Whitman AIM IHT Portfolio

Whitman Asset Management (‘Whitman’) is a comparatively young investment management company, founded in 2018 by a group of experienced smaller company investors. 

The Whitman AIM IHT Portfolio was launched in September 2018, and currently has assets under management of £42.2 million. It targets more mature AIM-quoted companies with the potential for meaningful earnings growth (greater than 10% per annum) in the manager’s view. 

The AIM IHT service is led by Sean O’Flanagan, who joined Whitman in January 2023 as part of a planned succession from Christopher Pease, the Service’s founder. 

Christopher stepped down from the day-to-day management of the portfolio in June 2023. He remains a large shareholder in the business and will act as a consultant to Whitman for the foreseeable future. Sean has 25 years’ smaller company investment experience, including as lead manager of the Charles Stanley AIM IHT portfolio.

Whitman is largely employee owned, and as the AIM IHT portfolio represents a significant proportion of the firm’s assets under management, the manager’s interests should be aligned with those of investors.

• Portfolio of 20-25 stocks
• Focus on larger AIM-quoted companies with the potential to grow earnings 
• Minimum investment of £20,000 – exclusive to Wealth Club
• Apply in an ISA: top up or make a new subscription online using the link below. To transfer existing ISAs, please download, print and complete the ISA Transfer Form and post it to us
• Apply outside an ISA: please contact us for details
  

The manager

Whitman is a boutique investment manager focused on UK smaller companies with £112.8 million in assets under management (June 2023). 

The company was founded in 2018 by a group of experienced small-cap investment professionals, including Chief Investment Officer Christopher Pease. Christopher retired in June 2023 but will continue to act as a consultant to the portfolio and the service’s mandate will remain unchanged. His successor, Sean O’Flanagan, has 25 years of experience investing in UK-quoted smaller companies, including as lead portfolio manager for the Charles Stanley AIM IHT service for 10 years, growing assets from £27 million to over £500 million. 

Sean manages Whitman’s £42.2 million AIM IHT Portfolio alongside Portfolio Manager Joshua Northrop (formerly of Hargreave Hale), supported by assistant portfolio manager George Henderson, both have been with the service since inception. The same team also manages the £20.3 million TB Whitman UK Small Cap Growth Fund (June 2023). 

Unusually, for a firm and portfolio of this size, Whitman benefits from a dedicated dealer, potentially allowing the manager to take advantage of opportunities unavailable to others and better manage risk within the portfolio.

Whitman is privately owned, with its shares held by employees and a small number of experienced external investors.

Your shares will be held by Third Platform Services Limited (TPS) as nominee, or by a custodian appointed by TPS.

Investment strategy

The Whitman AIM Portfolio typically holds between 20 and 30 stocks.

It has a bias towards more mature AIM companies, that are normally larger than the AIM average (minimum market cap £100 million), have a strong balance sheet and typically pay dividends. Dividends are variable and not guaranteed. In addition, each company must have the potential to grow earnings by at least 10% per annum, in the manager’s view. 

Whitman meets company management before investing. At the core of the investment strategy is identifying an experienced management team with a track record of building significant shareholder value and a personal stake in the company. 

Current portfolio overview

The Whitman AIM IHT portfolio contains 24 stocks (June 2023). The average market capitalisation is £651.8 million and there are no stocks worth under £100 million. 

The charts below show the portfolio sector breakdown for the top 10 sectors, which together account for c.83% of the portfolio, and market cap value distribution.

Sector breakdown (%)

Market capitalisation breakdown (%)

Examples of portfolio companies

Renew Holdings

Renew Holdings (Renew) is a leading engineering services group supporting the maintenance and renewal of critical UK infrastructure, including the national rail network and motorways. The group operates through 11 independently branded subsidiaries and has a highly skilled directly employed workforce of nearly 4,000. 

Whitman believes Renew can benefit from long-term, non-discretionary structural growth drivers, including a commitment by the Government to level up the economy by investing in green infrastructure and placing greater focus on sustainability as part of the UK’s target of reaching net zero carbon emissions by 2050.

The business has a market cap of £588.8 million (June 2023). In the last six months to March 2023, revenue increased to £471.8 million, up 13.9%. This included a contribution from Enisca (a new acquisition), and organic growth of 11.6% . Over the same period, the group also reported an improved cash position and a strong forward order book of £890 million. Past performance is not a guide to the future. 

