The key to successful stock picking is to identify under priced investment opportunities that offer the real possibility of capital growth. That's exactly what's on offer with this specialist finance lender.
The business creates value for shareholders through an asset management business that manages loans for third parties and acts as principal lender to small- and medium-sized (SME) house builders in the UK. The company is backed by a cash pile worth more than half its market capitalisation and, as fees build on loan commitments taken on by third party and syndicated funds the company manages, income and profits look set to ramp up this year and next.
Risks include high exposure to any potential UK property market contraction and the inherently subjective nature of valuing the real estate assets that underlie the loans. With the shares in deep value territory, however, there looks to be good compensation for these risks priced in.
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