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

Just added 6k, gf looks a compelling story, whats your target price gf tia.

Sigora I dont really set price targets but on this occasion Im going to say double at least.

cheers GF.

ps, more research to follow.

If it follows the route of MAN GROUP i will be more than satisfied,from the wee bit of research i've done the management team is well respected.

Spot on Sigora thats the way I was thinking, just wish I had got in a little earlier. Its these damned markets that led to my hesitation, to be honest I prefer a bear market than this crab market and I dont short.

cheers GF.

Well GF we dont have to worry wich direction the market goes now RAB WILL BENEFIT EITHER WAY, just a slight dampner, do you think the price has shot up too sharply over the past few days or has the markets realised the true potential of this gem.

Think that since it floated more and more coverage as alerted investors to just how and what this company stands for. Dont forget here in the UK hedge funds are pretty new to the ordinary private investor. I really do feel this one will move rapidly.

cheers GF.

Better late than never.

From IC

10 March 2004

New Issue: RAB Capital


RAB Capital, a fund manager specialising in hedge funds, is set to become the second publicly-listed hedge fund manager in the UK after Man Group when its shares start trading on Aim on March 16.

The company, which has seen assets under management balloon a hundredfold to more than 1.1 billion since it was set up in 1999, hopes to raise 8m by issuing 32m shares at 25p each, giving it an initial market value of 86m. The proceeds will go towards launching additional hedge funds, and a listing will help the company devise equity-based incentives to retain key staff.

It will also enable the takeover of I2S, a tiny (6.6m) Aim-listed investment company specialising in technology, media and telecoms. The deal proposes an exchange of five new RAB shares for two I2S shares. RAB co-founder Philip Richards described the bid as a “fund raising exercise”, as I2S will come with some 3.8m in cash. Seeking admission to Aim at the same time as making an offer for I2S, would also give RAB a listing with a larger and more active shareholder base.

IC view:

This looks an altogether more substantial issue than many recent Aim debutants. Not only is it profitable - basic earnings per share have risen from 37p in 2001 to 2.45 in 2003 - but the company will be a decent size on admission. And the stellar track record of Man Group, now a FTSE100 constituent, bodes well. Worth watching.

cheers Gf.

More historic info on RAB and please remember with it being an hedge fund it is difficult info to get hold of at present.

LONDON -- There’s no disguising the tremendous influence RAB Capital is having on the mining business, particularly among smaller exploration and mining companies that have to struggle hard to raise money. For example, in the past couple of weeks alone, London based RAB has provided 1.68m for Griffin Mining (LSE:GFM), 730,000 for Southern African Resources (LSE:SFU) and, most recently, 800,000 for African Eagle Resources (LSE:AFE).
This largesse does not represent a sudden interest generated by the seeming improvement in the global economic outlook and rising commodity prices. In the past two years or so RAB Capital has pumped about US$50m (34m) into exploration/mining companies, mostly small ones.

What makes this even more unusual is that RAB Capital is a generalist fund management company and not one of its funds is devoted entirely to natural resources investment.

The amount of money it has to offer obviously buys big chunks of the companies on the receiving end. Among London listed mining/exploration companies, RAB Capital, following its recent investments, now owns 28.6 percent of African Eagle, 13.4 percent of Griffin and 23.8 percent of Southern African. It also has stakes in Celtic Resources (LSE:CER), 10 percent, Caledon Resources (LSE:CDN), 2.9 percent, GMA Resources (LSE:GMA), and Tertiary Minerals (LSE:TYM), 11.6 percent. It also owned 7 percent of Thistle Mining but sold when it was obvious the weakening of the US dollar against the rand would reduce the attractions of this stock. A 12 percent stake in Oxus Gold (LSE:OXS), has been cut to 6.9 percent, as you might expect, given that the Oxus price is up by more than 400 percent since the start of this year.

