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 24 September, Tetra Tech outbid WSP with a recommended 222p/share cash offer, a 7.8% increase vs. WSP's and 110% premium to the start of the offer period.</li>
<li>The new offer represents 19.1x EV/Fwd EBIT and 25.7x Fwd P/E, and seems dilutive for Tetra Tech. Irrevocables and letters of intent amount to 27.53%.</li>
<li>Expect the shares to quickly close the spread at the beginning of the 26 September trading session and the market to possibly await a counterbid.</li>
</ul>


On 24 September, Tetra Tech outbid WSP with a recommended 222p/share cash offer, a 7.8% increase vs. WSP's and 110% premium to the start of the offer period.
The new offer represents 19.1x EV/Fwd EBIT and 25.7x Fwd P/E, and seems dilutive for Tetra Tech. Irrevocables and letters of intent amount to 27.53%.
Expect the shares to quickly close the spread at the beginning of the 26 September trading session and the market to possibly await a counterbid.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>BHP launched a bid for <a href="https://www.smartkarma.com/entities/oz-minerals-ltd" target="_blank" data-smartkarma-citation="entities:1138:1" rel="noopener">OZ Minerals (OZL AU)</a>. OZ has rejected it as being too low. BHP said the Offer provides certainty of funding growth. They are both right</li>
<li>This Offer price for <a href="https://www.smartkarma.com/entities/lifestyle-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:112:1" rel="noopener">Lifestyle International Holdings (1212 HK)</a> is probably sufficient to get up. It has been declared final for that reason. Optically $6/share was a more reasonable level.</li>
<li>
<a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a> announced another ¥100bn buyback over three years. However, the buyback is too small to pay back the Kim family inheritance tax obligations. </li>
</ul>


BHP launched a bid for OZ Minerals (OZL AU). OZ has rejected it as being too low. BHP said the Offer provides certainty of funding growth. They are both right
This Offer price for Lifestyle International Holdings (1212 HK) is probably sufficient to get up. It has been declared final for that reason. Optically $6/share was a more reasonable level.

Nexon (3659 JP) announced another ¥100bn buyback over three years. However, the buyback is too small to pay back the Kim family inheritance tax obligations. 


Last Week in Event SPACE: Softbank, OZ Minerals, Lifestyle, Nexon, Magic Empire, Swire Pacific

<ul>
<li>WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.</li>
<li>The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.</li>
<li>The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.</li>
</ul>


WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.
The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.
The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.


WSP Global/RPS Group: More Consolidation In Engineering Consultancy

United Kingdom

RPS Group plc is an independent environmental, health, safety and risk consulting group, which provides scientific, planning and design advice to customers in the commercial and government sectors.

RPS Group PLC (RPS 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

Tetra Tech Outbids WSP

Tetra Tech trumps WSP's offer for RPS. Consolidation is ongoing within civil engineering. Both companies aim to capture market share in ESG...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Softbank, OZ Minerals, Lifestyle, Nexon, Magic Empire, Swire Pacific

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

WSP Global/RPS Group: More Consolidation In Engineering Consultancy

In another consolidation move in engineering consultancy services, WSP agreed to acquire RPS Group in a well-timed transaction at a 76% premium,...

Jesus Rodriguez Aguilar