Had this on the watch list too long and could kick my own ass if it was possible. I think this is just the type of play needed on these markets along with Value shares such as Churchill China that I recommended yesterday.

Heres just a brief background on the company.................

Hedge fund leads rush to float
by Louise Armitstead
RAB Capital is the first to plan a listing in London. Others are bound to follow

IN the spring of 1999 Philip Richards and Michael Alen-Buckley arrived almost empty-handed at their new office — a small room in 1 Adam Street, just off the Strand in central London.
The day — April Fools’ Day — seemed apt at the time. Richards and Alen-Buckley, both highly regarded bankers at Merrill Lynch, were giving up stellar careers to start their own hedge fund, RAB Capital. The only money they had was their own, and their staff consisted of one manager, a compliance officer and a secretary.

Five years on, the little room in 1 Adam Street, still RAB Capital’s main trading floor, albeit straining under a vastly expanded workforce, is again the engine room of an ambitious and pioneering venture.

Last week RAB Capital became the first stand-alone hedge-fund company to announce its intention to float in London.

Richards, 46, and Alen-Buckley, 43, will be at the helm of a company with a market value that could be as high as 100m. Their stakes could be worth 30m each. Advised by KBC Peel Hunt, the firm will release a prospectus tomorrow revealing how much money it intends to raise.

In the past five years, Richards, a former army officer, and Alen-Buckley, who is the son-in-law of the hotelier Lord Forte, have increased their funds under management from 4m to an estimated 1.1 billion. They have 40 staff (16 of them managers), 7 hedge funds and a track record that is the envy of the City.

RAB’s first fund, the European equities fund, which was launched in November 1999, has made returns of 84% despite the tumbling markets.

Floating will for the first time allow small investors to take part in the success of a hedge-fund boutique rather than investing in one fund.

But there is growing concern that they will also be exposed to risks that at the moment are restricted to professional investors.

Watching in the wings are hundreds of other hedge-fund managers, salivating at the thought of following RAB to market and realising the value of their businesses. Investment bankers and advisers are also rubbing their hands at the prospect of a spate of similar deals.

Two funds earmarked for flotation are Thames River Capital and GLG Partners, one of the biggest hedge funds in London, with about $8 billion under management. Experts say plenty of others are looking to float as a way of cashing in.

Richards and Alen-Buckley dismiss the suggestion that this is their motive for floating RAB. “Right from the start we wanted to create a long-term business and we’re here to stay,” said Richards. “Floating is an indication of our permanence. Neither one of us will be taking cash out. We are also doing this for our staff. We have given them options over the years and this will be their chance to realise some cash. Staff loyalty is important to us and to our clients, who like the stability this offers.”

The cash raised from the float will also be used to launch additional hedge funds and bankroll the company’s rapid expansion.

Managers have already been hired for several new funds that will specialise in energy and in Japan. Small investors are likely to be attracted through a joint venture with Saga, which provides services for the over-fifties and has 7m customers.

Richards and Alen-Buckley built impressive reputations in the City working together in the late 1980s at Smith New Court, where they helped to build the stockbroker from a market value of 10m to one of 500m by the time it was sold to Merrill Lynch in 1995.

Both men had been watching the growing hedge-fund industry with interest. Alen-Buckley had numerous contacts, including leading figures such as George Soros. They spent four years at Merrill before quitting to set up RAB.

Alen-Buckley, who is taking the title of executive chairman, is described as the “public face” of the business. Richards, who goes from chief investment officer to chief executive, is more involved in strategy.

Richards runs the Special Situations fund, which is just over a year old but has already generated a return of 1,274%.

Since hedge funds are known for being opaque and secretive, observers are concerned that RAB will struggle to live with the scrutiny that comes with being a public company.

Richards said the company planned to float on the Alternative Investment Market (AIM) rather than the main market so that lengthy meetings with institutions could be avoided. “We want to spend our time managing the money, not talking about it,” he said.

“We have a simple philosophy. Our goal is to produce consistent returns in all market conditions. We think that if you work on managing the risks and reducing the downside, the upside tends to look after itself. The float is exciting but it will still be business as usual.”ENDS



Please DYOR, you are responsible for your own buying and selling timing actions.

cheers GF

Hi sinutab, I see you have worked out the historical P/E. Just wonder if you took the change of year end into account Which makes 13 months profit after tax, that would put the stock on a historical p/e of circa 24 hardly demanding for a hedge fund and should be at least if not more in line with the highest tech shares 35 plus.

The company have said that they expect to increase profit after tax 100% this financial year starting at the calendar year 2004 and from the reports we have seen so far they are in front of budgeted levels.

I therefore conclude that on an historical P/E of circa 24 and profits after tax, budgeted at 100% plus, the forward P/E for this company is a low circa 12, hardly demanding as a niche fund player, and well below the high P/Es of the top tech companies that cannot get anywhere near the returns this stock can provide.

In my opionion its derd cheap and a stock I really beleive will outperform in the next 12 months.

cheers GF.