RAB Capital was set up at the end of 1999 by two investment bankers, Philip Richards and Michael Alen-Buckley – the name comes from their initials. They first met while working for London broker, Smith Newcourt, which was taken over by Merrill Lynch. When they decided to form RAB Capital, Richards was a managing director at Merrill Lynch in London while Alen-Buckley worked for ABN Amro.

Today RAB employs 30 and, according to Richards, has nearly US$1bn under management in six main funds and a few other operations. He claims: “Every single one of our funds has made investors money.”

Although he does not claim to have any special mining expertise, Richards was attracted to the business two years ago when, he says, “central banks were printing money because of fears of deflation, and that must be good for gold and commodities.” But he stresses that only a relatively small percentage of the money under RAB management has been allocated to mining/exploration stocks.

And most of the money invested in mining so far has gone into Toronto listed stocks. The funds have stakes in about 30 companies there. For example, Richards says RAB was an original investor in Kirkland Lake Gold and has seen a four fold increase in the value of that investment. He also mentions Desert Sun Mining, where RAB’s investment is now worth six times the money put in. At random, he also names among the Canadian companies Admiral Bay, America Mineral Fields, Ariane Gold, Black Swan Resources, Cambior, Defiance, European Gold Fields, Northern Orion Resources, Majestic Gold and Yamana. Richards singles out Majestic, which has the Ceske Brezovo gold project in western Slovakia, for special mention – “it is still a very early stage project but it could have one of the biggest gold deposits in the world,” he suggests. RAB also has investments in about six Australian listed mining stocks.

Most investment fund managers in London avoid taking big stakes in small companies on the grounds that “buying the shares is easy, selling them can be very, very difficult.” Richards says: “I like to buy things when nobody else wants them and sell when everyone does want them.” When a share rises about 50 percent in price his funds sell some. “By selling we are in no way implying any lack of faith in a company but we help to provide liquidity. We are helping the company in that way because investors won’t buy a stock if they think it lacks liquidity.”

RAB is already well in profit on its recent purchase ten days ago of 12m Griffin shares at 14p each. Griffin has traded up to 23p on heavy volume.

A few days after accepting RAB’s cash, Griffin announced completion of a feasibility study on its Caijiaying zinc-gold project in China and said it would now look for debt financing for a US$15.7m mine. Caijiaying will initially be a 200,000 tonne a year underground mine exploiting reserves of 2.57m tonnes grading 12.59 percent zinc, 0.42g/t gold and 445.63g/t silver. Griffin said the project in its current guise would generate cumulative after tax cash flow (after capital repayment) at the current zinc price of US$760/t of US$41.2m. That rises to US$67.2m at a price of US$900/t, and US$85.8m at US$1000/t. Payback of capital is expected just over three years after production begins.

Roger Goodwin, Griffin’s finance director, dismisses the idea that his company gave too much away by allowing RAB to take the shares at 14p. When talks with RAB started a month ago, Griffin’s share price was 15p, so the placing price represented a small discount. Goodwin said Griffin was influenced also by the struggle it had had in the past when attempting to raise capital. “We thought to ourselves: the feasibility study will be ready in September – but will the money still be there in September?” There is also the potential of more money to come because RAB also took warrants exercisable up to August 2005 at 20p and this would give AIM listed Griffin another 1.2m before costs.

Goodwin said another important factor in the decision was that Griffin is worried about a bid coming at a low price. A big investor on the share register offered some protection if that happened.

Richards reckons Griffin is worth 30p a share at today’s zinc price and 40p if zinc goes up. “And they are getting very good gold grades.” Richards reckons investors who bought Griffin shares at 23p recently are unlikely to lose money. “There is all the upside of rising zinc and gold prices coming through.”

He is also enthusiastic about another recent listing on AIM, GMA Resources, which has Bobby Danchin, the former Anglo American executive director, on its board. GMA won a tender for 52 percent of the company that owns and operates Algeria’s sole producing gold mine. Richards reckons that, if all went to plan, GMA’s present market value is less than the annual cash flow it will generate in 2005.

