James Carthew: Oakley Capital selloff is way overdone
The private equity trust’s discount has stretched to become one of the widest in the sector, yet its portfolio is better positioned than some of its peers.
Oakley Capital (OCI) has been busy diversifying its portfolio in recent years and has taken stakes in some truly exciting and promising businesses. However, what was a steady narrowing of its discount – associated, I think, with its shift to a main market listing – has gone into reverse over the past quarter. Now, it is back at 38%, which is one of the widest in the private equity sector.
The culprit was February’s ‘SaaSpocalypse’, which saw the collapse of share prices of software stocks and the funds that invest in them such as HgCapital (HGT). The trigger was the progress achieved by agentic AI (specifically Anthropic’s Claude Cowork).
None of this is yet perfect, and it can also be very annoying – Microsoft’s copilot is desperate to help me write this article, for example. However, the power of these tools is undeniable, as is the rapid advance in their capabilities.
For some time, I have been arguing that OCI was cheap because it was outperforming HGT but traded on a much wider discount. That is still true today, with OCI’s five-year average NAV return of 14.3% per year beating HGT’s 10.7%, while on a 33% discount.
Crucially, OCI hasn’t achieved that by aping HGT’s approach. In fact, parts of the portfolio look decidedly old school.
Examples include… read more
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