Success in investment is something that divides us. Either we have the talent and can transform ourselves into the next George Soros, or we let others, possibly fund managers, take the strain. For those who wish to remain self-directed, it is often the “greats” who can be inspirational.
The Eighth Wonder
In the case of Dukemount Capital it may be that channelling a mixture of Warren Buffett’s “recurring revenue” mantra, or Albert Einstein’s view that compound interest is the “eighth wonder” of the world is what we may be treated to. Indeed, both of these giants meet in the middle with the concept of reinvesting dividends, thereby supercharging capital growth by compounding income.
Long Dated Income
Indeed, Dukemount describes itself as a “long dated income company”, and clearly income, if reliable, will keep on recurring. The key of course, is how to achieve this? Part of the answer is to look at what the company is already doing.
The existing focus is on two housing association projects in the supported living space. At the West Derby project Dukemount has been paid a monthly management fee, and is set to share a profit on the development as a whole. For Wavertree, being involved in a project where a 30 year lease has been signed, certainly fits into the long dated brief.
Bread And Butter
But what can be said is that in terms of what is ongoing at Dukemount currently, we are looking at bread and butter deals. The key going forward, and the opportunity to those discovering the company in a post Covid-19 world is to watch it maximize returns, as it takes advantage of a changing landscape and potential mis-priced situations.
A State Of Flux
For instance, it is well known that the retail and office spaces are currently in a state of flux to put it mildly. Big players such as Hammerson, are trying to assess whether this is a dip to buy into, or the start of a prolonged change in behaviour in terms of work from home and online retail. The aviation industry is reeling from the uncertainties regarding travel and quarantine, the hospitality / leisure industries similarly. But the state of flux is not confined to sectors in turmoil, online / delivery focused groups may need novel funding sources to expand, acquire and increase capacity.
All of this could now come under the remit of Dukemount Capital and its new CEO Matt Thompson. With a background as a barrister and in real estate, his ability to structure deals can be taken as a given. But having been at the helm of a significant private oil & gas group himself, and given the recent $-40 a barrel oil price, it is evident that with this sector also up in the air, Dukemount is more than capable of entering the fray in multiple areas, in search of recurring revenue for the long term.
Sale and Leaseback Heaven
Of course, most of us are familiar with the “sale and leaseback” concept as far as the real estate area is concerned, something which Dukemount is known for. The thing to remember going forward is that sale and leaseback can be applied from everything to oil tankers and planes, to lamp posts and parking meters. In many ways, the current pandemic means we are in sale and leaseback heaven.
At a time when businesses of all shapes and sizes want to hedge risk, increase visibility and transparency, and perhaps merely just survive, Dukemount appears well placed and with the correct skill set to grow from what is effectively a shell type market capitalisation to something far more substantial given ultra low borrowing costs can really allow for a highly scalable investment model.
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