Every regular investor in junior mining stocks will experience some failures to offset the successes. Richards is still smarting from allowing RAB to put money into Navan when the London listed company was fighting for survival under a new management. The struggle did not last long and Navan went into receivership, taking with it US$4m of RAB’s money. Nevertheless, Richards still seems to be talking to the corporate financiers at Canaccord Capital, who persuaded him that Navan was a reasonable bet, because he is still supporting Canaccord’s share placings – RAB acquired its Southern African stock via one of these. Richards simply says the shares in Southern African, which has a platinum project in South Africa, acquired at 2p each, “were cheap.”

Most of RAB’s mining investments are held be two particular funds, the Special Situations Fund, and the Europe Fund. Richards says 100,000 invested in the Special Situations Fund on January 1 this year is now worth 600,000, while the mainly blue chip Europe Fund is up by 90 percent past four years compared with a 30 percent fall in the total market. These gains are after fees, he stresses.

cheers GF.

GF, Thanks for jogging my memory on this one. It had been on my buy list after an article by Edmond Jackson last month. Some of his comments might be of interest.

"After studying the prospectus and visiting RAB's offices off the Strand, I detect more serious intent. I believe the management is determined to cut a sound and strong reputation, growing a substantive business. This is the crux of the investment rationale for RAB shares. ....

Until one sees what earnings RAB delivers over the next three years, the key judgemental issue is management. Although RAB appears early stage as a business, the fund managers involved (typically in their thirties and forties) all have extensive qualifications and proven records. Hence, I think it is a fair expectation they will attract sizeable funds - from a combination of institutional investors, high net worth individuals and RAB's marketing deal with Saga Investment Direct for the retail market.

The motives of Philip Richards, a joint founder with Micael Alen-Buckley are also a key ingredient. My impression is that Richards is not driven simply to make a lot of money. His reputation also appears vital to him, linked to creating a serious force in fund management showing how hedging techniques can deliver more consistent returns for retail investors......

Implicit in the decision of Saga to market RABs hedged funds would have been a 'due diligence' where Saga satisfied itself it was proceeding with a sound team that intends to be a leader in 5 to 10 years time....

..extra office space has already been developed. Further appointments of investment managers and support people are likely but in essence the team is in place. It is a fair expectation these talented people will continue to deliver and attract funds.

Thus, although a jump in pre-tax profit from 2.8 million (year to end-November 2002) to 10.6 million (13 months to end 2003) would have benefited from exceptional performance fees, I target profits progression. One can't he sure this happens in 2004, my threshold is a 2 year investment view. But on a three to five year view I can envisage a business worth some hundreds of millions of pounds."

Hope this is of some interest. Jennifer

Hi Jennifer, thanks for that piece have to say it was just that item that alerted me to the potential of the stock aswell. I wish I had got in then at that time but I still think this one will soar. Hoping to build up a big position in this one. Difficult to get newsflow from a hedgefund but now it as floated it will have to post via RNS. I think the more investors get to hear of this one the further north it will go. Good luck.

cheers GF.

I see the IC are backing this one this week aswell...........


INVESTORS CHRONICLE

Six of the best AIM newcomers:
*RAB Capital (RAB.L) - Moneybox (ATM.L) - Torex Retail (TRX.L) - Offshore Hydrocarbon Mapping (OHM.L) - European Nickel (ENK.L) - Omega International (OME.L).

cheers GF.

Hi Goldfinger...ref RAB involvement in AFE , would you hope that AFE could move forward as have others...they have struggled bit recently although I guess it was to be expected as they have been unable to do much mining until end of April rainy season...however is there also a danger that you being in both RAB and AFE means that you have a doubble bubble and hence either a double win or in worst case a double loss...rgds...buckets

Thanks for some outstanding research into a much undervalued company. Very promising and i bought a few RAB on Friday.

Cheers Hawick. Buckets there always going to be the chance of burst bubbles thats what makes this business so exciting to me. Its a case of limiting the downside and going for the upside, please dont forget RAB is not just looking after mining stakes. Its a mixture of funds and because of the nature of hedge funds its difficult to get at just what they do invest in. Now RAB as floated it will have to be more open and has to a certain extent refering to the new funds it will take on board please see posts above.

