The value of investments can fall as well as rise. Investors may get back less than they invested. Past performance is not a reliable indicator of future results. Capital at Risk.
ASSET
MANAGEMENT
Our highly experienced Asset Management team specialises in the small to mid-cap investment space. Between them, they bring over 50 years’ experience having been seeking out and investing in smaller companies since 1992. We employ a bottom-up, active stock-picking approach targeting growth at a reasonable price or value with a catalyst.
Funds Offered
APPROACH
At Oberon, our bottom-up investment process seeks to identify strong companies that are underappreciated by the market and have the potential to produce outperformance. These typically tend to be small-cap stocks that the market is less aware of.
Our investment philosophy is based around the following core principles:
• High conviction
• Fundamental (value) investing
• A size bias towards mid and small caps
• Fund managers co-invested on the same terms as the investors.
We also have a contrarian approach which leads us to focus on value situations. For example, a value situation could arise when the market perception of a company is negative based on a single attribute even though the business’s underlying transformation or strong potential within one of its divisions has not been factored in.
RICHARD PENNY
SENIOR FUND DIRECTOR
When looking at companies we ask three main questions:
1. How good is the business?
2. What is it worth?
3. Does it improve the portfolio?
We are looking for companies that have high growth, high return on capital and strong management alignment, and which we believe are mispriced. We are interested in sustainable return on capital but also the ability to reinvest at higher rates of return. Historic rates of return on capital are usually factored into the price, therefore it’s only the continuing higher rates of return on capital which can drive outperformance. The risk of an investment will be carefully considered. Key criteria are level of debt, geographic exposure, cyclicality, political risk, and regulatory risk.
CORNERSTONES OF OUR APPROACH
Behavioural – We are longer term than the average Investment Manager – we tend to have at least a two to five year investment horizon. We are also prepared to be contrarian and go against the flow.
Analytical – We use a return on capital and growth framework similar to those employed by corporate financiers, which we have previously used to deliver outperformance. We back companies where management teams are aligned with investors through ownership, which we believe to be a long-term driver of better returns within businesses.
Informational – We have over 50 years’ combined experience of analysing UK businesses, during which we have conducted over 7,000 meetings with company management teams. We also look at director dealings to give an insight into how managers view the prospects of the businesses they are running.
Technical – We are acutely aware that when we buy a share it means that someone else is selling it, so we look for forced sellers or fundraisings by companies who are forced to raise money at a distressed price. These could include a company dropping out of an index, rescue rights offerings or competitor funds meeting redemptions or being liquidated. All of these provide opportunities for active fund managers.
The UK small/mid-cap market represents a significant investment opportunity. In particular, we have historically used periods of market weakness as an excellent opportunity to buy growth companies at depressed prices.
Richard Penny
SENIOR FUND DIRECTOR
FUNDS OFFERED
Richard Penny, a Citywire AAA-rated fund manager, recognised for his long-standing success in special situations and small-cap investing, runs the TM Oberon UK Core Fund, TM Oberon UK Special Situations Fund and TM Oberon UK Smaller Companies Fund. Through managing these strategies, he has successfully navigated volatile markets, achieved strong returns and cemented his place as a premier manager in UK equities. Please click the dropdowns below to access overviews of the funds, fund characteristics and information on the fund manager.
Open-ended funds available:
TM Oberon UK Core Fund
The TM Oberon UK Core Fund seeks to safeguard and grow investors’ capital over the long term by targeting businesses with strong fundamentals, sustainable operations, and capable, reliable management teams. Our aim is to offer a stable and consistent investment option for those looking to engage with the UK stock market.
Investment Strategy
The Fund’s investment selection follows a stringent three-step evaluation process to ensure quality and reliability:
- 1. Clarity: Do we have a thorough understanding of the business and its operations?
- 2. Resilience: Does the business demonstrate sustainable profitability through economic cycles?
- 3. Trustworthiness: Can we rely on the management to be competent and honest?
Only businesses meeting all three criteria proceed to an in-depth valuation, where we assess attributes like cash generation and core business strengths. This process typically results in a selection of companies with low capital needs, well-established brands, solid balance sheets, competitive advantages, and lasting market presence. The Fund prioritises a long-term, low-turnover approach, focusing on both dividend yield and capital appreciation, with minimal concern for short-term market shifts.
Meet the Manager
Richard Penny
Richard Penny became part of Oberon as a fund manager in November 2024, after managing the TM CRUX UK Special Situations Fund since 2018 with CRUX Asset Management. With over 15 years of experience at LGIM, where he oversaw the L&GUK Alpha Trust and the L&G UK Special Situations Trust, he also held previous roles at M&G Investment Management and Scottish Amicable Investment Management. Richard was awarded an AAA rating from Citywire in June 2021 and holds a master’s degree in Engineering and Economics from Oxford University.
Fund Goals and Investment Policy
The Fund aims to achieve long-term growth, defined as five years or more, through a mix of capital gains and income.
It is important to note that returns are not guaranteed, and there is a risk that investors may receive back less than their original investment.
