One stockpicking technique I adopt is to scour the market for investment companies that have interests in unlisted high-growth technologies that offer potential to produce material valuation gains on disposal or IPO.
The disconnect between the carrying values in a company’s accounts and the price outside investors are willing to pay for these businesses explains why two constituents of my 2016 and 2019 Bargain Shares Portfolios, private equity group Oakley Capital Investments (OCI:361p) and venture capital group TMT Investments (TMT: 815¢), have produced eye-watering returns. Oakley has increased net asset value (NAV) per share by 122 per cent and paid dividends per share of 22.5p since early 2016, while TMT’s pro-forma NAV per share of 775¢ is 140 per cent higher than in February 2019. These hefty gains explain why their share prices have risen by 131 per cent and 226 per cent, respectively.
TekCapital (TEK:25p), an investment company focused on food technology, autonomous vehicles, smart eyewear and respiratory medical devices offers potential to deliver similar hefty returns. In fact, having first suggested buying the shares at 15.5p (Alpha Research: ‘Follow the smart money on technology’, 15 June 2021), I see upside to my 35p raised target. Recent newsflow is highly supportive.