After a disappointing year, Oryx International fund manager and small company activist pins hope on UK revival continuing in response to Trump turmoil.
Oryx International Group (OIG), the £169m global smaller companies trust run by activist Chris Mills, has reported a “disappointing” 2.4% drop in assets for the year to 31 March but is encouraged by signs of an end to the exodus from the UK stock market.
Like many UK-focused small-cap funds, Oryx saw a good first half of its financial year overturned by last October’s tough Budget and market turmoil following the surprise re-election of US president Trump in November.
The volatility spooked a private equity bidder for the company’s largest holding, Niox Group (NIOX), which pulled out of a takeover approach that would have returned £28m to Oryx.
Nevertheless, Niox, a specialty pharmaceutical company focused on respiratory diseases, was a strong performer, returning 18.8% and increasing to 11% of the portfolio.
Hargreaves Services (HSP), a property and infrastructure specialist, returned 23.5% having reported buyer interest in the first tranche of its renewable land portfolio. It is the second biggest holding at 6.7% of assets.
Carr’s Group (CARR) should yield a cash windfall soon after engagement by Mills, chief executive of Harwood Capital, sparked a strategic review and the sale of its engineering business for £75m.
After a busy previous 12 months for bids, the 2024 financial year was quieter, but Mills, chief executive of Oryx, said, “we believe several of our assets have or will attract corporate activity in the future”.
The small private equity portion of the portfolio was boosted by the sales of IEnergiser, a business processs outsourcer, and GYG, a superyacht maintenance provider, at 100% and 33% uplifts to their carrying values.
However, the underperformance of smaller positions in Avingtrans (AVG), EKF Diagnostics (EKF), Kitwave Group (KITW) and Flowtech Fluidpower (FLO) weighed on returns, Mills said.
UK sees silver lining from tariffs
Nevertheless, Mills was encouraged to see the “beginnings of capital repatriation” after four years of selling of small-cap stocks by UK investors. He said the silver lining from the turmoil unleashed by Trump’s tariffs in April had been the start of a rotation of money away from the US to Europe and the UK. That has seen the FTSE Small Cap index rally 21% in the past three months with Oryx shares up 14.5%.
“It is clear that UK assets are materially undervalued by the high volume of takeovers we have seen in the last few years and that continues today. As ever, we are confident in the current portfolio given the limited exposure to global tariffs, health balance sheets and core appeal to third party acquirers,” said Mills.
Nigel Cayzer, the company’s chair, stressed the ‘excellent’ long-term record of underlying investment growth with net asset value (NAV) up 493.8% over 15 years, 183.8% over 10 years and 83.5% over five years.
However, the latest total shareholder returns of 39.7% and 134% over five and 10 years show the impact of the wide discount that sees the shares trade 32% below NAV. Against this, unusually, there have been no buybacks to mop up unwanted stock and boost net asset value, which may reflect Mills’ large personal holding in the company.
