Buffettology Smaller Companies announces intention to float

Buffettology Smaller Companies Investment Trust PLC has announced its intention to launch an initial public offering and float its shares on the premium segment of the Main Market of the London Stock Exchange. Buffettology is seeking to raise a minimum of £100 million via an initial placing, an offer for subscription and an intermediaries offer of redeemable ordinary shares of £0.01 each. A twelve month placing programme will also be launched in conjunction with the initial fund raise.

Buffettology Smaller Companies to be managed by Sanford Deland

Sanford DeLand is to be the company’s investment manager, led by Keith Ashworth-Lord (CIO of Sanford Deland Asset Management Limited). Sanford DeLand manages approximately £1.4 billion across two open ended funds, the CFP SDL UK Buffettology Fund and the Free Spirit® Fund.

Investments will be made by applying the methodology of “Business Perspective Investing”, which starts with the premise that there is no philosophical distinction between part ownership (i.e. buying shares in a company) and outright ownership (i.e. buying the business in its entirety). In combination, the Company will seek to invest in the securities of companies where such securities can be acquired at a fair price in relation to the estimated intrinsic worth of the business.

The Company is seeking to provide shareholders with an annual compounding rate of return over the long term, defined as 5-10 years, which is superior to the Numis Smaller Companies plus AIM (Ex Investment Trust) Index. The Company will predominantly invest in the securities of companies listed or traded in the United Kingdom with a portfolio consisting of 30-50 companies with market capitalisations at the time of investing ranging from £20m-£500m.

Why invest in Buffettology?

The ITF provides the following points as key reasons for investing in the trust:

• Proven track record – The Company will be managed to the Business Perspective Investing philosophy that has been successfully employed by Sanford DeLand in their UK Buffettology and Free Spirit funds, ranked first and third in the IA UK All Companies segment, respectively, since each of their launches.
• UK Smaller Companies opportunities – The Company will provide access to UK smaller companies, an asset class that has historically outperformed other major asset classes over the long term2. Smaller companies offer a particularly attractive investment universe for active managers as they tend to be less well researched by traditional broking houses and less well understood by the investment community.
• Long term investment horizon – A focused portfolio of investments looking to identify the large companies of tomorrow and participate in their long term growth. By its very nature, Business Perspective Investment requires a long term time horizon, which, for the avoidance of doubt, means 5-10 years at the very least. The ideal holding period is forever.

Comments from Alex Brotherston, CEO of SDL Limited

“We are delighted to be increasing the options for investors to access Sanford DeLand investment expertise with the launch of the Buffettology Smaller Companies Investment Trust.”

“The Sanford DeLand investment team collectively has many decades of experience of applying the principles of Business Perspective Investing. The team will build on experience gained from running the UK Buffettology and Free Spirit Funds, combined with embedded knowledge in the smaller quoted company market, which will provide the necessary insight and expertise to take advantage of this opportunity for the Company’s shareholders.”

Comments from Keith Ashworth-Lord, CIO, SDL Limited

“We believe that the UK small cap market offers excellent investment opportunities to experienced managers who know what to look for and have the freedom to take a long-term view. Our Business Perspective Investing approach is ripe for application to smaller companies and presents an opportunity to deliver superior returns for our shareholders, over the long-term.

“The structure of a closed-ended investment trust, rather than an open-ended fund, means that many of the liquidity concerns over investment in smaller quoted companies can be addressed. The investment trust structure (and permanency of capital) should ensure that we can take a genuinely long-term investment perspective.”