The Headlines: A Slight Dip in Choppy Waters
Oryx International Growth Fund (OIGF) has released its final results for the year ended 31 March 2025, reporting a 2.4% decline in Net Asset Value (NAV) per share. The NAV fell to £16.15 from £16.55 the previous year, with total NAV attributable to shareholders standing at £226.08 million. While any decline might raise an eyebrow, context is crucial. This dip comes against a backdrop of significant global volatility, particularly impacting the UK smaller companies market where OIGF plays.
Navigating the Storm: What Dented the NAV?
The year wasn’t a smooth sail. Chairman Nigel Cayzer’s statement pinpoints two major catalysts for the turbulence:
- The UK Budget (October 2024): Specifically, an increase in the minimum wage and national insurance, coupled with a reduction in tax incentives for AIM-listed companies, hit the smaller companies sector hard. This further dampened already weak investor sentiment towards UK smaller equities.
- President Trump’s Inauguration & Tariff War (January 2025): The return of Trump and the immediate chaos of his announced tariff war sent shockwaves through global markets. The uncertainty caused businesses to rein in spending and orders, negatively impacting share prices globally.
This double whammy effectively wiped out a positive first-half performance (+6.5% NAV rise), culminating in the full-year decline. OIGF’s Investment Manager, Harwood Capital, noted this performance was still favourable compared to relevant indices, highlighting the challenging environment.
The Oryx Edge: Activism and Long-Term Vision
While the short-term result is negative, OIGF’s report strongly emphasises its core strength: a deep-value, activist investment approach. This isn’t a passive index tracker. Harwood Capital actively engages with its portfolio companies:
- Board Presence: Crucially, the team holds board seats in 21 out of roughly 42 portfolio holdings. This level of involvement is unusual and allows them to directly influence strategy and management.
- Value Creation Focus: The strategy revolves around identifying undervalued companies, actively shepherding them through value creation, and managing the realisation process. They don’t just sell when things go wrong; they roll up their sleeves and fix them.
- Stellar Long-Term Track Record: This approach has demonstrably paid off over the long haul. Forget the single-year blip: NAV per share is up a staggering 493.8% over 15 years, 183.8% over 10 years, and 83.5% over 5 years. That’s the kind of compounding that turns heads.
The Board, led by Cayzer, expressed confidence that this activist approach will continue to bear fruit despite the current macroeconomic and geopolitical fog.
Portfolio Spotlight: Winners, Losers, and Potential
Diving into the portfolio reveals a mixed bag, reflecting the volatile year but also underlying strengths:
- Star Performers: Top holdings NIOX Group Plc (respiratory diagnostics) and Hargreaves Services Plc (industrial/property services) delivered strong returns of 18.75% and 23.5% (plus dividends) respectively. Carr’s Group Plc also saw material value unlocked through the successful £75m sale of its engineering division, driven partly by OIGF’s engagement.
- Notable Decliners: Avingtrans Plc, EKF Diagnostics Holdings Plc, Kitwave Group Plc, and Flowtech Fluidpower Plc faced headwinds. Flowtech was hit by an industrial sector slowdown, while Harwood believes the share price falls for the others were largely unwarranted given operational performance.
- Strategic Moves: Harwood increased positions in Restore Plc (document storage/digitisation) and Animalcare Group Plc (veterinary pharmaceuticals), nearly doubling the former. New positions were initiated in Big Technologies Plc, Venture Life Group Plc, and Optima Health Plc.
- Unquoted Success: The unquoted portfolio performed well, with sales of IEnergiser Plc (100% uplift) and GYG Plc (33% uplift). Source Bioscience Plc also delivered strong results likely leading to a valuation uplift.
The top 10 holdings (representing 58.44% of NAV) showcase a blend of resilient performers and companies Harwood believes hold significant potential, often trading at discounts to their intrinsic value.
Looking Ahead: Silver Linings Amidst the Gloom?
The outlook, unsurprisingly, carries a heavy dose of caution. Trump-era tariffs and persistent regional conflicts (Ukraine, Israel/Gaza) make forecasting exceptionally difficult. However, Harwood identifies a potential positive trend emerging:
- Capital Repatriation? One unintended consequence of Trump’s policies might be capital flowing *back* from the historically overweight US into UK and European markets as pension funds look to de-risk.
- Undervalued UK Assets: The sheer volume of takeovers in recent years underscores Harwood’s belief that UK assets are materially undervalued. They see green shoots in the UK IPO market as banks try to time a recovery.
- Portfolio Resilience: Harwood expresses confidence in the current portfolio, citing limited exposure to global tariffs, healthy balance sheets, and the core appeal of many holdings to potential acquirers.
While acknowledging shareholder disappointment with the negative return, the Investment Manager believes OIGF is “strongly positioned to significantly benefit from any recovery in domestic markets.”
The Bottom Line: Patience and Conviction
Oryx International Growth Fund’s 2025 results reflect a tough year for smaller companies, buffeted by specific UK policy changes and global political upheaval. The 2.4% NAV decline is a snapshot of that turbulence.
However, this fund isn’t built for knee-jerk reactions. Its DNA is deep-value investing combined with hands-on, activist management – a strategy with a proven, exceptional long-term track record. The Board and Investment Manager remain steadfast in their approach, confident that identifying and nurturing undervalued companies, often through direct board involvement, will continue to generate superior returns over time.
The discount to NAV widened slightly to 32.2%, reflecting the challenging sentiment. For investors who share Harwood’s conviction in the fundamental value within the UK smaller companies space and believe in their activist model, periods like this can present opportunities. It’s a fund playing the long game, and its historical performance suggests that game plan works. Keep an eye on those green shoots.