To fulfil its objective, the Fund allocates at least 75% of its assets to companies listed on UK exchanges, particularly those incorporated or domiciled in the UK. The Fund’s investments primarily include ordinary shares and other securities such as preference shares and convertible debt. The Fund may also hold cash, money market instruments, deposits, warrants, units in other funds, and derivatives. Generally, the Fund consists of 20 to 40 holdings and may also invest in companies based outside the UK if deemed beneficial. This relatively focused approach means the Fund may exhibit higher levels of volatility.
Derivatives may be utilised to support the Fund’s objectives or for hedging, though active derivative trading is not currently planned.
TM Oberon UK Special Situations Fund
The TM Oberon UK Special Situations Fund focuses on shares deemed undervalued due to unique factors affecting the individual company, its parent group, or affiliated entities. This may include companies undergoing recovery efforts, experiencing management changes, showing potential for strong growth, holding undervalued assets, or engaging in refinancing. The fund’s Investment Manager has flexibility in
investment selection, unrestricted by geographic or industry focus.
Investment Approach
Fund manager Richard Penny identifies two primary approaches to finding companies undervalued by the market:
- 1. Value Situations: These may include distressed companies where market confidence has dipped, but Richard has identified significant upside potential, believing the market’s reaction to be an overcorrection.
- 2. Growth Opportunities: The fund also targets top-tier companies; primarily in large and mid-cap stocks, that show strong value-creation and growth potential not fully reflected in their current market pricing.
For both approaches, entering at an attractive price point is a critical component of the strategy.
Meet the Manager
Richard Penny
Richard joined Oberon as a fund manager in November 2024, bringing experience from CRUX Asset Management, where he managed the TM CRUX UK Special Situations Fund since October 2018. He previously worked at LGIM for 15 years, managing the L&G UK Alpha Trust and L&G UK Special Situations Trust, and held roles at M&G Investment Management and Scottish Amicable Investment Management. In June 2021, Richard received an AAA rating from Citywire. He holds a master’s degree in Engineering and Economics from
Oxford University.
Fund Objectives and Investment Policy
The Fund’s primary objective is to achieve long-term capital growth, targeting an investment horizon of at least 5 years. To pursue this, the Fund will allocate a minimum of 80% of its assets to shares listed on UK securities markets, focusing on companies incorporated or domiciled in the UK. These companies may or may not have their headquarters or significant business operations in the UK. The Fund invests across a range of market capitalisations, but with certain limitations:
- No more than 40% of the Fund’s assets will be invested in (i) small companies or (ii) companies listed on the Alternative Investment Market (AIM).
- For clarity, a small company refers to those listed on the London Stock Exchange with a market capitalisation below that of the largest 350 listed companies.
TM Oberon UK Smaller Companies Fund
The TM Oberon UK Smaller Companies Fund aims to achieve long-term growth, over a rolling period of at least 5 years, through a combination of capital gains and income generation, with all fees and expenses accounted for.
Investment Strategy
The Fund follows a bottom-up investment approach, focusing on small-cap and AIM-listed UK companies. This approach is built on four core principles:
- Three Pillars of Growth: Focusing on companies with the potential for multi-faceted growth.
- Value-Driven Philosophy: Seeking fundamentally strong companies that are undervalued by the market.
- Manager Alignment: The fund manager is co-invested, aligning their interests with those of the investors.
- Focus on Distressed Growth Sectors: Targeting industries with long-term growth potential that may be temporarily out of favour.
These principles are designed to deliver alpha by identifying unique opportunities within the small-cap market segment that align with the Fund’s strategy and growth focus.
Meet the Manager
Richard Penny
Richard joined Oberon as a fund manager in November 2024, bringing experience from CRUX Asset Management, where he managed the TM CRUX UK Special Situations Fund since October 2018. He previously worked at LGIM for 15 years, managing the L&G UK Alpha Trust and L&G UK Special Situations Trust, and held roles at M&G Investment Management and Scottish Amicable Investment Management. In June 2021, Richard received an AAA rating from Citywire. He holds a master’s degree in Engineering and Economics from Oxford University.
Fund Objectives and Investment Policy
The Fund’s primary objective is to generate long-term capital growth, targeting a period of at least 5 years.
To achieve this, the Fund invests at least 75% of its assets in shares of smaller UK companies, which are either domiciled, incorporated, or significantly exposed to the UK market. Within this allocation, the Fund focuses on the lowest 10% of UK-listed companies by market capitalization, reviewed on a quarterly basis.
The Fund seeks companies that demonstrate improving growth in revenues or profits and appear undervalued. This may include businesses undergoing strategic changes, such as new financing, acquisitions, or restructuring, as well as those experiencing management changes or shifts in business strategy.
Additionally, the Fund may invest up to 25% of its assets in:
- Companies with market capitalisations above the bottom 10% of UK-listed firms,
- Companies in other geographic markets, such as Europe and the USA,
- Collective investment vehicles, including those managed by the ACD or Investment Manager,
- Warrants, cash, and cash-equivalents.
This flexible approach allows the Fund to capture a diverse range of opportunities across small and micro-cap companies, with the potential for growth-driven returns.
Investment Trusts available: