Fast Growing Independent Equity Firms Doing Business in the UK

There are many independent private equity companies based in the UK that are succeeding in making profitable equity investments for their clients. The top companies are the ones that structure client services that are geared towards meeting the needs of and fulfilling the investment challenges faced by businesses and individual customers struggling to meet tough demands in an uncertain economic climate. They are especially well equipped to actively manage their portfolio of businesses through responsible business practices, which result in lower risks and added value for shareholders. Following is a list of only a few of the highly qualified and dynamic investment companies working out of the UK who excel in helping their corporate customers, blue-chip companies, innovative entrepreneurs and international organizations to reach their goals by making solid equity investments that are profitable in the short run as well as long term.

Greshem Private Equity

Greshem Private Equity is one of the leaders in the range of independent and locally based mid market equity investors. The company has earned a worthy reputation of consistent and successful investments and rich partnerships with local management teams. The firm offers regional services that enable it to provide valuable local contacts with regional knowledge that open the doors to new opportunities for long-term success. All business investments are carefully researched to ensure they are based on a solid business model, are flexible enough to withstand a competitive market, are consistent with the generation of a consistent cash flow and can work seamlessly as partners with Greshem representatives. Some of the sectors that Greshem invests in are industrial businesses, energy and environment, consumer products, business support services and pharmaceuticals.

Rosemont Group

The Rosemont Group is a privately funded investment company established by renowned investment entrepreneur Frederick Achom in 2002 and was recently valued at over $40million. Along with a myriad of investments in popular international brands of luxury products and services, the Rosemont Group is active in the UK equity investment market. The experienced team of investment professionals seeks out existing business ventures with high potential and make either capital investments or utilize its own resources to grow the company. Through its careful selection of high potential start-ups and companies on the ground, Rosemont Group creates investments with long-term capital growth and positive cash flow. The team’s expertise and particular skill sets take into account operations and management, sales, strategic business planning, financial consultations and marketing and promotions. The Rosemont Group is well situated to offer either passive support in the realms of capital or direct resources but in both directions the company provides intellectual capital as well as active support at multiple levels in wholly owned companies, joint venture projects and well-formed partnerships. The Rosemont Group specializes in equity investments from $1 – $10 million, but is flexible when it comes to potential projects or promising partnerships that do not fit within that range.

NVM

As the stock market in the UK is on the road to recovery with a slow moving growth in the economy, NVM has taken measures to succeed during the upswing as its investors share in the company’s growth through its list of carefully chosen funds. The company pinpoints potential UK investment opportunities and manages 200m in funds, including Northern 3 VCT PLC, Venture Capital Trusts and Northern Venture Trust PLC. A total of 4.5million was earned from investments in new venture capital funds and profits from sales of investments reached 2.0 million. Positive trading results are impacting the portfolio worth with generally increased values. NVM takes into account the current market conditions by being very careful when selecting new investments and employs a top-notch investment management team to oversee those investments, which ensures a steady maturing of company portfolios resulting in favorable returns to the shareholders. Providing high returns to investors that are both long-term and tax-free through capital growth and good yields on dividends are the focus of NVM investments. Its professional and experienced venture capital executives work out of offices in Reading and Newcastle upon Tyne where they successfully manage the funds and investment trusts.

Graphite Capital

Placing a major emphasis on the mid market companies, Graphite Capital is a one of the top equity investors in the UK. The London based firm became independent in 2001 but its investors have been successfully raising and managing private equity funds since its inception in 1981. Currently under its equity investment management are funds worth more than 1.2billion.

Lloyds Banking Group

One of the more accessible equity investment firms is Lloyds Bank, which works through offices nationwide and specializes in the areas of corporate finance, capital markets, risk management, international trade and banking. On staff are teams of financial professionals whose knowledge base cover a wide swath of sectors including business services, energy, leisure and health, manufacturing and transportation, retail and consumer products, financial institutions and construction and real estate. Its corporate customer base numbers 30,000 and includes blue chip companies as well as entrepreneurs rapidly reaching new business heights.

Deloitte Touche Tohmatsu Limited

Deloitte Touche Tohmatsu Limited (DTTL) is an independent UK company that provides regional equity investment services. The firm’s trademark is its unwavering pursuit of high quality investments and sustaining trust of its clients throughout every level. Deloitte is known for its collaboration, industry expertise, innovation and exceptional client service reaching into such areas as tax consultation, corporate finance and audits.

High Dividend ETFs – An Equity-Income Investment Fantasy

A week or two ago, while exchanging ideas at an AAII chapter meeting somewhere in the Northeast, a comparison was made between a professionally directed “Market Cycle Investment Management” (MCIM) portfolio and any of several “High Dividend Select” equity ETFs.

