The biggest fund in the IA UK Smaller Companies sector, and one of its best performers has backed the initial public offering (IPO) of popular internet media firm LADBible, trading under the name LBG Media.
The company is a digital social media and youth content publisher aimed at young adults. Since its launch in 2012 it has built up 10 core brands, the most well-known being LADBible, UNILAD and SPORTBible.
The company floated at £360m yesterday on the London Stock Exchanges AIM. Co-founder Solly Solomou previously told Sky News that he planned to sell a chunk of his stake, which would be valued at around £200m if the IPO was successful.
abrdn has taken 7.16% of the shares issued, which will be spread out across its small-cap offerings.
FE fundinfo Alpha Manager Harry Nimmo, who runs ASI UK Smaller Companies, said that the LADBible brand was not just about “young blokes” but was a fast growing, global business with the potential to go further. It is still run by its founders, Solomou and Arian Kalantari, all characteristics Nimmo looks for in new investments.
Co-manager, Abby Glennie, explained that today in more digitalised and online world “content is king. Everyone wants to own content”.
She said that LBG Media, and LADBible in particular, has been able to monetize its content effectively throughout the various brands.
“It has recognised the value of working with brands or influencers and how to monetize that, as well as general advertisements,” she said.
“It also has a ‘You’ve Been Framed’ element whereby people send the firm content all the time. People want to be featured on LADBible.”
Nimmo added that although they were investing at the IPO it was not a “start-up business”, explaining that it has almost 10 years of proven growth and returns behind it already, so it was not a speculative trade.
The abrdn manager added that the investment was not an attempt to try and draw in a younger demographic of investors to the ASI UK Smaller Companies fund or trust.
“We're not just investing for PR, we want to make money for our clients here,” Nimmo said.
Despite being one of the biggest initial shareholders, LBG Media will only make up about 0.7% of the portfolios’ total allocation, which Nimmo said was normal practice for new holdings.
This is because they do not have all the historical data needed to back test the holding in Nimmo’s proprietary Matrix process, which ranks companies on a number of factors – including growth, momentum, quality and value – with the team then focusing on companies with the highest scores to find investment ideas.
Nimmo built the Matrix process when he first launched the ASI UK Smaller Companies fund and uses it across his portfolios.
Since using the system, the fund has been a consistent outperformer over the long term, ranking in the top quartile over three, five and 10 years. During the latter it made the ninth-highest returns in the IA UK Smaller Companies sector (347.8%), ahead its average peer (269.1%).
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Glennie added that LBG Media “has a lot of the qualities we like, and this is a good, profitable business, with good margins and capital and has been profitable since the start.”
MI Chelverton UK Equity Growth Fund and Slater Investments have also bought into LBG Media at IPO, taking 3% and 3.85% of the shares issued, respectively. Chelverton Asset Management and Slater Investments declined to comment.