GlobalData

GlobalData claims to be the gold standard market intelligence provider to the world’s largest industries.

The business was formed in 2016, following the consolidation of several data and analytics providers, and continues to expand its offering through investments, targeted acquisitions, and organic growth. 

Its data platform is used by over 4,700 customers worldwide. It provides insights on competitors, market analysis, and pricing. The business has high levels of recurring subscription revenues (80% of total revenues in its last full financial year). The business is also relatively capital light, giving it room to scale through its “build once, sell multiple times” model.

In the 12 months to December 2022, GlobalData increased revenues 28.5% to £243.2 million, following a combination of positive M&A activity, organic growth, and currency gains. Over the same period, the business reported operating margins of 23.0%. 

The business has a market cap of £1.4 billion (June 2023).

Alliance Pharmaceuticals 

As is to be expected, not all investments will be successful. Alliance Pharmaceuticals is an example. 

Alliance is an international healthcare group which owns the marketing rights to around 80 different brands. Whitman believed the predictability of product demand combined with the well oiled operational model could mitigate investment risks.

However, in September 2022, the UK competition regulator started court proceedings to disqualify seven executives after a Times investigation exposed price rises on an anti-nausea drug used by chemotherapy patients. Unsurprisingly, the shares reacted badly. Given the potential fines and disqualification of Alliance’s management team, the portfolio managers sold the position.

Performance

The Whitman AIM IHT portfolio service was launched in August 2018. The chart below shows the performance of the service since launch against a peer group of other AIM ISA portfolios available via Wealth Club. Like other IHT portfolios, this is a discretionary managed service, so each portfolio is likely to be different.

Cumulative performance from launch to 30 June 2023

Access to your investment

Investments in this portfolio are for the long term. However, if your circumstances change, you can sell some or all of your shares, although sometimes this can take a while depending on market conditions and liquidity. Any amount you withdraw will no longer be IHT free. Withdrawals may result in a Capital Gains Tax liability unless held in an ISA..

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. Those considering AIM Inheritance Tax Portfolios should be comfortable with the significant risks of investing on AIM.

AIM IHT portfolios should only form part of a balanced portfolio. Your capital is at risk and you should not invest money you cannot afford to lose. If a service is managed by a small investment team, it could create key person risk. The fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. 

AIM stocks can be hard to sell, particularly at the smaller end of the market, and can be illiquid. AIM shares can be very volatile especially if the market falls sharply. The difference between the buying and selling price (spread) of AIM shares is often wider than the spread for shares listed on the main market. 

Eligibility for BPR, based on current rules, is assessed at the date of death and will depend on the companies in the portfolio remaining qualifying. Broadly speaking, you will need to have held a BPR qualifying stock for at least two years and still hold it on death to qualify. Tax rules can change and benefits depend on circumstances.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Charges (ISA)

A summary of the main charges and savings for an investment within an ISA is shown below. If you wish to invest outside an ISA, please see the provider's documents. The investment may have additional charges and expenses: please see the provider documents for more details. If you would like a full breakdown or a personal illustration, please let us know.

Our view

Whitman is a comparatively young investment manager, but its investment team has decades of experience as smaller company specialists. A dedicated dealing resource is particularly notable in a small asset manager – and could add value in the relatively illiquid AIM market. 

The announcement of founder Christopher Pease’s retirement marks a significant change for the investment team. Nonetheless, Whitman has appointed a seasoned AIM IHT investor as successor. Sean O’Flanagan has 25 years of investment experience within UK equities, 16 of which were spent managing AIM IHT portfolios for Charles Stanley and Canaccord. Christopher’s decision to continue to serve the team in a consulting role may provide further reassurance to investors. 

The manager is largely employee owned, and with the AIM IHT portfolio accounting for a significant proportion of the firm’s assets under management, the manager’s interests should be aligned with those of investors.

The manager focuses on more mature growth companies, which may help manage volatility. However, all AIM investments should be considered higher risk and the portfolio has struggled this year as the wider AIM market has fallen dramatically and growth investments have fallen out of favour. 

The fee structure is competitive. The minimum of £20,000 could make it a contender for this year’s ISA subscription.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.