I still think that the Mining Boom as a LOT further to go, inflation in the US and UK will be the driver of that. Good luck.

cheers GF.

From todays Sunday Telegraph and from Edmund Jackson.


Curb the doubts, some mines are nuggets of value

Mark Twain is often quoted by cynics as saying that a mine is "a hole in the ground with a liar standing beside it".

But while you should never discard a sense of scepticism about investment, if you had been too dismissive recently, you would have missed some mouth-watering returns in the mining sector.

So what has been happening to send mining shares soaring and has the trend further to go?


Click to enlarge
The potential was established a few years ago when central banks printed money to combat the risks of deflation. That helped to boost the price of gold and other commodities, and more recently the latter have benefited from economic growth, especially in developing countries.

Enter RAB Capital, a generalist hedge fund group that has revolutionised the Aim market in mining stocks. Its strategic move is already a classic of investment history, and a 1,274 per cent gain for its Special Situations fund last year shows the merits of a flexible approach. (These were some of the factors that convinced me to buy RAB shares, which are also now listed on Aim).

Exploiting the macro-economic trend, RAB also bridged a gap in the financing of smaller miners. Its equity was instrumental in giving banks the confidence to lend, thus creating a virtuous circle. Mining companies could invest to seize the upturn.

A booming Chinese economy has also helped, with demand for raw materials pushing up metal prices and therefore mining shares. I am wary, for as an economics student I learned how capricious trends in the Chinese economy can be. Upsets occur despite the image of strong growth.

Besides being tied to the health of the US economy (which is China's principal export market), there is a risk that continued foreign investment in China will result in overcapacity. That would hit raw material prices and thus mining shares.

Despite risks along the way, the momentum appears strong. In terms of the party for miners - commercially and in the stock market - we may only be at about 10pm.

Anglo Pacific shows how good governance and being a director of a mining company need not be a contradiction. The consistent growth chart reflects a well-run business.

A shareholder in Anglo Pacific told me to take a closer look when the price was only 14p. It was the emotional baggage typically associated with mining shares that discouraged me from buying.

The company is in the classic mould of a mining finance house, taking pro-active investment stakes. In recent years this strategy has grown pre-tax profit from a small base to 4.1m, with a yield of about 4.5 per cent at the current share price of 55.25p.

Yet the two executive directors have not been given big pay and share options. The 2002 annual report showed individual salaries of about 48,500 and bonuses of 40,000 each for 2000 and 2001 while contributions to their pensions were minimal. Each executive director had less than 1m share options, exercisable at about 21p.

Their prosperity is directly linked to the returns enjoyed by investors as they each hold over 3 per cent of the equity. I doubt the 2003 annual report will show big increases in their packages. So much for boards who say big pay and options are the only way to motivate!

The prelims showed a fall in operating profit from 5.2m to 2.6m due to the group's Australian interests mining coal on government rather than private land with lower royalties. The results should improve this year, aided by coal prices rising in the Far East. I recognise the risks but long-term the region is a dynamo.

The company holds a variety of other stakes in the Far East as well as in Canada. I think it has further upside potential, so long as one appreciates it is also geared to the fortunes of the commodities cycle.

Peter Hambro Mining, which operates mainly in gold in far eastern Russia, is another example how a combination of integrity and the ability of key personnel has delivered excellent progress. I don't like to be shown the chart because it reminds me of a golden opportunity missed.

I am learning that in the quoted resources sector there are rivals and malcontents who sow doubts. It is best to form your own judgment and not consult many others. Hambro went to a lot of effort to help me understand its operations yet I allowed myself to be swayed by scepticism.

Griffin Mining has become a favourite on Aim this year, with its shares rising from 17p to test 30p. Its prospects were bolstered in February by an RAB-backed 8.75m placing to help development of the Caijaiying zinc-gold project in China. It is estimated to have reserves worth $1.5bn (833m).

