Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>UK Industrials maintain top Sector weight. Real Estate and Consumer Discretionary underweights fund Technology overweight.</li>
<li>Investment Managers Industry group hits record exposure. REITs largely unloved by UK Small/Midcap funds.</li>
<li>Future plc remains the most widely held company. XPS Pensions and Foresight Group Holdings are the top overweights. B&amp;M, Weir Group and Rightmove lead the underweights.</li>
</ul>


UK Industrials maintain top Sector weight. Real Estate and Consumer Discretionary underweights fund Technology overweight.
Investment Managers Industry group hits record exposure. REITs largely unloved by UK Small/Midcap funds.
Future plc remains the most widely held company. XPS Pensions and Foresight Group Holdings are the top overweights. B&amp;M, Weir Group and Rightmove lead the underweights.


European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 10 February, the High Court made an order sanctioning the scheme of arrangement (effective on 14 February). 13 February will be the last day of dealings in the shares.</li>
<li>The listing will be cancelled on 15 February. Although a cheap offer, the need of capital for growth will benefit both K3 and the main shareholders who will remain onboard.</li>
<li>Considering the short timetable, from a risk arb point of view, this has been a good trade nevertheless.</li>
</ul>


On 10 February, the High Court made an order sanctioning the scheme of arrangement (effective on 14 February). 13 February will be the last day of dealings in the shares.
The listing will be cancelled on 15 February. Although a cheap offer, the need of capital for growth will benefit both K3 and the main shareholders who will remain onboard.
Considering the short timetable, from a risk arb point of view, this has been a good trade nevertheless.


Sun Capital Partners/​K3 Capital Group: Last Trading Day

<ul>
<li>Sun Capital offers 350p/share for K3, 10.7x EV/NTM EBITDA, lower than median of peers at 11.3x and lower than my DCF-based estimate of 404.7p (implied 12.4x EV/NTM EBITDA).</li>
<li>In spite of the underwhelming figure, the deal is likely to go ahead: top shareholders/managers (30.4%) will contribute to Bidco, and irrevocables total 10%. Court/GM meetings are on 26 January.</li>
<li>Gross spread is 0.71%. Assuming it all goes smoothly, the estimated annual return assuming settlement by 28 February is 7%. <strong>Long.</strong>
</li>
</ul>


Sun Capital offers 350p/share for K3, 10.7x EV/NTM EBITDA, lower than median of peers at 11.3x and lower than my DCF-based estimate of 404.7p (implied 12.4x EV/NTM EBITDA).
In spite of the underwhelming figure, the deal is likely to go ahead: top shareholders/managers (30.4%) will contribute to Bidco, and irrevocables total 10%. Court/GM meetings are on 26 January.
Gross spread is 0.71%. Assuming it all goes smoothly, the estimated annual return assuming settlement by 28 February is 7%. Long.



Sun Capital Partners/K3 Capital Group: Agreed Underwhelming Offer

United Kingdom

K3 Capital Group PLC provides financial services. The Company offers business transfer, brokerage, and corporate finance services. The Company serves customers worldwide.

K3 Capital Group (K3C LN)

UK Small/Midcap Fund Positioning Update

How are UK Small and Midcap equity funds positioned? We analyse the holdings of 106 actively managed UK strategies to find out.

Steven Holden

Sun Capital Partners/K3 Capital Group: Last Trading Day

K3 Capital Bidco have announced the sanctioning of the scheme of arrangement, which will become effective on 14 February. Considering the short...

Jesus Rodriguez Aguilar

Sun Capital Partners/K3 Capital Group: Agreed Underwhelming Offer

My fair value estimate DCF-based (9.5% WACC, 2.3% perpetuity growth rate) is 404.7, therefore 350p seems quite a modest offer, if not a lowball...

Jesus Rodriguez Aguilar

UK Small/Midcap Fund Positioning Update

How are UK Small and Midcap equity funds positioned? We analyse the holdings of 106 actively managed UK strategies to find out.

Steven Holden

Sun Capital Partners/​K3 Capital Group: Last Trading Day

K3 Capital Bidco have announced the sanctioning of the scheme of arrangement, which will become effective on 14 February. Considering the short...

Jesus Rodriguez Aguilar

Sun Capital Partners/K3 Capital Group: Agreed Underwhelming Offer

My fair value estimate DCF-based (9.5% WACC, 2.3% perpetuity growth rate) is 404.7, therefore 350p seems quite a modest offer, if not a lowball...

Jesus Rodriguez Aguilar

Sun Capital Partners/K3 Capital Group: Last Trading Day