7 per cent of the share capital at 96p in December 2015; and last summer’s buy back of 10.45 per cent of the share capital at 84p. This means that if you bought 10,000 shares at 54.5p when I initiated coverage six years ago, you retain a holding of 3,383 shares, worth £1,590, and have received total cash proceeds of £5,991. That cash return is more than the initial investment and it’s time to crystallise profits on the residual holding.
r21442
25 Jan 2017
Re: All very quiet ... No doubt Thompson will have his say on this one given today's news. I will post on here. Would be surprised if its anything other than positive.
Alan Watkins
24 Jan 2017
All very quiet ... Not much on the news or forum lately - anyone any idea of the likely timetable for this one over the next few months?
r21442
28 Jul 2016
Long IC article on Gresham deal I had a very interesting call with Tony Dalwood, chief executive of Gresham House (GHE:300p), a specialist asset manager and a constituent of my 2016 Bargain shares portfolio. The company has just been awarded the mandate to act as investment adviser for small-cap private equity fund LMS Capital (LMS:60p), a company I have been following closely and one that I last advised buying shares in at 57.5p at the start of this month (‘Cash rich bargain buy’, 7 Jul 2016).The key point is that LMS Capital has been winding down its investment portfolio and returning cash to shareholders, something I have been capitalising on, having initiated coverage at 54.5p ('Capital returns', 11 Feb 2011) and recommended participating in four major tender offers pitched at net asset value (NAV) per share. Total cash returns received since I commenced coverage exceed the initial investment made.What is being proposed now is that Gresham House takes over running LMS’s portfolio with the aim of maximising shareholder value through the sale of legacy assets in the near-term, some of which will be returned to shareholders through further tender offers, and redeploying the balance of the cash proceeds to focus on new investments in the smaller quoted company and private equity space. Specifically, LMS’s portfolio will be aimed at investments capable of generating a 15 per cent net internal rate of return over the medium to long term and with potential for value creation through management, operational or strategic initiatives. The investee companies must demonstrate strong underlying operational cashflow characteristics and returns on capital invested. At most 20 of these investments will account for at least 80 per cent of LMS’s net asset value, of which half will be in private equity. It’s the same Strategic Public Equity investment strategy Gresham House has been pursuing at investment manager of Aim-traded investment company Gresham House Strategic (GHS:780p) since winning that £38m mandate last summer. It’s been successful too. Despite volatile markets, Gresham House Strategic’s net asset value per share is up around 3 per cent since August 2015, representing a 10 per cent outperformance of the FTSE SmallCap index.The latest mandate win is clearly a good deal for Gresham House shareholders as the company will receive an annual management fee of 1.5 per cent of assets under management below £100m, plus a performance fee of 15 per cent of the value created for LMS shareholders on new investments made subject to hitting a hurdle rate of net asset value growth of 8 per cent a year. To put this into some perspective, LMS had net assets of £92m at the end of the first quarter and I estimate proforma net assets were around £96m at the end of June following sterling’s plunge since the EU Referendum. Two thirds of LMS’s portfolio is held in US assets so this will have had a very positive impact on the sterling value of those investments. The mandate should generate annual fee income of around £1.4m for Gresham House, and will “accelerate his company’s move to profitability” according to Mr Dalwood.He has yet to brief the company’s broker Liberum Capital so no new forecasts are in the market yet, but I feel this is a game changer and could prompt a move into profitability next year rather than in 2018 as previously predicted. Liberum was previously forecasting a trading loss of £1.1m on revenues of £3.8m in 2017 after factoring in a rise in asset management fees from £2.65m in 2016 to £3.76m, so the LMS mandate win is clearly material.Furthermore, the broker had not factored in any rental income into the 2017 forecasts from Gresham House’s legacy property in Speke, Liverpool, known as Southern Gateway, a fully-let multi-let office and industrial complex. The property is currently being marketed for sale at £7.6m on an initial yield of around 10 per cent, but the company is willing to hold out to get the optimum price for shareholders. G
r21442
06 Jul 2016
Latest IC article I think investors have got their valuation of small-cap investment company LMS Capital (LMS:57.5p) seriously wrong. I have good reason to think this way as having run through the annual accounts and the first-quarter trading update, looked into the structure of the portfolio of investments and the currency exposure, it's obvious to me that the cash-rich shares are very undervalued.I must admit some history here as I have been following the company ever since it started winding down its investment portfolio and returning cash to shareholders, something I have been capitalising on, having initiated coverage at 54.5p ('Capital returns', 11 Feb 2011). These capital returns have all been made through tender offers pitched at net asset value (NAV) per share: a buyback of 17.4 per cent of the share capital at 84p in December 2012; a buyback of 17.2 per cent of the share capital at 90p in July 