James Carthew: Will good performance narrow Oakley Capital’s illogical discount?
In both underlying net asset value (NAV) and share price terms, the best-performing private equity fund over the past five years has been Oakley Capital Investments (OCI). The share price has kept pace with the NAV over that period – both returning about 23% per annum on average.
In NAV terms, OCI is the best performing of all investment companies over that period, which is presumably a factor in it winning a Citywire performance award last November.
Remarkably, private equity funds dominate the top 10 best performers so OCI is not alone in generating good underlying returns.
However, OCI’s share price discount narrowed and then widened over that period and is currently close to 32% below the value of its assets.
What is Oakley Capital doing that is different? For one thing, it focuses on quite a narrow group of sectors – technology, consumer and education – where the underlying companies operate in growing markets, and the application of new technology can drive efficiencies, allowing companies to take market share from incumbents. Over its 20-year history, Oakley has built up considerable expertise in these areas.
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