In the world of real estate, we are told that it is “Location, Location, Location,” which is key. However, as many investors in the small caps space are only too aware, here it is very often a case of the 3M’s: Management, Management, Management.
We are reminded of this in the wake of the recent appointment to Dukemount Capital of Matt Thompson as CEO. Not only did he qualify and practice as a Barrister, but he brings with him 17 years of family office, private equity, real estate, industrial and financial markets experience. In addition, this was gained in executive and leadership positions, covering all facets of these sectors.
Perhaps most relevant at this stage is that Thompson comes from a family office background, an area where developing the kind of deal flow that protects wealth and gain for the long term, especially in the current low interest rate climate. In many cases investments are taken with a multi-generational perspective, something quite removed from the way other markets look at the world. As far as the outcome at Dukemount is concerned the intention under Thompson is for his skills to be used to bring in larger transactions than we have seen to date, based on long dated income.
Wavertree And West Derby
But of course, we are dealing with the junior end of the stock market, and notoriously short-term timeframe with retail investors prevailing. According to the Bulletin Boards they are obsessing over the outcome for Dukemount’s Wavertree and West Derby projects and treating them as if they are binary bets. However, while these projects are important, they are a foundation. The key will be how Dukemount uses the completion of these projects as a platform to expand further in the sector, based on the same model.
However, a positive differentiator between Dukemount and many other small caps, is that while there may now be more news flow under its new CEO, there is no intention of making more announcements for the sake of it. They will be limited to unveiling projects as they are developed, and deals as they are completed. Care and Leisure sectors will be maintained, but Dukemount will be looking to expand into other sectors, such as working with universities and other education providers, as well as distribution facilities, alongside broadening geographical locations.
As far what impact Covid-19 has had, whether risk or opportunity, it would appear it has been the practicalities of the new environment which have been foremost. For instance, whilst not in the care home market, Dukemount is currently offering brand new facilities with the best available care providers. Paramount is to provide all stakeholders from residents to local authorities the facilities they will need going forward.
Therefore, as far as the outlook for Dukemount is concerned over the next 12 months, we are looking at a three-pronged strategy. First is clearly to complete the two existing projects, and once this is out of the way the new focus would be to increase deal flow to boost cash flow. Thompson has suggested that if new cash generating deals are brought to the table, the share price which is currently towards the lower end of its recent ranges, should effectively look after itself. Given the modest market cap of the company near £3m, this seems to be a relatively conservative call to make.
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