Interactive Investor

Insider: key people snap up these AIM shares 

23rd August 2021 08:58

Graeme Evans from interactive investor

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As holiday season continues, some directors decided to buy stock rather than hit the beach.

The private equity industry veteran behind AIM-listed MJ Hudson (LSE:MJH) has bought more shares in the financial services administration company he built from scratch in 2010.

Chief executive Matthew Hudson, who owns 22.5% of the business, purchased shares worth £5,300 as one of three directors to buy on Thursday. Chairman Charles Spicer also spent £25,000, while director of corporate development Andrew Walsh picked up a £5,000 stake.

Hudson set up the business originally as a specialist legal firm providing advice to asset managers, but it is now a one-stop-shop specialist service provider with a focus on alternative investments, including private equity, venture capital, real estate and hedge funds.

The share of alternatives is expected to reach 15% of assets under management by 2025, with the need for outsourcing driven by increasing regulatory and governance demands.

MJ Hudson now supports more than 1,000 clients, with a focus on the major asset management centres of northern Europe and North America. There are 240 staff in 11 offices, compared with just Hudson when he started his venture in 2010 after a career in private equity as a lawyer and as an investor.

The company continues to win new clients, particularly in relation to ESG (environmental, social, and governance) services, and has just bedded in a further three acquisitions. Revenues are set to show growth of 25% in the year to June, and forthcoming annual results should feature the first dividend since joining AIM on election day in December 2019, when it placed shares at 57p for a valuation of £97.6 million.

Its time as a listed company has been hampered by the periods of lockdown, with shares slipping to 38p last September. They closed on Friday at 54p, with the directors making their purchases at 53p on the back of Hudson telling investors that the business “took off” in the second half and had started the new financial year well.

Hudson said this month: “Our three major growth trends of increased assets under management in private markets, increased regulation (especially within ESG) and the growth of outsourcing in asset management operations are all accelerating out of the pandemic dip.”

It has been a boom year so far for the private equity industry, as highlighted by a flurry of M&A action as buy-out firms take advantage of post-pandemic valuations and low interest rates.

Their targets have included FTSE 250-listed Sanne (LSE:SNN), which provides similar services to MJ Hudson and has been at the centre of a £1.5 billion takeover battle involving Apex and Cinven.

House broker Cenkos Securities believes the takeover multiples being applied to Sanne highlight how much the market currently undervalues MJ Hudson, which is on 13.5 times underlying earnings.

The Cenkos team recently highlighted five structural growth drivers for the group, including the rise in alternative assets and the favourable trends around regulation, ESG and outsourcing.

They add that the company is one of only a small number of ways for UK public market investors to gain exposure to the rapidly growing private equity space.

Is Westminster a winner?

Another AIM-quoted company where directors have bought in numbers is Westminster Group (LSE:WSG), whose recent contract wins have included one to supply security services to protect the historic Royal Palace and Tower of London.

Westminster has also just won a multi-million dollar deal for the management of security teams, introduction of screening equipment and various Covid-19 resilience measures at five airports in the Democratic Republic of the Congo.

Chief executive Peter Fowler believes the flurry of large-scale, long-term contract wins will produce a “several million pound step change” in the business.

Turnover of £3.5 million for the first half of the year was 16% higher than the previous six months, although Covid factors including the impact of travel restrictions at airports in Africa meant the group fell to a first-half loss per share of 0.32p.

Fowler, who has 45 years’ experience within the security industry, led a management buy-out in 1996 before overseeing the disposal of the company's alarms business to Chubb in 2000. It listed on AIM in 2007 and now operates in 50 countries through its technology and managed services divisions.

Fowler underlined his confidence last week with the acquisition of shares worth £5,000 at a price of 5.1p. Non-executive director Simon Barrell also made a purchase of £20,000 at 5.3p and company secretary Roger Worrall did so at the same price for a holding worth £5,000.

Shares closed the week at 5.25p, which compares with 4p in June and more than 8p in September.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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