ODYSSEAN INVESTMENT TRUST (OIT) 114.5p
Gain to date: 17.4%
Original entry point: Buy at 97.5p, 10 September 2020

Our ‘buy’ call on Odyssean Investment Trust (OIT) has generated a swift 17.4% return, with the discount to net asset value narrowing from 9.4% to 4.7%, on rising awareness of what makes this concentrated portfolio of smaller companies a bit special.

In our original article, we highlighted how Odyssean’s managers Stuart Widdowson and Ed Wielechowski have proven expertise in picking takeover candidates. That skillset has been demonstrated once again by a recent offer for specialty chemicals company Elementis (ELM), the trust’s second largest holding, by Minerals Technologies, marking the fourth bid approach for one of Odyssean’s companies in the last year.

Rejected by Elementis, Widdowson views the 107p all-cash offer as a ‘highly opportunistic approach’ which substantially undervalues the business and its prospects. Indeed, he regards Elementis as ‘a “double upside stock” – well-positioned for the end market recovery as the world normalises from Covid, as well as having “self-help” initiatives which the management can execute to improve underlying operational efficiency and returns.’

We have faith that if prized portfolio assets are ultimately lost to takeovers then the managers can replenish the fund with new ideas that have the potential to deliver outsized returns.

SHARES SAYS: Keep buying Odyssean Investment Trust.

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