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Primary Recommendation

Davenham - Highly profitable lender to small companies

December 2005

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • DVM
  • Price:
  • 270.5p
It is surprising that shares in Davenham, an asset-based lender, did not receive a stronger reception from investors when it floated this month. Part of the explanation as to why the shares were placed on a low multiple, of only 9x current year profits dropping to 7.5x for next year, is that investors were not prepared to pay a premium for the chunk of shares which were being sold by its two VC-backers. The other part is that old timers view the sector with some scepticism given the past horror stories of Euro Sales Finance and Versailles. However, unlike both those businesses, Davenham has a long trading history, operates in some specialist niches with high operating margins and has been profitable each year since its formation. ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

All material on this website is protected by copyright. You may use Information retrieved from the www.scsw.co.uk website for your own personal non-commercial use which means that you may not sell or copy this information to any third party without prior written consent. ISSN 1358-183X

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