Many years ago, I raised the question (to no one in particular): what’s better for your financial health, 6% tax free/tax deferred or 3%? There is absolutely not one molecule of similarity between any MCIM portfolio and any Index ETF, period. You decide which is best for you.

I took a closer-than-I-normally-would-bother-to look at three different equity ETFs in the “high dividend equity” category: PFM, FDL, and VIG. They had almost everything in common, except their Morningstar rating, which varied from two-star to five-star. Interestingly, the five-star rated fund seemed to be the most speculative.

Each was constructed, or “marked-to,” the weighting of the securities in a specific index, such as the “Dividend Achievers Select Index.” These indices are comprised of mostly large capitalization US companies with a history of regular dividend increases.

The ETF owns every security in the underlying index, and it does so absolutely all of the time. There is no thought of profit taking – and no manager to do it.

Consequently, one would expect that (in addition to replicating the market value of their own index) each ETF’s performance would pretty much track that of the NYSE only, dividend paying only, Investment Grade Value Stock only, Investment Grade Value Stock Index (IGVSI).

They didn’t do either over the last five years – actually, none of these ETF securities have been in existence for more than five years and none has surpassed its pre-financial-crisis high. Still, these funds would probably “perform” better cyclically than most open-end mutual funds.

On the other hand, the similarly constructed IGVSI has surpassed its 2007 all time high, and the MCIM portfolios which use it as a “selection universe” have done far better than that.

What’s a selection universe? In the ETF case, it’s everything in an index at any price, with positions tweaked occasionally to reflect the equities held in the “real” index – without considering profit or loss. In regular mutual funds, its whatever the boss tells the manager to buy.

An MCIM portfolio manager would “select” from the total universe just those stocks that meet a set of forty-one-year-time-tested buying standards for additions to an investment portfolio. He or she would also be taking profits on issues that have met pre-defined selling targets.

That’s right, there is never any “smart cash” in an ETF.

Finally, in an MCIM portfolio, there is no need for periodic, market-value-driven, position adjustments because diversification is based on the cost-basis of portfolio holdings. Is it clear that weighted indices have little concern with diversification – and why should they?

These are not real investment portfolios. They are sector-tracking mechanisms that have been securitized as Wall Street gambling devices. The three ETFs contained 206, 100, and 142 positions, respectively, but each had roughly 50% of the market value in the top 10 holdings.

And who do you think is influencing the fund creator’s weighting judgment?

MCIM portfolios never hold even fifty equities (even at the depths of a correction) and individual positions are never allowed to exceed 5% of total portfolio cost basis. Yes, more concentrated while still being well diversified, and managed to take advantage of the different individual price cycles of all qualifying securities.

On the issue of income, where the questioner’s position was that these elite dividend producing companies consistently raise their dividends and thus are excellent income providers – the whole premise is wrong. The purpose of stock ownership is growth production in the form of capital gains – not income in the form of dividends.

Dividends are a sign of a company that is both strong financially and respectful of the investment made by shareholders – certainly a less risky class of equities. But there is a whole ‘nother family of securities (generally safer and more generous with cash flow than any equity) intended primarily for income production.

The average income of these three ETFs is roughly 2.5% – probably less than the pre-trading income of just the equity portion of the most aggressive of the three MCIM portfolio asset allocations.

Having a required 30%, 60%, or 90% cost-based asset allocation to income securities (now yielding over 6%) is having a high income portfolio without the added risk of some of the futures speculations that were included in at least one of the ETFs.

These ETFs have a basis in IGVSI quality equities, and could be excellent trading vehicles. Certainly, they can be expected to track the IGVSI and the more popular (but totally manipulated) DJIA and S & P 500 averages.

But traded they must be, or they are just another “buy ‘n hold” archaism. ETFs are actually not managed at all. The “passive management” referred to is merely the readjustment of holdings to mirror the weightings in a separate and totally unmanaged index.

MCIM “mirror” portfolios, on the other hand reflect the actual transactions that take place within a totally day-by-day, actively managed portfolio. They produce capital gains in addition to dividends and interest, and assure a steadily growing “base income” in the process.

Market Cycle Investment Management Portfolios are investment portfolios; ETFs in general are derivative gambling devices; High Dividend ETFs are quality-and-income equity derivative gaming devices that could be useful around the bottom of the next correction – the next prolonged correction, that is.

The investment gods are not happy with ETFs, or with crash-causing derivative products in general – stocks and bonds (and active management) may not be as cheap or as sexy, but they are far better for your financial health.