Realise that participating in the launch of a new Investment Trust is not always the wisest move as is amply demonstrated by the dismal performance of star fund manager Neil Woodford’s Patient Capital Trust (WPCT). Since its launch at £1 per share in April 2017 its shares have markedly underperformed the market, and, at 80p, are now languishing at a 8.2% discount.

Nevertheless, it might be worth casting an eye over Odyssean Trust (OIT), a small cap investment trust, which is being launched next month by Stuart Widdowson, the former investment manager of Strategic Equity Capital (SEC), one of the most successful small cap investment managers. (It plans to issue 100m shares at £1 with trading starting on May 1st).

Widdowson quit SEC a year ago to set up Odyssean Capital, a boutique fund manager with the backing of Christopher Mills’ Harwood Capital, and Ian Armitage, former chief executive of HG Capital, one of the biggest private equity trusts. Armitage, who had worked with Widdowson at HG Capital before switching his allegiance to SEC where he had a 5% stake at one stage, is non-executive chairman of Odyssean Capital, and will invest £6.6m, for a 6.6% stake in the new trust.

Harwood Capital, Widdowson’s joint venture partner, plans to invest £13.4m, Widdowson and family will be investing £1.2m, and the trust’s four non-execs will invest £660,000. They have also agreed to invest their director’s fees net of tax in the trust’s shares on an ongoing basis.

http://www.odysseancapital.com/uploads/1/1/3/1/113159793/27.03.18_oit_intention_to_float.pdf

OIT’s stated aim is to “to deliver long term capital growth by investing in high quality quoted companies which have the fundamental ability to achieve meaningful capital growth. The managers’ differentiated approach combines public and private equity investment expertise to create highly focused, unconstrained, long only portfolios of quoted UK smaller companies.” Its portfolio will typically consist of up to 25 holdings, with the top 10 accounting for the majority of the trust’s net asset value, across a range of industries

It is a far from novel investment recipe, and Odyssean is a latecomer to the game of investing in a highly concentrated portfolio of under-researched small cap stocks. Indeed, the fact that the shares of SEC, Widdowson’s former outfit, are currently trading at a 13.9% discount, underlines the risks especially at this late stage of one of the…

Finish reading with a 14 day trial

or Unlock with your email

Already have an account?
Login here