A 20% share price rally last month has tipped Onward Opportunities (ONWD) above £50m of assets for the first time since launch over three yeas ago.
The UK smaller companies investment company, which came to market with less than £20m in March 2023, said a string of positive company results had helped propel the portfolio to £52m with a record high net asset value of 148.5p per share at the end of August, up 17.5p from 131p at 31 July.
That underpinned a 24.5p leap in the share price from 124.5p to 149p, leaving the shares up 43% over three years, below the 46% average of investment trusts in the UK Smaller Companies sector.
This follows a tough first half when asset value fell 14.1% and its shares slid 15.9% as its holdings in smaller companies were sold off in response to the US-led war on Iran and the resulting spike in the price of oil.
Rentguarantor Holdings (RGG), a provider of rental guarantees to professional landlords that was Onward’s top holding at 9.9% of assets at the end of July, surged 74% last month to a market value of £128m. That followed half-year results showing revenues soared 250% to £3.4m as a result of increased demand from the introduction of the Renters’ Rights Act in May.
Strong updates from other holdings on AIM, the junior stock exchange, such as Likewise Floorings (LIKE), engineering company Mincon (MCON), Angling Direct (ANG), Aurrigo (AURR), a designer of driverless cars, and podcast platform Audioboom (BOOM) also drove returns.
Laurence Hulse, the fund manager at Dowgate Wealth, said it had been a real achievement to grow the fund from the market turbulence around banks in early 2023 when he had begun to search for “gems amongst the rubble”.
“Whilst growth of the fund and investment performance fell some way off at Easter with the outbreak of war in the Middle East, the portfolio has had a chance to charge back over the summer taking the fund to new heights,” he said.
Chair Andrew Henton said: “Public market capital allocation to the UK’s smaller companies – which are recognised as foundational for economic growth – has been low for many years. The value opportunity being missed thereby was one of the reasons underlying the formation of the company. It is very satisfying to have seen some of that value, hitherto overlooked by the market, being crystalised within Onward during the three years since launch.”
Our view
Matthew Read, senior analyst at QuotedData, said: “Passing £50m of net assets just three-and-a-half years after launch is a quite an achievement when you consider the significant headwinds during that period. The benefits of scale should start to kick in, with a lower management fee above £50m and fixed costs spread across a larger asset base. The portfolio will likely remain volatile, but ONWD could have a decent future ahead if it can find ‘gems among the rubble in UK small caps’ as its managers like to say.”
