Marwyn Value Investors (MVI) has published its annual results for the year ended 31 December 2022. Unfortunately, the announcement doesn’t provide much in the way of detail as to how MVI generated its returns over the year, so we can’t comment on that here, but it says that, for its ordinary shares, it generated an NAV total return of 1.5% in comparison to 0.3% for the All-Share. However, shareholders won’t have felt the benefit of this as the discount has widened even further- from 35.2% at the beginning of the year to 46.3% at the year end.
Performance summary – ordinary shares
- Net assets of £98.1m, a decrease of £3.8m since 31 December 2021, with £5.0m paid out in dividends
- NAV per share of 176.8p as at 31 December 2022.
- Total NAV return of 1.5% since 31 December 2021 (versus 0.3% for the All-Share).
- Share price down 24.0p since 31 December 2021 to 95p as at 31 December 2022. The share price discount to NAV increased to 46.3% as at 31 December 2022, compared to 35.2% as at 31 December 2021.
- Quarterly dividends of 2.265p per share paid in February, May, August and November 2022 with a further quarterly dividend of 2.265p expected to be paid in each quarter of 2023. Total annual dividend of 9.06p per share represents a yield of over 9.7% (based on share price of 92.5p as at 31 March 2023).
- Look-through cash balance of £44.4m at 31 December 2022 held within the fund structure, supplemented by significant capital available for investment within the portfolio entities.
Performance summary – 2016 realisation shares
- Net assets of £3.5m, an increase of £0.8m since 31 December 2021
- NAV per share of 376.0p as at 31 December 2022.
Performance summary – 2021 realisation shares
- Net assets of £668k, an increase of £6k since 31 December 2021
- NAV per share of 185.3p as at 31 December 2022.
Manager’s Review of 2022 and Outlook for 2023
“In 2022, we delivered a modest positive NAV performance for ordinary shareholders of 1.5% amidst a difficult market environment, with the average UK small-cap declining by 22%. Our significant cash position will now allow us to capitalise on falling valuation multiples and tightening credit conditions.
“These market conditions are revealing the weaknesses in leveraged investment models, which we have consciously avoided, and are creating special situations that present attractive entry prices. With continued outflows from UK active equity funds, our focus remains on opportunities where we can act as the principal investor and funding source.
“Our investee companies, such as AdvancedAdvT led by Vin Murria OBE, have demonstrated agility and discipline in their investment activities. Although the offer for M&C Saatchi did not proceed, the financial impact on AdvancedAdvT was minimal. With over £100 million in cash, a strong roster of institutional investors, and a significant decline in technology valuations, we believe AdvancedAdvT is well-positioned for 2023 under Vin’s leadership.
“Le Chameau, our premium footwear business led by Corry Taylor, has made significant strides since 2019, overcoming global shipping and supply chain disruptions as well as a post-Covid slowdown in demand. With a focus on expanding its direct-to-consumer online business and increasing its addressable customer base, Le Chameau aims to capitalise on the long-term growth prospects of the premium outdoor market. However, the company will proceed cautiously in the current market environment and prioritise consolidating its achievements to date.
“During 2022, we also announced new management partnerships with Mark Hodges through Marwyn Acquisition Company II Limited and Waheed Alli through 450 plc (previously Marwyn Acquisition Company plc). Mark Hodges brings a wealth of experience from leadership roles at Centrica, Aviva, and Reassure and will focus on the pensions and wealth management space. Waheed Alli has an exceptional background in media and entertainment, with successful ventures such as Planet 24, Shine, and Silvergate Media to his credit. We are excited about the opportunities to acquire proven entertainment properties and intellectual property that can be exploited in new ways and through new channels.
“In terms of prior investments, we were pleased to recognise the £10 million VAT claim from our previous investment in Praesepe, with the final £5 million cash receipt expected later this year.
“We are deeply grateful for the support we have had in 2022 from our investors and the Board. We expect 2023 to be a very active year, we believe we have a fantastic group of management partners, and, as we found in the years following the financial crisis, we believe it is in these types of investing environments where our investment strategy comes to the fore.”
Comments from Robert Ware, chairman of Marwyn Value Investors
“Despite the challenges of 2022, the Board acknowledges the Manager’s persistent efforts to identify and collaborate with leading Management Partners, resulting in the appointment of Mark Hodges to MAC II and Waheed Alli to 450 plc. Their extensive experience and deep sector knowledge equip their respective acquisition vehicles with exceptional leadership and expertise, allowing them to continue pursuing their stated investment strategies.
“The acquisition vehicles have exercised patience in identifying and executing platform deals, evaluating a significant number of opportunities. With the Fund maintaining its cash resources during these uncertain times, it is well-positioned to support the acquisition vehicles as they progress with their stated investment strategies throughout 2023 and beyond.
“With the additional Management Partner appointments and considering the current level of opportunities we are seeing across the sectors that are the focus of our current acquisition vehicles’ investment strategies, I believe that with the support of the Manager and our cash resources, the Company is well-positioned to capitalise on opportunities that will lay the groundwork for robust portfolio performance in the coming years.”