Well this has got to be the best rival to the sniping on the CYH thread! For what it,s worth I in on this one, and no one has commented on the fact that RAB have taken over a co. called I2S trading on Aim at 157p--100% and this pushed the shares up 12.50p when it was announced last week. There is bound to be profit taking for a while. This is a young company that has so far performed very well lets hope they can keep it up!! Other rivals are watching with interest! fingers crossed and good luck holders.

Goldfinger you say "I therefore conclued that on an historical P/E of circa 24 and profits after tax budgeted at 100% plus"


How can 100% tax on profits give a p/e ratio? that doesn't makwe sense...sorry....or did you mean something else?



Anyone got the average fund rate increase, the only one the bulls seem to want to mention is the one of 1200%.....I am sure I'll get an answer if I keep trying.

An increase on profit of 100% after tax--is promised, so if the p/e is 24 this year--actual, then next year should be a p/e of 12 if they meet their forecasts.
the 1200% is the increase of the value of the funds they are managing!! wish they,d take over mine, I wouldn,t need to sit talking to you lot! go on third eye join us and buy some!!

LOL, think thirdeye as been at the whisky bottle again, he seems rather confused.

cheers Gf.

Hi Moneyplus I see it was easy enough for you to understand re- to my forward P/E, I should add that thirdeye has a reputation for drinking after 4pm, he seems a little confused. Sorry I cannot help that.

On the takeover of 12s they also picked up 4 million of cash aswell which is certainly a positive move.

cheers GF.

4m of cash & a market cap of about 180m.....dwindling by the last three days.

Spiked & looks set to drop further on the chart to me.


If they are in mining, that seems to have peaked, dollar is strengthening, gold is weakening, inflation is the worry, not de-flation, therefore likely interest rate movements upwards will strenghten the US$ further imo.

How wrong you are. Inflationary pressure as the US is getting, leads to interest rate increases, inflationary pressure also leads to buyers of currencies moving into the Gold and base metal markets as a hedge against currency loses.

The bull market in base metals hasnt even started yet. Heres an excelent piece on the subject........

The stock, bond, dollar, and gold charts seem to be warning that a second top in the stock market will occur in the next 2 weeks, and then the Fed will have a rate hike on May 4 or this summer causing a large sell-off in stocks, bonds, and the US dollar. Gold should start rising to new highs because of inflation fears as supported by the rapidly rising commodity prices. Gold stocks could sell-off in the first week of May and then start their next wave up to new highs. So May could become very volatile. Now is the time to sell any stock and/or bond mutual funds, and take a look at bear funds, commodity funds, and gold stocks/funds.



Don Delavan
SBRB Management Corp.
17 April 2004
ENDS.

And take a look at bear funds, commodity funds, and gold stocks/funds.

YUP WEVE GOT THEM ALL AT RAB, shame your missing out thirdeye, mind some say you have always been a loser.

cheers GF.

ps, just goes to show the detail he pays to comments, see what I mean moneyplus re to the 4 million 12s have. See what we are up against, it just isnt worth dealing with him, mind Andy seems to take him seriously, perhaps andy would like to handle the Bull case from here onwards?.

goldfinger

Check PM on SC please.

The answer to the other fund performance question asked earlier in this thread by various posters is that they are reasonable, but not in the order of 1300% (Special Sits fund)

Rab manage 7 funds in all, which includes 2 funds of funds, one internal, and the other best of breed external hedge funds.

All have produced a positive return for investors from commencement to date.

I cannot (or will not) post actual performance figures as that information comes from restricted web sites, however an enquiry from any interested or potential investor may elict a more formal response from Rab Capital

On the issue of profits I read though Rabs share prospectus. an act that seems beyond the ability of some of the morons that inhabit this thread Quite frankly some of you should stick to National Savings, as you are not safe to be let out investment wise

In 2003 Rab had a net profit on ordinary activities after tax in the order of 7.3 million, a substantial increase on the previous year (and year before that) Turnover has been doubling each year. That information is on page 20 of the share prospectus I would also add that fund performance figures are also available within this document

Which equates paul to an historical p/e of circa 24- 25, and a going forward P/e of circa 12- 13 hardly demanding when you take into account it being a niche player and should be up somewhere near the top tech p/es.

cheers Gf.

Here are the figures unedited from the prospectus....its slightly complicated because the previous accounting period is 13 (then 2 times 12) but the 31/12/2003 earnigs per share figure is 1.71p on a fully diluted basis.

That equates to a PE ratio currently of (54p divided by 1.71p) = 31.5

Emgs PE ratio for example is around 22...therefore my own view is that a degree of enterprise value is already there within Rab.

