Realising value. Compounding capital.
Magdalen is opportunity-led rather than allocation-led. We take a patient, long-term approach to capital allocation and go where we believe the relationship between price, value and risk is most attractive.
A long-term approach to value.
Capital is allocated where we believe prospective returns are most attractive relative to price and risk. We are not constrained by asset class or market capitalisation.
Research is extensive and the hurdle for deploying capital is high. We act decisively when an opportunity warrants it; otherwise, we are comfortable doing nothing.
We regard a modest capital base as an advantage, allowing us to pursue smaller opportunities and return capital when attractive opportunities are unavailable, rather than grow assets for their own sake.
A disciplined approach to capital.
Value
We invest where we believe the prospective return justifies the price paid and the risks accepted.
Resilience
We prefer situations where the underlying economics can withstand uncertainty and adverse conditions.
Patience
We are willing to wait for opportunities and give successful investments time to develop.
Conviction
When the investment case is compelling, we are prepared to allocate capital meaningfully.
Long-term record.
Private company valuation: Current private company investments are ordinarily valued at 4.5x trailing twelve-month PBT. Where a holding is held for sale and an active sale process is underway, valuation is based on expected net realisable value.
A consistent philosophy across changing opportunities.
Since 2013, Magdalen has allocated capital across listed securities, private investments and direct opportunities. The mix has changed; the objective has not: realise value where appropriate and compound capital over the long term. Scale is not an objective in itself; we would rather return capital than retain it where prospective returns do not justify deployment.
We distinguish between risks to capital and risks to long-term returns.
Principal risks are assessed by likelihood and potential impact. Our primary concern is permanent capital loss; we also recognise that periods of limited opportunity may constrain returns.
A significant holding suffers a permanent deterioration in its economics or value, resulting in a material loss of capital.
A private investment ultimately realises below its carrying value, resulting in a permanent loss of capital.
Capital cannot be realised at an attractive value or within the desired timeframe.
Attractive opportunities may be unavailable for extended periods, leaving more capital undeployed and reducing prospective returns.
Dependence on a key decision-maker creates continuity risk if that person becomes unavailable or materially less involved.