Odyssean Investment Trust (OIT) 180.49p

Gain to date: 85%

We said to buy Odyssean Investment Trust (OIT) at 97.5p in September 2020, highlighting that managers Stuart Widdowson and Ed Wielechowski had proven expertise in picking companies that could prove attractive to private equity or strategic trade buyers.

Progress has been positive, and we have continued to champion the merits of this concentrated smaller company portfolio in the intervening period.

WHAT’S HAPPENED SINCE WE SAID TO BUY?

The shares hit a new all-time high in early 2023 at 182.5p and are now up 85% since we originally said to buy.

Odyssean has extended its superb run of selecting takeover targets, with the latest holdings to draw premium-priced bids being sausage skins maker Devro (DVO) and pensions specialist Curtis Banks (CBP:AIM).

Widdowson says the latest bids ‘reinforce how the investments we select can also prove to be attractive to trade or private equity-backed industry peers, despite the cost of borrowing increasing, given their strategic positioning and/or available cost synergies.’

Odyssean’s performance has been good considering the headwinds buffeting smaller companies, and the trust is the second-best share price total return performer in the Association of Investment Companies’ UK Smaller Companies sector over one year.

WHAT SHOULD INVESTORS DO NOW?

We view Odyssean as a must-have investment trust for a diversified portfolio. Widdowson and Wielechowski remain ‘extremely positive’ about the potential of the existing portfolio to generate attractive medium to long term returns via self-help and the scope for M&A.

They believe returns will continue to be differentiated compared with the archetypal growth or value investment products in the broader peer group.

The pair believes sentiment will improve and have a suspicion that the latter part of 2022/early 2023 may end up being a ‘good vintage’ for long term returns.

Shares also has faith that the pair will replace prized portfolio assets lost to takeovers with new ideas that have the potential to deliver outsized returns.

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