2013; a buyback of 22.5 per cent of the share capital at 95p in May 2014; and a buyback of 28.7 per cent of the share capital at 96p in December 2015. This means that if you bought 10,000 shares at 54.5p when I initiated coverage, you will still retain a holding of 3,778 shares, worth £2,172, with a NAV of £3,589 by my estimates (see below), and have received total cash proceeds of £5,660. That cash return is more than the initial investment. Anomalously priced The reason why I feel LMS shares are extremely undervalued right now is because investors have failed to react to the precipitous fall in sterling since the EU Referendum unlike other companies I follow with heavy US dollar exposure: litigation investment companies Juridica (JIL) and Burford (BUR), both of which I reiterated my buy stance on recently. This exposure to the greenback is important because at the end of the 2015 financial year, and also at the end of the first quarter, LMS held around 69 per cent of its assets in US dollar-denominated investments. The cross rate was £1:$1.474 on 31 December 2015, £1:$1.436 at the end of March 2016, and £1:331 on 30 June 2016. In the past few days sterling has weakened even further and is now trading below £1:US$1.31 and falling by the day. The point being that sterling has declined by almost 9 per cent since LMS issued a first-quarter update which revealed a NAV of £92.1m. That equated to 89p a share at the time based on an issued share capital of 103.584m shares.my calculations, at the end of the first quarter, £29.6m of the portfolio was invested in UK-denominated assets and a further £62.8m was in US assets. This means that the sterling value of those US assets has risen by £6m in the past three months using the latest spot rate all things being equal. It's actually more because the company holds 819,000 shares in New York Stock Exchange-quoted Weatherford International (US:WFT), a global diversified upstream oilfield service group. These were worth £3.2m at the end of March 2016, but mark the holding to market value and it's now worth £3.6m. In other words, I believe that before adjusting for fluctuations in the valuations of portfolio investments, the impact of the currency movements adds 5.8p a share to the March 2016 NAV to give a spot NAV of almost 95p a share. This means that LMS shares are priced on a 39 per cent discount to my estimate of NAV.Furthermore, we already know that the company held net funds of around £15m at the end of May after factoring in the proceeds from disposals already announced. Add to that the liquid stake in Weatherford International and 18p a share of the current share price of 57.5p is, in effect, cash. This means that investments which I estimate are now worth 77p a share are being attributed a value of only 39.5p a share in the current share price. That's half their book value!That's an incredibly deep discount and one that implies LMS's board has no chance of selling any of its remaining investments anywhere near book value. Frankly, that's absurd beca
r21442
01 Dec 2015
IC comment on tender offer The board of investment company LMS Capital (LMS: 78p) have announced a £40m share buy-back programme by inviting shareholders to tender around 29 per cent of their holdings at net asset value. Given that the shares were trading at 72p less than a fortnight ago, or 23 per cent below end of June 2015 book value of 94p when I highlighted the potential for an imminent cash windfall (‘Capitalising on tender offers’, 19 November 2015), and book value per share has since risen to 96p at the end of September, then this is very good news indeed. The latest time for tendering your shares is Thursday 10 December 2015 and I would certainly advise tendering your full allocation. Based on a £40m cash return and 145.25m shares in issue, this means that if every shareholder tenders his allocation in full then 41.66m shares, or 28.69 per cent of the share capital will be purchased by the company at around 96p each. LMS net cash increased from £35m to £47.4m in the third quarter, a sum equating to 34 per cent of its net asest value of £139m, reflecting disposals made since the June half year-end. In effect, LMS's board is returning 84 per cent of its cash pile.To show how this works in practise, if you purchased 10,000 shares at a cost of £7,200 a fortnight ago, then you can expect cash proceeds of £2,754 from tendering 2,869 shares. At the current market price of 78p the balance of your holding is worth £5,562, so in effect your investment has increased in value by 15.5 per cent from £7,200 to £8,316 in less than a fortnight. Or put it another way, the company’s share price would have to fall below 62.3p post the tender for you to lose money. That’s clearly not going to happen given that it would mean the share price discount to spot book value – LMS’s net asset value has since increased to 97p since end September – would have to widen from the current 19 per cent to 36 per cent. My advice here is simple: tender your full allocation pro-rata with the above worked example. Results of the tender offer will be announced on 15 December and cheques will be sent out on Monday, 21 December, so expect a cash windfall in time for Christmas.
thirty fifty twenty
27 Nov 2015
Great RNS price up to 77p Today's RNS was exactly as ST had pointed out.NAV currently 97p,30% getting tendered back at NAV.Price reaction today puts them at the lower range of my personal valuation. I have sold as bought purely as a very low risk / small return within weeks,possibly still worth a hold given discount to NAV,but for me, I want to keep liquidity for future opportunities aside from big discount situations.All IMHO, DYOR and BoLI am no longer a holder of LMS.
