Odyssean Investment Trust: making the best of difficult circumstances.
Odyssean Investment Trust, set up to profit from supporting “misunderstood companies”, is a mere three years old – but its record to date and managers’ expertise make it a buy.
Fund managers are generally not good at running businesses. If they were, they would be in the wrong job. The objectivity and broad perspective of a fund manager is potentially of great value to a company, but requires the discipline of the private-equity specialist to justify the effort. Here, fund managers do add value through “active” involvement in the management of businesses they control, in contrast to the “passive” approach of most professional investors.
Setting up shop
This makes Odyssean Investment Trust (LSE: OIT) the perfect vehicle for an active approach. Stuart Widdowson, its lead manager, spent five years at HgCapital before joining Strategic Equity Capital, a trust focused on UK smaller companies whose performance he turned around. In 2017, he left to set up Odyssean with Ian Armitage, who had been key to the success of HgCapital, and Ed Wielechowski, another Hg veteran.
With the backing also of Christopher Mills of the North Atlantic Smaller Companies Trust, Widdowson raised £87m in a 2018 stockmarket flotation for a “private-equity style” strategy of investing in 15 to 20 stakes in companies with market values of between £100m and £1bn. These were to be “misunderstood companies with self-help potential”, in which the team’s “active engagement could support long-term value growth”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Their record and differentiated style looked promising but finding the right investments could not be rushed. In 2019, Widdowson was forced to take nine months’ compassionate leave and UK equities have performed poorly this year, especially small caps. Odyssean, it seemed, was as unlucky as its near-namesake in the Iliad. Like Odysseus, though, Widdowson and the team have proved adept at making the best of difficult circumstances. Though its benchmark small-cap index was down 16.7% from the trust’s launch to mid-year, Odyssean gained 3.5%. “Most of our outperformance has come in difficult markets,” says Widdowson, “but we are not out to beat the index, just to make money.” Bids for three companies in the portfolio in the last 12 months, at an average premium of 40%, have helped. Those for Consort Medical and Huntsworth were followed in August by a bid for Odyssean’s first investment, translation services provider SDL.
SDL, says Widdowson, was underperforming when they bought the shares. As a result of a number of problematic acquisitions and a failure to streamline operations, margins were only 8%, despite good intellectual property and high barriers to competition. Two years on, margins were close to the mid-teens and SDL agreed to a merger with rival RWS, more than doubling the value of Odyssean’s original investment.
Skewing towards growth
The portfolio now consists of 19 holdings, “companies with good technology that are trading below intrinsic value. We are not interested in very cheap, dying businesses,” says Widdowson. He expects to find five new investments a year, which will not be a problem this year. Technology, media and telecoms account for over 30% of the portfolio, industrials over 20%, business services 18% and healthcare 13% – the profile of a growth strategy rather than a value one. Net cash is 10%, leaving room for one or two new holdings “where we can double our money in three to five years”. The team is patient: “We often shadow businesses for... four years before investing.” Widdowson says the strategy has capacity for £500m of investments but extra issuance is impossible until his shares, currently trading on an 8% discount to net asset value (NAV), reach a premium. With this discount, Odyssean’s record to date, the outstanding record of the managers and mispricings more common than ever in the small-cap sector, Odyssean’s shares are a bargain.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.
After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.
-
Why now is the right time to invest in biotech
The biotech sector holds huge potential for investors, with strong growth and attractive valuations. Here's the best way to play it.
-
Zoopla: Busiest home buying May since 2021, but property asking prices slide
Buyers return to the market after the end of higher stamp duty thresholds and post-Easter lulls, but average sales are £16,000 below asking price
-
Investment opportunities in the world of Coca-Cola
There is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?
Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'
Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
A fund that looks past the short term in Asia
Growth should remain strong, but successful managers also need to focus on governance. Here's how to find active opportunities in Asian markets.
-
Greg Abel: Warren Buffett’s heir takes the throne
Greg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?
Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?
Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
Can new management turn RIT Capital around?
After several years of poor performance, there is growing evidence that RIT has turned the corner, says Max King