John Goold Kelso CEO LinkedIn 15 Hours ago26 Apr 2025 07:51
“The stock market is always right". That’s the adage every young stock market practitioner is taught and it often becomes ingrained. I have never believed that the market is always right.
Passive investors don’t have a choice. Active investors do and clearly, the corporate buyers of the 150+ companies that have left our beloved UK stock market in recent years don’t believe it either.
Despite the government’s lack of concern over this strategic issue, active investors do care. Good stock-pickers can reap the rewards.
This week, another UK company began its journey to leave the market: Science in Sport (SIS), a nutrition and protein brand with some great products. Market cap of £75m. A year ago, it was worth less than half. Two years ago it was worth less than a third. A 2x return in one year and 3x+ over two. On the surface, the take-out looks a fair price at 1.5x sales and a reasonable EBITDA multiple but I suspect the former Boots CEO behind the PE buyer understands the real value better than the UK market ever did. Hats off to Dan Wright, who joined as Chairman 18 months ago, for delivering another deal.
The attached article highlights potential value in THG. Market cap: £400m - now with two businesses; beauty and nutrition. One top-rated analyst pointed out this week that MyProtein (which makes up 40% of THG’s revenue) could be worth £750m based on the SIS take-out valuation and as high as £1.5bn using sector comps. Again, that’s just 40% of the group revenue.
I have always believed the UK stock market often misprices companies but it’s important to understand why. Company fundamentals aside, when you’ve had years of relentless capital outflows and zero government stimulus to reverse that trend, it’s no surprise that prices are so fundamentally low.
So to the next generation of active investors: shun the idea that the market is always right. It isn’t, but you might be.
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