Rockwood Strategic is exploring a move to the main market of the London Stock Exchange, as its restructuring continues after the UK small-cap investment company reported strong returns for the past 12 months.
The £40.3m investment company – previously known as Gresham House Strategic – reported a 27.5% NAV total return for the year-ended 31 March, compared with a gain of 3.2% for the FTSE Small Cap (excluding investment trusts).
It follows a period of intense change for Rockwood after it removed previous investment manager Gresham House and appointed Harwood Capital in October.
It was then put into wind down in December, before returning to an active investment strategy under Harwood Capital in April.
Main market listing will improve tax efficiency
Chair Noel Lamb said: “The portfolio has delivered excellent NAV growth despite a year of significant corporate change and elevated costs. This specialist, active strategy now has an aligned, focused investment manager which we believe will continue to deliver for shareholders.”
He added: “We are exploring a move from the AIM to the main market of the London Stock Exchange to help further enhance future shareholder returns.”
Lamb said a change in the company’s structure to an investment trust alongside a main market listing would help improve Rockwood’s tax efficiency, as it would no longer incur VAT on management and performance fees or corporation tax.
Discount after discount after discount
Manager Richard Staveley (pictured) said its new nine-strong portfolio has significant upside and substantial cash ready to be deployed in the micro-cap space.
He explained: “The investment opportunity for shareholders is clear: UK equities are on a discount to global equities, micro-cap companies are on a discount to the market, the portfolio is on a discount to micro-cap and Rockwood shares are on a discount to the portfolio.
“We have aligned ourselves with shareholders in this differentiated, specialist strategy, current market conditions are rich with opportunity for the experienced, dedicated, value investor, and we look forward to delivering our goal of compounding shareholders’ wealth over the long term.”
Under its value philosophy, Harwood Capital seeks out proven businesses with identifiable assets and catalysts for change, with a three-to-five year holding period.
According to data from the Association of Investment Companies, Rockwood Strategic is currently trading at a 13.76% discount to NAV (as of 23 June). It is not geared and has estimated ongoing charges, after the recent cost review and fee reduction, of 1.5%.
