Hits: 15

23 July 2020

Frenkel Topping – Placing & Update

Share Price 41p

Mkt Cap £31m

Conflict Disclosure: No Holding 

  • News £13m placing at 40p/share alongside the acquisition of a forensic accounting business Forth Associates for a maximum of £3m which amounts to 8.5X EBITDA. The money is being raised as a war chest to roll up professional services for injured parties where Frenkel Topping can provide the wealth management services to the injured parties, thus providing a full service to the PI and Clinical negligence market. The trading update states H1 revenues are expected to be up 9% to £4.4m and EBITDA up 16% to £1.1m and the outlook is confident.
  • Estimates The acquisition adds an annualised £350k to EBITDA (14%) while the new shares expand the share count by 43%. The placing is therefore perhaps 18% dilutive before acquisitions are made.
  • Valuation If we assumed 18% dilution we would get a 2020 PE of 16.6X. But if the extra £10m can be spent acquiring professional services businesses at 5-*X EBITDA this could come down rapidly.
  • Conclusion There are 2 reasons this is exciting. Firstly because the numbers are attractive and secondly because the wealth industry is full of ex growth cash cow companies. Growth is from providing other services. See Messrs Smith & Williamson for further details.

3 June 2020

Frenkel Topping – AGM

Share Price 39p

Mkt Cap £30m

Conflict disclosure: No Holding

  • Results AUM during April grew 4% to £880m, reversing the 4% decline in Q1. The company announces a second JV arrangement with a firm of solicitors. Ascencia AUM is now gaining some scale at £399m. Costs have been cut to mitigate the impact of lower base rates and a 5% dividend increase is recommended.  
  • Estimates Forecasts assume 13% PBT growth to £2.6m and 7% dividend growth.
  • Valuation PE 12.3X Yield 3.8% 
  • Conclusion This business is proving its resilience. As it gets larger it may start appearing on radar screens. One to tuck away.

21 April 2020

Frenkel Topping – FY Results

Share Price 30p

Mkt Cap £22m

Conflict Disclosure: No Holding


  • Results Revenue up 12% to £8.6m. PTP up 9% to £1.2m. EPS up 13% to 1.25p. Strong start to new year reported and a JV with a firm of personal injury lawyers announced.


  • Valuation PE 22.7 Yield 4.2%


  • Conclusion Small, but with potential.

13 February 2020

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Frenkel Topping – No discussions  

Share Price 45p

Mkt Cap £34m

Conflict Disclosure: No Holding

  • Statement Harwood Capital entered discussions on 28 January which have now been terminated. The board confirms results are in line with expectations with AUM increasing 15% to £897m at 31 December. Revenues are expected to exceed £8.5m. Ascencia AUM were up 31% to £399m and the company continues to build momentum.
  • Estimates Forecasts anticipate £2.1m PBT and EPS 2.6p. Operating margin 24%.
  • Conclusion The shares were 38p ahead of the announcement of talks which is 14.6X PE.

9 December 2019

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Frenkel Topping – Trading Update  

Share Price 33p

Mkt Cap £25m

Conflict Disclosure: No Holding

  • Update The company has grown its AUM and trading is therefore in line with expectations.
  • Estimates PBT of £2.1m is expected from £8.6m revenues, a 24.4% PBT margin.
  • Valuation PER 12.8X and yield of 4.2%.  
  • Conclusion Looks tempting if this small company can get grow its profits materially.

30 May 2019

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Frenkel Topping – AGM Update 

Share Price 39p

Mkt Cap £29m

Conflict disclosure – No holding

  • Update This looks interesting. A 43% increase in new investment mandates and a 33% rise in expert witness instruction is reported this year.  This follows a year of investment in IT systems, training academy and marketing. The company also says it is exploring a number of opportunities to expand the Obiter (advice) brand including launching socially responsible portfolios.
  • Estimates 2019 estimates are for £2.1m PBT up from £1.7m in 2018 driven by revenue growth from £7.7m to £8.6m. That’s EPS of 2.6p and a dividend of 1.4p.
  • Valuation PER 15X yield 3.6%
  • Conclusion  So often markets read “ a year of investment” to mean “long term decline”.  The fruits of the investment are now starting to show. Because the company is small this is a play on earnings rather than valuation. The earnings this year are expected to recover after a series of downgrades in 2017 into 2018.  When the downward spiral turns the upgrades aren’t usually one off.  Clear sign of a reasonably priced recovery stock with an interesting niche and cash on the balance sheet adds comfort.

10 April 2019

Frenkel Topping – FY Results 

Share Price 28p

Mkt Cap £21m

Disclosure: No holding

  • Results Revenue up 5.5% to £7.7m has resulted in a decline in operating profit to £1.7m following a year of investment.  AUM was up 3.6% over the year to £779m. Outlook is optimistic with current trading said to be encouraging. Net cash equivalents was £2m
  • Estimates Dec 19 estimates are for £2.1m PBT and 2.4p EPS from £8.6m revenue.
  • Valuation PER 11.7X yield 6.4%
  • Conclusion Lighthouse has just been taken over at 18X multiple. At this valuation I suspect either the company will grow or succumb to a rival.  Both outcomes would be attractive to shareholders.  And hats off to the company for getting “Impact investing”, “Digital innovation” and “challenger” into the commentary.

31 January 2019

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Frenkel Topping – Pre Close Update 

Share Price 29p

Mkt Cap £22m

  • Update Results are expected to be in line with expectations. AUM has increased to £778m. Expert Witness instructions increased 30% and so the company reports a solid start to 2019.
  • Estimates Unlikely to change. 2019 EPS is expected to be 26% ahead of 2018
  • Valuation Per 12X, yield 6.2%
  • Conclusion  After a year of investment in 2018 the company is now set to grow earnings strongly as the benefits come through from the investment. But it remains small and is at risk of falling prey to a larger predator. Either way shareholders will benefit.