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magazineMake hay from currency fluctuations with Record
Would you like to own shares in a company that is sitting on piles of cash, is prepared to return it you at regular intervals and has also been growing at a fair lick?
We give you Windsor-based Record (REC). The company helps large institutional investors such as pension funds reduce the risk of losing money due to changes in the values of currencies.
The largest part of the business, passive hedging, seeks to eliminate the impact of currency movements when a firm’s revenue is dominated in foreign currencies.
Model gaining currency
Record’s multi-product strategy combines currency hedging with forex trades in an attempt to generate returns for the client.
It also offers dynamic hedging, or active currency management, where the firm decides if a currency movement is going to result in a loss for its client or not.
The company’s chief executive James Wood-Collins says ‘the business thrives on turbulence, uncertainty and political change which all impact the currency markets’.
But you don’t need to know the intricacies of how currency markets work to realise that Record is good investment; it’s clear in the numbers.
Record’s results for year ending March 31 2017 show a business on the up and up. Its assets under management equivalent hit a record high £46.6bn. ‘Equivalent’ because unlike other asset managers, it doesn’t hold any physical securities for its clients like stocks and bonds.
Record is a cash cow
It’s a problem we’d all like to have, what do I do with all my excess money? There’s no point leaving it in a bank with very low interest rates so Record has various options, all potentially good ones for investors.
The company is sitting on cash of £29.2m of which all it needs to satisfy regulatory requirements is around £9m.
Record is paying out a £2m special dividend for its last financial year, or 0.9p a share. The 2p ordinary share is up 20% from 2016 and the company says this is not a one off.
It is aiming to return to shareholders any excess of earnings over the sum of ordinary dividends in the form of special dividends.
So you have an income which could reach a yield near to 6% if Cenkos analyst Rae Maile is correct in his projections and a company with a not too racy 12.9 times forecast earnings ratio for the year ending March 2018. (DS)
Record (REC) 46.12p
Stop loss: 31p
Market Cap: £102m
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