Argo Group’s (ARGO:LN) Final Results should be released shortly (I’ll try confirm the exact date). In my most recent Argo posts, I published two letters I’ve sent to Kyriakos & Andreas Rialas (CEO & CIO, respectively). I encourage you to review both letters before continuing:
Here’s the first letter (from Nov-2012)
Argo’s share price rallied +6.2% in the following week.
And the second letter (from Dec-2012)
This was sent on behalf of myself, Guy Thomas & some other (smaller) shareholders, representing an aggregate 5% shareholding in Argo. The letter focused on a single specific shareholder distribution proposal. ARGO subsequently rallied +6.5% (in the following week). [In fact, the share price is now up an impressive +36% since my November letter. Despite the rally, I believe Argo remains just as compelling an investment proposition - I currently have a 5.4% portfolio stake].
My recommendations & proposal require little (further) explanation, and I expect shareholders will enthusiastically support all efforts to realize & enhance Argo’s intrinsic value. But I will revisit them in the context of an upcoming results preview – plenty of current & prospective shareholders have emailed me about Argo, so I hope you’ll find this useful. Let’s first consider Argo’s existing funds:
The Argo Fund (TAF, $82 mio AUM): TAF is Argo’s flagship fund, racking up a great performance over the past dozen years. Despite this, AUM has continued to decline. So, what do TAF’s prospects & AUM look like now? Focusing existing fund-raising efforts on TAF is the obvious strategy here – so what new resources are required to increase AUM?
Argo Distressed Credit Fund (ADCF, $24 mio): Considering ADCF was launched into the eye of the credit crisis storm, performance has been respectable. However, the fund’s size begs the question: With the right resources, can fund AUM be doubled/tripled in the medium term, or would a fund merger (e.g. with TAF) make better long-term sense?
Argo Special Situations Fund LP (SSF, $108 mio): This fund’s a 2012 merger of two other Argo Funds (AHL & ACPF), with its high-water mark (for earning performance fees) reset to zero. SSF’s a closed-end fund, with a 3 yr realization period (now about 2.3 yrs, subject to extension). What are the plans/prospects for retaining these AUM (ideally) within a new/rollover investment vehicle?
Argo Real Estate Opportunities Fund (AREOF, $88 mio): AREOF’s a listed fund, …
