There appears to be a big disconnect between Augmentum’s share price and the performance of its underlying companies. Over the year to the end of March, its NAV grew by 19pc, while its top 10 investments recorded average year-on-year revenue growth of 96pc and typically have 17 months’ worth of cash to support their growth plans.
Questor believes there is much to feel positive about when it comes to Augmentum’s portfolio, which includes Tide, a bank for small businesses, and Onfido, which provides fraud prevention software. Fintech businesses owned by the trust continue to gain market share and to grow their revenues, as consumers and businesses reassess their relationships with banks and other financial services firms. They offer a fresh perspective, cutting-edge technology and the ability to digitize archaic and time-consuming processes.
Augmentum also recently banked £42.8m from its stake in interactive investor, the investment platform, which was sold to asset manager Abrdn. This represents a return of 11 times the money they invested. This brings the fund’s cash pile up to £61m, which is available to take advantage of new opportunities and to top up existing ones. However, the management team, led by Tim Levene, will only do this at sensible valuations.
“We think this trust offers good value,” Mr. Lockyer concludes.
Questor agrees. This is one to buy for the long term. It may take time for the market to realize that Augmentum’s NAV is resilient, but hopefully our patience will pay off.
Questor says: buy
Ticker: AUGM
Share price at close: 109.3p
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