Account figures from prospectus below (page 35) unedited.
-------------------------------------------

30 November 30 November 31 December
2001 2002 2003
Note
Turnover continuing operations 2 5,390,359 11,197,647 23,237,556
Net operating expenses
Administrative expenses (3,879,934) (8,561,287) (14,116,734)

Operating profit continuing operations 3 1,510,425 2,636,360 9,120,822
Interest receivable and similar income 5 81,197 158,387 161,098
Profit on disposal of fixed asset investments 8a 1,279,693

Profit on ordinary activities before taxation 1,591,622 2,794,747 10,561,613
Taxation 6 (469,117) (873,207) (3,221,883)

Profit on ordinary activities after taxation 1,122,505 1,921,540 7,339,730
Equity dividends on Ordinary Shares (200,000) (240,000) (750,000)

Retained profit for the year 14 922,505 1,681,540 6,589,730
Note 2001 2002 2003
Basic earnings per Ordinary Share 19 0.37p 0.64p 2.45p
Fully diluted earnings per Ordinary Share 19 0.33p 0.56p 1.71p
None of the Companys activities were acquired or discontinued during the two financial years ended
30 November 2002 and the 13 month period ended 31 December 2003.
There were no recognised gains and losses in the periods other than the profits for these periods.
35

Hey guys

After reading the portfolio which was written early march you will realise that RAB CAPITAL PLC had plans to invest in Energy and japan funds.

Ok if you look at the front page of ADVFN you will notice that companies like GLOBAL ENERGY AND EMERALD ENERGY, CNE, HTG, HNR Stormed ahead last week with rises from as low as 14.23% to a maz rise of 182.11%!

Towards the end of march, stocks in japan SURGED!! And its only the start of whats to happen. Check stocks like AJG, BGFD, FJV, IJD ... there all Japan funds.

Now if RAB had their funds sorted, they would have benefited from these rises...(the point im trying to make is these fund managers were well aware of rises like this those many weeks ago!)

So i beleive if you give it time, and once the funds are setup this will come good, very good infact.

The fund managers know what their doing...you only need to read the portfolio to realise that....il gladly send you a copy if you leave your email address.

Cheers
Inv

Thanks very much--how do I do that?

Yup paul thanks for posting, would actually like to know how you got that info? as its only high net wealth individuals who are able to get the prospectus in full. I was turned down even though I am a high net wealth person many times over. Think you know what I mean. There is a shortened prospectus, for the rest but it doesnt give that much information away.

GF.

So anyone who had done research before buying would know the eps was 2.45p not the earlier fancyful figures published in this thread for whatever reason & the fully diluted 1.71p suggesting a p/e of circa 31 unless anymore options, warrants etc were issued at the float @ 25p? (or is the fully diluted inclusive of options/warrants issued in the prospectus?)

Thanks very much Paulismyname.

goldfinger

i have a copy of the prospectus, its NOT short! 90 pages mate! if you would like a copy read my PM on SC.

Cheers
Inv

From Tom Bulford:

You don't want to sit at the breakfast table with me, I assure
you. Not unless you enjoy Victor Meldrew impressions. What really
got me going on Sunday was an article about hedge funds. All else
having failed, the City is now trotting these out as the latest
solution to all your financial troubles.

Are these just glorified gambling counters, run by the same
group of fund managers whose judgement proved so hopelessly inept
over the last decade? Er.....no! They are apparently 'low-risk,
low-volatility investments' and should be part of your portfolio
for the sake of... wait for it!... diversification!

I DO NOT BELIEVE IT! What a load of cobblers! What is the point
of buying things that will go down when everything else is going
up, or go up when everything else is going down? Diversification
is always trotted out to justify new products. I can promise you
that if someone comes up with a way of investing in hot air, this
will be promoted as useful means of diversification.

---------------------------
Hedge funds are a financial
scandal waiting to happen
---------------------------

I am quite happy to recommend that you diversify your cash into
ten or twenty investments that all have a good chance of making
you money. But I fail to see the logic in owning in one hand
something that will simply cancel out what you achieve with the
other.

There are only two ways to profit on the Stock Exchange. One is
to hand over your cash to companies that have a high return on
capital and can therefore make it grow. The pie gets bigger each
year, and so does your slice of it. This is the true source of
investment returns, and it is why I personally invest all my
money in small companies.

The second is to take advantage of the market's mood swings, and
to trade. This is the source of speculative profits, but to do it
successfully you have to be smarter than everyone else. The pie
does not get bigger each year. It is a zero-sum game, but it is
the game played by hedge fund managers. So how can all of them
succeed? And if they win, who will lose?

You've probably guessed the answer to that. You will! The fees
on hedge funds are astronomical. Man Close will charge annual
fees of around 5%, plus a performance fee of 20%, if profit
targets are met. No wonder the managers are so keen to push them!

Third Eye, got a bit fed up with all the ramping going on with this stock so the information I posted (which is in the public domain if you look for it) is part of an unedited share prospectus.

The PE ratio of around 30/31 on fully diluted EPS of around 1.71 is not unduly overvaling this share, but as in previous posts I regard this as an investment rather than trade.

Finally for your information I will tell you I read in the share prospectus the directors are "confident" (note the clear use of that word in city speak) they are unlikely to need any further capital injections for at least 12 months...that tells me the final EPS figure quoted in the prospectus is a fair and reasonable assumption

Thanks paul.

I too saw a lot of ramping in this stock.