Charlemagne Capital. Dog with Putin's fleas or value situation?

Tuesday, Feb 24 2015 by

Charlemagne Capital     (£CCAP)    10.5p   Mkt Cap £29m     EV £14m

With markets up and defying the usual Gexit issues I decided to do a spot of contrarian bottom fishing using the momentum screens (3m RSI <-15, 6m RSI <-25) combined with some basic value parameters PE<16x, ROCE >10% (with all the usual caveats that the PE could well be >15 in some of these companies as the EPS may be disappearing fast).  Sometimes this throws up interesting situations (aside from the JQW (LON:JQW) or Zanaga Iron Ore (LON:ZIOC) s of this world) where the baby has been thrown out with the bath water.

I came across Charlemagne Capital, with a StockRank of 97

Charlemagne is an Emerging Markets focused fund manager,
specialising in equities and in particular Eastern European equities. Hmmm popular at the moment !

Why is it potentially interesting?

Mkt Cap = £30m

No debt

Net Cash on B/S at H1 14 = $19.3m =  £12.5m

Also like Ashmore (LON:ASHM) it has seeded some new funds from its own balance sheet. The market value of these funds WAS $10m. Given that a fair proportion may be in E European start up funds I think its prudent to haircut this by 35% to account for negative market movements. So $10m * (1-0.35) = $6.5m = £4m

So overall net liquid resources roughly £16m

Therefore Enterprise Value is ROUGHLY £30m - £16m = £14m

OK so what about the funds it manages?

It manages 4 types of funds

Magna: The Magna Umbrella Fund plc is Charlemagne Capital's UCITS fund range. These funds are all managed on a fundamental, bottom-up stockpicking  investment process.

OCCO: This is an absolute (hedge) fund targeting Eastern Europe. Max volatility = 12%

Institutional: Charlemagne Capital manages a number of segregated regional and global accounts for its institutional clients.

Specialist: Charlemagne Capital's specialist funds include both long-only funds and closed-end property funds. Illiquid….

The asset gathering record is patchy with good growth in the higher margin Magna retail funds offset by the decline in the lower margin Institutional funds.

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Ashmore Group plc is a United Kingdom-based company, which operates as a specialist emerging markets asset manager. The Company offers a range of investment themes, such as external debt, local currency, corporate debt, blended debt, equities, alternatives, multi-strategy and overlay/liquidity. Its geographical segments include United Kingdom, United States and Others. The external debt theme invests in debt instruments issued by sovereigns (governments) and quasi-sovereigns (government-sponsored). The local currency theme invests in local currency-denominated instruments issued by sovereign, quasi-sovereign and corporate issuers. The corporate debt theme invests in debt instruments issued by public and private sector companies. The Company's products are available in a range of fund structures, covering the liquidity spectrum from daily-dealing pooled funds through to multi-year locked-up partnerships. more »

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Charlemagne Capital AUM ($m) 

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Polar Capital Holdings plc is an investment management company. The Company is engaged in the provision of investment management and advisory services. The Company offers professional and institutional investors a range of geographical and sector investment opportunities. The Company offers fundamental funds diversified by asset class, geographical, sectoral specialization, strategy and structure. Its subsidiaries include Polar Capital Partners Limited, Polar Capital Partners (Jersey) Limited, Polar Capital (America) Corporation, Polar Capital Limited Liability Partnership and Polar Capital European Income Fund. more »

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  Is LON:CCAP fundamentally strong or weak? Find out More »

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