Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!
A few months ago, fellow blogger Wexboy had a very interesting post on Record Plc, a UK based “specialty asset manager”. Go and read the whole thing, it is worth it.
I try to summarize the business & background in my own words:
Record Plc provides so-called “Currency overlay” asset management services. Currency overlays are in principle used for two reasons.
- To hedge an international investment portfolio into one single currency, usually the currency of the investor and/or
- To gain some extra yield by hedging currency exposures more “dynamically”
It is important to know that they do not manage the underlying assets, but “just” a derivative portfolio hedging the underlying assets and that they do not use their own balance sheet but act solely as an agent for the ultimate client.
The Company / Spin-off
Gocompare.com (GoCo) has been spun-off from parent Esure in the beginning of November, a week before the US elections and only a few days before Italgas SpA. As a “parting gift”, Esure took out a special dividend of about 75 mn GBP financed by some net cash and a 70 mn GBP loan before spinning the company off-
In my understanding, the major reason for the spin-off was that Esure, the listed UK online direct insurer was short in solvency capital and that this transaction improved the solvency substantially.
Every Esure investor got one GoCo share for an Esure share. Interestingly, Toscafund, the second largest shareholder only holds 14% in Goco compared to 16,7 for Esure, so they seem to have sold some shares.
Due to the well-known Brexit troubles in the UK, my contrarian instincts seem to motivate me to look more at UK companies these days. One of the UK companies on my watchlist was Staffline Plc, a recruitment and “human resources outsourcing company”.
The company got on my radar screen because friends mentioned that it looks like an interesting company and that the have a “great CEO”.
Those are the usual multiples:
Market Cap 232 mn GBP
P/E 2015: 15,6
P/E 2016: 7,4
The company grew sales almost 10-fold over the last 10-12 years. Interestingly however GAAP EPS in 2015 was at the level of 2006.