As with Anglo Pacific, it intrigues me how a small company such as Griffin is progressing nicely under an executive chairman. Corporate governance rules prescribe a split, with a chief executive and non-executive chairman.

Indeed, investors in all sizes of company have learned bitter lessons about a concentration of power. But for small companies an executive chairman is sometimes better. It puts the onus on investors to judge the boss's capability and integrity, which is no bad thing.

Griffin's chairman has publicly expressed the company's "faith and long tenure" in China. As with Peter Hambro Mining in Russia, good local relations are a key to long-term success. So far the joint venture at Caijaiying is the only foreign mining venture to be granted a base metals extraction licence under Chinese mining laws. Production is targeted to start in the second quarter of 2005.

Ocean Equities, Griffin's broker, anticipates annual pre-tax cash flow of about $25m (13.9m) at current zinc prices, once mining reaches 500,000 tons a year. At 26.75p a share, Griffin is capitalised at 43m.

I recently calculated a fair value to be about 30p a share, though I could well be conservative. I like to identify a margin of safety in a share, and in a higher risk industry/country this should be a thumping margin. But to play mining shares well, perhaps I should relax this constraint - so long as the underlying trend is firm - and recognise this sector always has an element of speculation.

Griffin seems an attractive long-term play, so long as one appreciates the potential for bumps along the way. If the Chinese boom slows, that could mean a sell-off among miners eventually, with smaller company shares vulnerable. Yet Griffin looks set to progress commercially.

The outlook for zinc prices is fair and the geological fault system at Caijaiying also has good upside potential as a gold resource.

Asia Energy, which is floating on Aim, is another group where RAB Capital's Special Situations hedge fund is investing more money. After full due diligence, the fund initially backed the company with private equity. All this is interesting for long-term prospects because venture capital money normally exits on a flotation. About 15m is being raised at 75p a share.

The group's 100 per cent-owned Phulbari project involves developing an open pit coal mine and power station in Bangladesh, and is of major importance to that country's economic development. A feasibility study is likely to take at least 18 months but management is confident and well organised locally.

Phulbari is in northwest Bangladesh, 30 metres above sea level, and not subject to seasonal flooding, unlike large areas of the country.

On a long-term view, Asia Energy is interesting. It's hard to say if there may be a better chance to buy, say in about nine months' time. Dealings start on Aim tomorrow.ENDS.

I hold stock in both Rab Capital and Anglo Pacific, I rate RAB the better investment but both in my opinion are top notch.

cheers GF

Interesting article - thanks GF. I shall definitely add some RAB to my portfolio.

Yes, have a few too as unmargined real equity and may well add to them

PS, can we just keep to ONE thread on RAB (he said nicely) as it will make it easier for us all to evaluate the share and company

Missed this one friday must be slipping. The saturday mail brought it to my attention...............

Cambridge Mineral Resources PLC
16 April 2004

Cambridge Mineral Resources plc ('the Company')



Holding in Company



The Company was notified on 16 April 2004 that RAB Capital plc, acting as
investment manager for a number of co-mingled funds, had acquired on 14 April
2004 a further 2,325,018 ordinary shares in the Company.



RAB Capital plc's notifiable interest is thereby increased to 32,211,783
ordinary shares, representing 23.8 per cent. of the issued share capital.



The notification went on to state that RAB Capital does not act as custodian for
its clients and therefore the shares are registered in the nominee name of the
custodian of its clients, Morstan Nominees Limited.


This information is provided by RNS
The company news service from the London Stock Exchange



Certainly an excelent company to increase your stake in as Cambridge have had a positive drilling update from their Lomero Poyatas project in Spain.

Things just get better with RAB Im going to have more of these in the morning.

cheers GF.

With all the posts all over the internet on Aimquoted, Sharecrazy, MoneyAM, this weekend do you think some holders might be tempted to take a profit after it's recent run?

Looks like it might be overdue a bit of profit taking.

Excelent looking chart.




cheers GF.