WHAT YOU GAIN AS A MEMBER
John's Investment Chronicle started in January 2012 so that other investors could observe how I manage my investment portfolio, the JIC Portfolio. In July 2020, I added a second portfolio, the JIC Funds' Portfolio, which only invests in funds and replicates Mrs R's SIPP.
There is complete transparency. You can see both portfolios and all transactions. There is an explanation of the thought process behind every trade in the investment diary. The aim is to provide food for thought to more experienced investors and to help those new to investing. There are plenty of tipsters who will remind you of the good ones and quietly forget the not so good. John's Investment Chronicle does not have that luxury as the portfolios are there for you to see, backed with real money. I have to confront my mistakes and deal with them; there is no hiding place!
Above all, this is a true account of the trials and tribulations of a private investor!
Through becoming a member of John's Investment Chronicle you will gain access to a members area which includes:
The Investment Diary with regular blog posts.
- JIC Funds Portfolio
- JIC Portfolio
2 Transactions Pages
- JIC Funds Transactions
- JIC Portfolio Transactions
Through becoming a member you gain access to regular diary entries, here is a recent diary entry on K3 Capital.
K3 Capital: (K3C.L, AIM All Share: Market Cap £233m, 337p, 6.1% of JIC Portfolio, Medium Risk/High Reward, target 5.0%)
Conclusion: The acquisitions make sense in that they fit into K3’s strategy of providing business services to UK SMEs. It expands its offering into new sectors. K3 has grown both organically and though acquisition. It looks like they are paying a full price, but they are high margin businesses and sensibly there is a four year earn out and existing management are tied in and well incentivised. I see no reason not to back CEO and founder, John Rigby in making these acquisitions as thus far, its previous deals have added considerable shareholder value. He says today’s acquisitions will be immediately earnings enhancing. On 15th June it issued a positive trading update for the year just ended 31st May. It is valued at 21.0x May 2021 earnings forecasts, for 41% growth. In a note this morning, Finncap is forecasting 20% growth in the current year taking the PE ratio to May 2022 down to 17.1x and a further 22% growth the following year taking the PE ratio down to 14.0x. Forecast dividends lead to a yield of 2.7% for the year just ended, rising to 3.6% in the current year and 4.6% next year. For what it’s worth SimplyWallSt has it trading 50% below its estimate of fair value. If I didn’t own it I would be buying and am happy to stick with my Medium Risk/High reward rating, (pointing to a 5.0% position). I’m at 6.1% and will let it run. Happy Holder!
K3C has announced the acquisition of Knight Corporate Finance Group (KCFG) and Knight R&D Limited (KRD).
It is also raising £10.0m through the placing of 2,941,934 new shares at 340p to partly pay for the acquisitions.
KCFG is a specialist mergers and acquisition advisory firm within telecoms and technology sectors. In the year ended 31stMarch 2021, KCFG generated revenue of £1.71m and EBITDA of £0.78m. the consideration is up to £8.6m, with £3.3m initially though a mix of cash and shares. There are then earn outs for each of the years ending May 2022, 2023, 2024 and 2025. The first year is 60% cash and 40% shares, the second is 70% cash and 30% shares and so on.
KRD is a specialist tax advisory firm serving UK SMEs. For the year ended 30th September 2020, KRD generated revenue of £3.16m and EBITDA of £1.98m. Consideration will be up to £16.3m comprising an initial consideration of £9.3m (£7.3m cash and £2.0m shares). There will also be an earnout of approx. £4.0m payable as 60% cash and 40% shares over the next four years.
Both acquisitions are expected to be immediately earnings enhancing.