Kelso Group Holdings Plc

It's great to see the changes by the FCA around the London listing rules. Standard list companies will finally become part of the main Premium UK Index with several important knock-on benefits to those listed companies joining and getting the index upgrade. In theory the likes of Wise PLC with a market cap of over £7bn will join the FTSE 100 and the FTSE 250 index will get at least three new participants with billion pound market caps being Deliveroo, THG and Oxford Nanopore. Passive funds should now buy their weighting in the new entrants. Some big UK pension funds like Legal & General which have large passive allocations will most likely become shareholders in these UK based businesses. Active fund managers benchmarked against the Premium Index, which generally don't appear on the register of these stocks, will also need to consider them. We hope, particularly in the case of THG due to our shareholding, that in the coming months, this change will result in some uplift in shareholder value. Congrats to the FCA for driving through this very important and helpful change for the UK market. #LegalandGeneral #WisePlc #DeliverooPlc #OxforNanoporePlc #THGPlc

Great to see Stephen Bellamy, an experienced PLC director, with the ideal track record to take on the role as chairman of The Works. With near £300m of revenue through its c500 shops, EBITDA of £6m last year and market cap of c£15m, we think Steve has a lot to go for.

NCC Group and Angling Direct PLC Trading Updates We’re pleased to see the positive statements from both companies today. NCC is particularly strong with both operating profit and net debt ahead of consensus, the latter showing strong cash conversion and now only at a very comfortable 1xEBITDA. The Managed Services division, which we’ll find out more about today at the Capital Markets Event, is a real gem, showing 36% growth. Overall a really strong update with plenty more to do and lots more upside to come NCC FY24 Trading Update - click to read below. https://lnkd.in/eFKEZ5zJ Angling Direct’s statement is short and sweet but confident. Despite poor weather, the business has produced an inline and “resilient trading performance” for the first quarter of the current financial year. With its strong balance sheet, it’s well placed to take advantage of any market recovery. Angling Direct PLC AGM Statement - click to read below. https://lnkd.in/e6ACn7y4

The Board of Kelso noted the profile article in the Saturday Times Magazine on the THG CEO (read article below). In it, he compared small minority shareholders to his dogs: ‘Activist investors have suggested that he sell off the nutrition arm of the business. He is dismissive of the suggestion from the small group of investors. “My dogs have got more shares and you’ve met them.”’ We would encourage shareholders to read the article. Assuming Kelso is the activist being referred to, we have always stated THG should look to demerge the three businesses and sell off majority or minority portions of each ideally to strategic investors, as mentioned in our RNS from December 2023: https://lnkd.in/e7cxxiga The Board of Kelso has concluded change is needed at THG and will be voting against the Chairman at the upcoming THG AGM on 24th June 2024.

Kelso released its AGM trading statement last week - see attached. #Kelso #THG #AnglingDirectPlc #TheWorksPlc #investments #marketreview #NCCGroupPlc #shareholdervalue

Kelso has shared how it is voting at THG’s forthcoming AGM. Kelso’s vote against the Chair is centred around its frustration that THG is still on the Standard List of the LSE two and half years after committing to move to the Premium Index. With the Premium Index of the LSE should come extra demand for shares from tracker funds, ETF’s and active funds. Kelso believes the move to the Premium List will help the strategic optionality of THG going forward.

Following NCC Group’s excellent capital markets morning at the London Stock Exchange last week focusing on its escrow service business ‘Escode’, Kelso is pleased to announce an increased shareholding in NCC to 2.2m shares. We look forward to attending the Cyber Security update in June.

Kelso is pleased to release its annual results from its first year of trading in 2023 showing a 55% IRR, above our 25% target. Through active engagement Kelso continues to try and help UK listed companies unlock their true value on market.

Is the UK stock market undervalued …   There’s been lots of commentary about the state of the UK stock market and what can be done. There are some obvious ideas as to how to fix it of which erasing stamp duty should be top of the list. In the meantime, the UK remains undervalued and investors require three main traits; analysis, patience and, with full disclosure, a stomach for volatility if you want to own stocks directly. Value and opportunity is out there and these are 3 recent historic examples of the potential rewards.   1.⁠ ⁠ Ascential PLC - 25th Jan ‘23 share price 200p with mkt cap of £880m, strategic review conclusion that the business will be split into 3 with possible U.S. listing for Flywheel. Roll forward 9 months to 26th Oct 2023 share price of 213p with a market cap of £940m. Next day shares rally 35% as Omnicom ($18.5bn mkt cap) bids £740m for digital commerce and APAX bids £700m for WGSN leaving the third part still listed with ebitda ongoing of £65m to £70m. Final detail of the £850m of cash return to shareholders was announced on Thursday last week as the shares hit 318p with a value of of £1.4bn. A 50% + reward so far for shareholders.    2. Marlowe plc - 14th February ‘24 share price 350p with mkt cap £338m. Next day shares rally +35% as company sells one division which equates to 20% of group revenue and 40% of ebitda for £430m being 25% more than the pre deal mkt cap. The clever Inflexion team are the buyer. Marlowe shares sit today at 522p with a market cap of £505m being another 50% return.    3.⁠ ⁠Hotel Chocolat Plc - one to never forget - 16th November 2023 140p and the next day it receives a 375p cash bid from Mars giving an overnight 170% return.  Other recent examples of Pendragon, Wincanton and On The Market each had 100% share rises. Sadly, over 50 companies were taken over from the LSE last year.   Kelso is a focused listed activist acquisition company (KLSO) with 4 listed stocks being THG plc, NCC Group PLC, The Works.co.uk PLC and Angling Direct PLC. We believe each of these stocks has the potential for 50%+ returns following Kelso's first year performance in 2023 of an IRR of over 50%. We hope that returns are on market and not off market. If the market doesn’t value these and other mid cap stocks correctly then a third party probably will. In the meantime we encourage all companies on the UK markets to carry on creating value.   There are many ways investors can get exposure to the small / mid cap market several of which are not household names; Schroders small / mid funds; Rockwood Strategic IT plc (RKW), Odyssean IT plc (OIT); Harwood funds; Killik special sits; Onward Opportunities Ltd (ONWD); Slater Growth Fund; Gresham House funds to name a few. Yes, the UK is undervalued. Investing in the UK should give investors a feel good factor to help save our stock market BUT you could also make some big returns in the next few years. #ukstockmarket #markettrends #investment #marketupdates

Interesting to see one of the UK’s biggest investors Legal and General getting behind Share Action which is leading the charge from an investor perspective getting chocolate and sugar companies to improve the mix of their products from a health and nutrition perspective and why Myprotein within THG plc is so relevant.