Former Strategic Equity Capital (SEC) star manager Stuart Widdowson (pictured) has revealed the name of his new start-up company: Odyssean Capital.
Widdowson, who quit SEC's manager, GVQ Investment Management, nearly a year ago after an eight-year stint, is preparing to launch a range of investment trusts and companies, according to Odyssean.
The new company is a joint venture with Harwood Capital, the investment boutique run by veteran smaller companies investor Chris Mills, which will seed and finance the new business as well as provide back office support.
Odyssean will be chaired by Ian Armitage, the founder of Hg Capital, the venture capital manager, who gave Armitage his first job and remains a fan and a big shareholder in SEC.
Widdowson, the firm's managing partner, will focus the business on unconstrained, long-only investing in quoted UK smaller companies through closed-ended funds.
He has hired Ed Wielechowski, a former principal of the technology team at HgCapital, and Kate Reid, formerly of Algebris Investments.
Widdowson said there are a number of opportunities in the UK smaller companies space due to regulatory changes from Europe and mis-pricing.
‘We believe the introduction of Mifid II legislation will lead to many more opportunities to find mis-priced UK smaller quoted companies over the next few years, so timing could not be better to launch our investment strategy,’ he said.
The European directive forces brokers to charge customers for their research rather than bundling it as a free service into their core share trading activities.
While this improves transparency it also increases the financial pressure on brokers and will probably reduce the number of independent analysts covering smaller companies and investment trusts.
In a statement Widdowson added that smaller companies had ‘significantly outperformed’ large companies over the long term but remained ‘under-researched, undervalued, and often overlooked’.
‘There’s a fantastic opportunity to generate premium returns in this investment space and I feel we have an excellent team in place to capitalise on the coming market opportunity,’ said Widdowson.
Under Widdowson, Strategic Equity Capital was one of the top-performing trusts in the UK Smaller Companies sector. Its five-year total shareholder return of 137% still looks impressive but returns of 5% and 16% over one and three years have lagged rivals. The trust is now managed by Jeff Harris and its shares trade at a 13% discount to net asset value.