INSE "clearly attractive" says fund manager6 Apr 2023 14:41
In the new Shares Magazine out today, Ken Wotton, manager of Strategic Equity Capital, highlights INSE in an article about "how he chooses which stocks to invest in and how he continually reviews his portfolio to ensure it is suited to market conditions":
"Inspired (INSE:AIM) is a good example of the way in which we have sought to exploit the increased dislocation between share prices and business fundamentals
We invested in Inspired, which provides energy advisory and sustainability services to more than 2,900 UK businesses, having identified the opportunity through our investment platform
The business case is clearly attractive. Inspired helps its clients rise to the growing imperative to operate more sustainably – requirements that will only become more demanding – but also to manage their energy consumption more efficiently This is crucial to clients given the elevated levels of energy prices. It also provides Inspired with counter-cyclical qualities – businesses will be especially focused on cost reduction during a difficult period of trading
Importantly, Inspired has secured a high-quality management team that has extensive experience of building and exiting from businesses in this sector. It also has an attractive financial profile – its model features high margins, low capital intensity, and growing revenue and profits; it also cash-generative with an attractive and growing dividend per share
Looking forward, there is every prospect of active consolidation in the marketplace, providing Inspired with an opportunity to grow through acquisition, as well as the potential to attract trade or private equity buyers
In the meantime, the company’s valuation provides a generous margin of safety; its shares trade at a significant discount to those of its peers, and to recent M&A transaction multiples in the sector – as well as to the company’s own historical rating. Our investment in Inspired is a good example of how the platform and capabilities we have developed to conduct such thorough risk management reviews of existing holdings can also be leveraged to deploy further capital into existing
investments."
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