It has had generally good results over the years though a number of its investments have gone to zero and others have been dramatically cut in value after the authorities acted on their business practices. That said these bad results have historically been significantly out weighed by the positive results.
Also whilst there have been some big valuation swings on specific investments I do think that the company has been reasonable in its valuations.
It has two major shareholders. The founder Mr Brian Marsh (41.8%) and PSC Insurance (19.7%) an Australian business.
Currently BPM has a declared diluted NAV per share of 455p (Results for the year to 31/01/22) and a share price of 296p (13/06/22). A very sizeable discount for a profitable business with a diversified asset base..
Why is this?
In my opinion it is mainly four fold;
1-The company needs money to invest. Historically this has been generated by investments reaching a decent valuation and being sold. This has been limited in the last few years and whilst the current set of results do contain a decent level of realisations, some of the cash obtained has already been used supporting current investments. In the short term there does seem enough that BPM will not ask for more, but equally it is restricted in its actions to raise cash for additional investment (rights issues, etc) as these will directly impact on Mr Marsh. He doesn’t seem to want to be diluted so it is not as though this can in the short term become a great growth vehicle. So as an investor you are concerned both that there might be a cash call and the effect of Mr Marsh's holding meaning not that much can be done.
2-The company cannot act to buy back shares as this will potentially impact Mr Marsh. So the discount doesn’t get minimised by sensible buy backs. The company has repeatedly mentioned this as an activity that it would consider but for Mr Marsh.
3-Dividends are limited, both as the company needs money to invest, see 1 above, but also because dividend income affects Mr Marsh. He obviously wants some. But presumably only so much. Also to be fair a lot of the profits are historically not cash but changes in NAV that only become cash on a realisation.
4-The dead hand at the tiller that Mr Marsh’s holding creates makes recruiting people to take the business forward either difficult or expensive. Why join a firm that you can’t do much with?
So we find ourselves with a deep discount on a real asset whilst we wait for Mr Marsh (81 years old) to do something with his shareholding that changes the game at BPM. Given PSC has 19.7% the chances of this coming from outside pressure seems limited.
I hold, but am not inclined to buy more. Though I do keep my eye on the activities of Daniel Topping and Jonathan Newman who are the two key executive directors. They have bought a few in the last 12 months, but not so much as to convince me that they see a big change any time soon.