Sustained financial success in the market is often achieved by those who are prepared to back their judgement on individual companies rather than be guided by market fashions or prognosticators.
So it’s interesting when a couple of specialist investment managers come to the ASX, especially when they have a successful record in activist investing – briefly activist investing involves taking a stake in distressed or badly placed companies and then working with management to institute changes. Activist investors are usually value based in their selection process and risks in implementation are minimised. Rewards can be substantial.
Sydney-based Sandon Capital Investments Ltd (ASX: SNC) is run by the well regarded Gabriel Radzyminski who brings a solid track record in this method of investing. Interestingly high grade investor Geoff Wilson (Wilson Asset Management) has a significant personal holding in the company.
Basically Sandon Capital hunts for companies with high levels of cash / net tangible assets and whose management are reasonably receptive to change. At present the portfolio is under construction and around 50% of Sandon’s capital is yet to be invested. Significant investments include Armidale Investment Corporation which has a portfolio of diverse businesses; Coventry Group which manufactures / distributes fasteners and hardware and also recruitment company Candle.
Situations are only bought into when they are available well below intrinsic value; have the capacity to deliver improved earnings and whose prospects are relatively independent of market / economic conditions. Sandon Capital is a highly attractive proposition for patient investors with a value driven approach.
Melbourne-based Alex Waislitz is an outstanding investor who has generated impressive returns over 20 years for the privately owned Thorney Investment Group. Now investors have direct access to the same investment team and deal flows through the ASX-listed Thorney Opportunities Ltd (ASX: TOP). Alex Waislitz owns 30% of Thorney Opportunities.
At present 35% of funds are invested – Thorney Opportunities has an 8.3% holding in the NBN rollout contractor Service Stream and views the recent profit downgrade as due to legacy issues working their way through. It also has an interest in non-bank financier Money3, mainly through a 9%pa secured bond with attached options. Another significant investment is in AMA Group, an auto accessories and panel-beating business.
Thorney Opportunities is a deeply analytical, patient and value-focused investor – shareholders look set to be well rewarded over the medium and long term.
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Motley Fool contributor Peter Andersen owns shares in Sandon Capital and Thorney Opportunities