Following Raynar Portfolio Management’s record of success, Founder and Portfolio Manager Philip Rodrigs has deployed further cash into e-commerce providers that are benefitting from market conditions associated with COVID-19.
Philip designed the investment firm’s Raynar Flagship strategy to focus on high conviction stock selection. Having developed a strong belief that the shift to remote working and online shopping as a result of Coronavirus will be sustained, Philip identified several firms that he believed would particularly benefit. The results have been impressive, to say the least, propelling the strategy to the number one slot in its sector. Some of the online retailers driving the performance of Philip’s industry-leading Flagship strategy include Gear4Music, Angling Direct and online estate agency Purplebricks.
Raynar Portfolio Management Buys Shares in Purplebricks
Raynar Portfolio Management has invested in various online retailers over the last few months, including the online ‘house retailer’ – or estate agent – Purplebricks. This is just one example of Raynar’s increased weighting in internet-enabled providers, which the firm has grown from around 12% to over a fifth of the Flagship strategy.
Philip explained that Purplebricks’ lucrative divestment of its Canadian operations has made it a pure-play on the UK market, signalling the end of its ineffective ventures into international markets. This has strengthened Purplebrick’s balance sheet, overcoming previous financial concerns. Purplebricks has also benefitted from recent changes to stamp duty regulations and the rapid increase in transactions in the UK market after the government initially rolled back the lockdown.
‘It seems that a lot of people have reassessed the personal living space,’ Philip says, explaining that he remains ‘a firm believer that working from home has structurally increased permanently.’ He adds that, as the leading online-only estate agent, Purplebricks is in a ‘very attractive and strong position.’
The COVID-19 Rise in Online Retail Sales
Aside from Purplebricks, some of Raynar’s other holdings include retailers that have also profited from the structural trends that have taken place at the hands of COVID-19.
‘It is unarguable that delivery of retail and services through the internet has structurally increased,’ says Philip. ‘It was structurally increasing anyway, but there’s been a massive acceleration and a lot of people who maybe hadn’t tried it before have been forced to try it and that has materially opened up the scope for that trend.’
While major online retail providers such as Amazon have massively benefitted from COVID-19, Philip emphasises that many other online retailers have also experienced success. He refers to Raynar’s holdings Gear4Music and Angling Direct as examples.
Gear4Music
Gear4Music shares have nearly quadrupled since March, as the firm’s market leadership has helped it flourish within a fragmented music retail industry. Numerous physical stores across the UK have been severely impacted because of the lockdown. Meanwhile, Gear4Music sells musical equipment online and has been in a prime position to take advantage of the huge increase in people taking up or practising music over recent months.
Gear4Music has struggled to cope with increased demand in the past – in 2016-17, shares increased from 160p to 840p and then fell all the way back in the subsequent two years as its operations and systems couldn’t cope. The entrepreneurial management team was undeterred and have overhauled the business to be able to meet future rising demands. The completion of this improvement in 2019 proved very timely and they are reaping the benefits now.
Angling Direct
Angling Direct sells a vast range of fishing equipment, both in-store and online. In a similar way to Gear4Music, Angling Direct is benefiting from the increase in people enjoying fishing as a pastime after lockdown. Their online sales have increased sharply in a similar manner to the increase in sign-ups to fishing clubs across the UK.
Philip describes the business’ retail approach as ‘modern in what is a very traditional mom and pop retail industry.’ He adds: ‘They have a very prudent balance sheet, and, at one stage, their cash balance was half of their market capitalisation.’
Raynar Portfolio Management Surpasses £50 Million Mark
As of August, Raynar Portfolio Management exceeded £50 million in assets, having won several clients over recent months and more than quintupling in size since its inception in February. The Flagship strategy has returned 18.2% in the three months since its launch, outperforming all funds in the Investment Association (IA) UK All Companies and UK Smaller Companies sectors.
‘We have been very positively surprised, but very pleased and encouraged, with the number of inbound inquiries and people interested to hear about what we are up to,’ says Philip. ‘It is important for a young business that eight months in we are already through the £50m [mark] – that is really a great start for us.’
‘I am very pleased to have been able to deliver that sector-leading performance to the benefit of our launch clients and early supportive clients. But we are very much focused on the medium- and longer-term. We are looking to build steady performance over time, so it is great that we have got sector-leading performance in the very short term, but that is not going to change our approach.’
About Philip Rodrigs
Philip Rodrigs is a small cap stocks specialist who has grown and soft-closed a host of industry-significant funds on the investment scene. He is particularly recognised for the award-winning investment trust focused on micro caps that he conceived of and created in 2014, which many firms have attempted to emulate.
After studying Economics and Management at Lincoln College, University of Oxford, Philip went on to contribute to the management of funds at Invesco, T. Rowe. Price, Investec Asset Management and R&M Asset Management. Since establishing Raynar Portfolio Management (Victoria, London) in January 2020, Philip’s boutique investment firm has launched two unique investment strategies that attract high net-worth investors from near and far.
Philip has been named the Financial Express UK Smaller Companies Alpha Fund Manager of the Year, Morningstar’s Outstanding Rising Talent, and the Investment Week UK Smaller Companies Manager of the Year twice.
Learn more about Philip Rodrigs and RPM’s Flagship Strategy at www.raynarpm.com.
