The Ryder Capital Ltd (ASX: RYD) share price has today pushed higher following a strong performance in FY20. At the time of writing, the Ryder share price is currently up 7.14% to $1.50.
What does Ryder do?
Ryder Capital was listed on the ASX in September 2015. It is managed by Ryder Investment Management Pty Ltd which is a Sydney-based boutique fund manager. The company pursues a high conviction, value driven investment strategy specialising in small to mid-cap Australasian equities.
The company’s top three holdings are Macmahon Holdings Limited (ASX: MAH), Updater Inc and Nextdc Ltd (ASX: NXT). Another of its largest holdings is 3P Learning Ltd (ASX: 3PL) which today has soared thanks to a takeover attempt. This is likely, in part, driving Ryder’s impressive gains.
How did Ryder perform in FY 2020?
Ryder was a very positive performer in FY 2020 despite the effects of the coronavirus pandemic. The company managed to deliver a 149% increase in total comprehensive income after tax to $7.7 million.
The company also increased total profit reserves by 65% to $18.9 million. This is the amount of money the company can distribute and, as a result of the increase, there was an increase in dividend yield. Ryder Capital announced a fully franked, 3 cents per share dividend, increasing the full year dividend by 25% to 5 cents per share.
Ryder’s full year investment performance was 12.34%, smashing the All Ordinaries Index (ASX: XAO) equivalent performance of -10.25%. The company beat its hurdle which was 4.93% for the year. This was calculated as the RBA cash rate plus 4.25%.
FY 2020 gross portfolio performance of 16.1% was also materially ahead of the company’s performance benchmark as well as the ASX All Ords and S&P/ASX Small Ordinaries Index (ASX: XSO). Cash holdings of $17.5 million at 30 June 2020 represented 17.90% of the portfolio.
What’s next for the Ryder share price?
Peter Constable, Chairman of Ryder, has this to say about the coming year:
“The economic impacts of the COVID-19 health pandemic remain highly uncertain in depth, breadth, and timing.”
He went on say, “This backdrop is not one that should be supportive of record high asset prices however, the magic of zero interest rates and record fiscal stimulus has forced risk aversion aside for now.”
The company is optimistic yet realistic about the future. Ryder expects to see further instances of mispricing creating opportunities for the company to deploy capital. Ryder explains that in the absence of viable investments, the company will look to increase its cash weightings, while maintaining its indirect exposure to gold.
The Ryder share price currently sits at $1.50, 7.14% higher than yesterday’s close and 3.4% higher in year-to-date trading.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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