Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Who bought & sold Brewin after £32m tech writedown

1 comment
Who bought & sold Brewin after £32m tech writedown

On 13 May Brewin Dolphin surprised the market by taking a £32 million hit on a technology U-turn.

The news shaved 2.2% off the wealth firm's share price on the day and the analyst community said the tough decision could be ‘negative to sentiment’.

The decision to ditch plans to implement the Figaro software was the latest development in a major strategic overhaul at Brewin, which has seen it consolidate its regional network as part of a restructure to cut costs.

With the firm also embroiled in a High Court poaching row with rival Charles Stanley, it has been an interesting few months for Brewin, which is led by chief executive David Nicol (pictured).    

The stock continues to be a popular play among fund managers and a number of key trades took place in the aftermath of the tech write off.

Sellers

According to information seen by Wealth Manager concerning transactions which took place between in the four weeks up to 12 June one of Brewin's biggest investors, Kames Capital, sold around 875,000 shares, reducing its total stake to 8.43%.

This interest is held across a range of Kames funds, including the Kames Ethical Equity fund managed by Citywire AA-rated Audrey Ryan.  

Ryan saw the opportunity to buy into Brewin in 2013 following a placing by the firm. In March this year she told Wealth Manager: 'I think the market was a bit worried about the RDR changes and what that meant for many businesses in the financial space.

‘But in terms of what we have heard on pricing from them [Brewin], we believe it has a strong investment case and we are comfortable with that. The valuation is quite full but that has been the case for some time.’ 

Other big investors to trim stakes included Royal London and BlackRock, which sold around 280,000 and 1 million shares respectively, reducing their positions to 5.09% and 4.75%.

The Royal London position is held through a number of funds, including + rated Derek Mitchell's UK Mid Cap Growth and Victoria Stewart's UK Smaller Companies funds.

Citywire AA-rated Martin Cholwill was the biggest Royal London investor on 12 June with a 2.89% stake through his UK Equity Income fund. 'There has been a transitional management, so there is an orderly handover. I don’t think there is anything to worry about with the management change, he told Wealth Manager in April.

Nigel Ridge's UK Absolute Alpha and Ralph Cox's UK Smaller Companies funds are among the BlackRock investors.

Buyers

These trades were countered by big investments from Fidelity and Aviva Investors, which bought 2.08 million and 1.8 million shares respectively, lifting their interests to 7.35% and 3.88%.

Fidelity’s stake includes a 2.3% holding in Citywire AAA-rated Alex Wright’s UK Smaller Companies fund.

After March's Budget Wright was excited by the opportunity chancellor George Osborne’s shock overhaul to pensions presented to Brewin. ‘The Budget is [a] positive for wealth managers as it encourages saving and means pensioners will need more help managing their assets in retirement,' Wright said.

‘A key position is Brewin Dolphin which also benefits from internal change as a new management team focus on cutting costs and raising margins closer to those of peers.'

Meanwhile The UK Smaller Companies fund managed by David Lis and Trevor Green are among the Aviva investors.  

Unicorn Asset Management’s purchase of 500,000 shares through the Unicorn UK Income fund, which was managed by the late John McClure, was another notable trade. The moved lifted the fund’s stake to 2.81%.

The rest  

Beyond the eye-catching trades, other top investors in Brewin kept their positions more or less steady.

These included Artemis Investment Management, which trimmed 100,000 shares off its holding to reduce it to 0.78%.

Citywire AAA-rated Tim Steer is among the investors through his Artemis UK Growth fund and recently said Brewin scored 100 out of 100 in his proprietary rating system. His colleague John Dodd also praised the firm in a recent update on his Alpha Trust, saluting the firm’s ‘excellent management’ team.

Other fans include A-rated Richard Watts' Old Mutual UK Mid Cap and + rated Dan Nickols Old Mutual UK Smaller Companies funds, which between then added another 191,000 shares to lift their combined interest to 2.79%.  

Invesco Perpetual's Jonathan Brown maintained his UK Smaller Companies fund's holding at 0.91%, while the City of London Investment Trust run out of Henderson and the Montanaro UK Smaller Companies fund kept their holdings at 0.42% and 0.55% respectively.

Peter Webb is also a backer and paid homage to Brewin's contribution to his top performing small cap Income & Growth fund when interviewed by Wealth Manager in May.   

Performance

At 10.30am shares in Brewin were trading at 304.8p, around 15% below their 52-week high of 357.6p.

In a trading update at the end of May, Brewin firm profits had soared by more than 25% to £29.7 million in the six months to the end of March, although this figure does not include the £32 million tech writedown.

Earlier this week, broker Liberum left a meeting with Brewin in a positive mood, prompting it to repeat its buy rating on the stock. 

'Driving operational efficiency has been the focus of management efforts...the group appears to be on track,' analyst Justin Bates said in a note on the stock.

Liberum also highlighted Brewin's target of 5% in discretionary net inflows does not look overly challenging given the 12% achieved in 2010 and 9% in 2011.

'Once the "organisational plumbing" is fixed and systems functioning as desired, the team can then confidently turn attention to asset gathering,' Bates said.

'Brewin [looks] an attractively priced and interesting play of the UK wealth management sector.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

John Dodd
John Dodd
13/14 in Equity - Energy (Performance over 3 years) Average Total Return: -23.19%
Richard Watts
Richard Watts
5/10 in Equity - UK Medium Companies (Performance over 3 years) Average Total Return: 75.69%
Audrey Ryan
Audrey Ryan
44/154 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 47.78%
Derek Mitchell
Derek Mitchell
87/154 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 39.67%
Tim Steer
Tim Steer
58/154 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 45.87%
Alex Wright
Alex Wright
67/192 in Equity - UK (All Companies) (Performance over 3 months) Average Total Return: -0.36%
David Lis
David Lis
109/154 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 36.90%
Trevor Green
Trevor Green
100/154 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 38.55%
Nigel Ridge
Nigel Ridge
22/81 in Alternative UCITS - Long/Short Equity (Performance over 1 year) Average Total Return: 7.94%
Victoria Stewart
Victoria Stewart
18/42 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 64.86%
Ralph Cox
Ralph Cox
34/42 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 49.08%
Daniel Nickols
Daniel Nickols
14/42 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 68.16%
Jonathan Brown
Jonathan Brown
29/42 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 56.26%
Martin Cholwill
Martin Cholwill
7/78 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 64.95%
Peter Webb
Peter Webb
75/78 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 20.98%
Citywire TV
Your Business: Cover Star Club

Profile: The opportunity set that attracted Brett Williams to wealth management

Profile: The opportunity set that attracted Brett Williams to wealth management

Brett Williams is best known for helping to build some of the biggest platforms in the IFA market.He made the move over to wealth management to head SEI’s UK business earlier this year in the belief that this is where the best opportunities now lie.

Wealth Manager on Twitter