Dear reader

BTR is growing said Starling Bank. Their lending grew well over 20%.

BTR is growing say Savills. Here’s the proof:

LendInvest (LINV) also lends to fund BTR. It calls it its “Mortgages” division. It also has a property development division called “Capital”.

LINV is a UK specialist property finance platform focused on buy-to-let (BTL), short-term/bridging, development, and residential mortgages. It operates a hybrid model with a shift toward capital-light operations (third-party funding, securitisations, and asset management fees) alongside selective on-balance-sheet lending for net interest income.

You can buy LINV at half price (to its NAV): A £72.7m NAV, a £63.5m TNAV and just a £35.7m market cap, is this a mispriced company?

>50% discount to its NAV.

LINV operates in two segments: BTL (buy/build to let/rent) and short-term bridging loans. You can see it has attracted a wide range of prestigious partners (and funders) so LINV itself is largely (but not wholly) capital light i.e. it lends other people’s money.

AuM are the assets earning income. Those can be on or off the balance sheet.

“On Balance Sheet” are known as its “Principal Investments” so this is where you borrow money (i.e. have a liability on your balance sheet) and lend money (i.e. have an asset on your balance sheet). You earn a net interest margin (NIM).

“Off balance sheet” is known as “3rd party funds” and, well, you don’t borrow money (i.e. no liability), but you charge a fee to a 3rd party and use their money to make loans - so you’re a service provider connecting borrowers with lenders. Typically the 3rd party will be a well-known Bank i.e. those above. But also Bondholders too.

FuM is the pool of money you can use to lend. It is your “dry powder” you might say. Its recent trading update tells us that:

“The Group enters FY27 with its largest pipeline to date, providing strong visibility on forward lending.”

We also know that LINV has £1.66bn of unutilised funds to use for that pipeline, and expects to grow its funds by an estimated £0.5bn over the next year.

Where LINV turned profitable again last September, but on an underlying basis moved the dial by £3m adj.adj.EBITDA after I include the share-based payment back in to the numbers.

Free Technology

LINV boasts the best platform for complex mortgage applications and win plaudits for its interface.

Is it “just about AI and automation”? Err, no.

LINV’s approach isn’t about automating the underwriting decision; it’s about automating the administrative burden that slows it down.

The reality of specialist lending is that high-level experts often spend a lot of their day on “Data Friction, chasing AML trails, manual portfolio stress testing, and verifying messy asset valuations. That isn’t underwriting; it’s underwriters forced to do data entry and a poor use of talent. LINV uses technology to synthesise those disparate data points into a single, structured overview. This doesn’t replace underwriting intuition; it complements it.

Developing the platform has been an investment of over £60m over the years. That investment has been written down (impaired) by -£50m so you are paying £35m to get tangible assets (net cash and receivables) in excess of your buy price plus the IP/technology at zero price as well as a business generating profits in the price for free too.

LINV’s technology is a moving feast too where there are up to 12 changes are made (on average) per day.

About -£3m per year is amortised meaning the estimated £8.5m carried forward balance today will be fully written down to zero by 2029. It’s unlikely to actually get to zero in that further development will be capitalised but the fact that a large slice of “cost” is really a hidden asset - in the price for free.

***56% retention rate

You might not consider 56% in FY26 to be all that good but it has grown from 19% FY24 to 35% FY25 to 56% FY26. It is not “normal” for specialist lenders to enjoy that level of retention. The rates are more typically 20%-30% since price and yield is the primary driver. What we appear to see is that people will pay for the convenience for LINV’s platform, since it does not offer the lowest price in all occasions.

Ability to transfer products is a big deal for example. Minimise hassle.

My analysis

The latest trading update confirms that LINV now has funds under management (FuM) of £5.48bn up from £5.31bn and assets under management (money put to work) of £3.82bn as at 31/3/26.

This means that there £1.66bn left to deploy and LINV tell us in their trading update of their record pipeline.

Based on this my estimate is that we will see an acceleration of PBT over the next 12 months and beyond, as fixed costs are fully covered and growth drops straight to the bottom line.

This profit run rate puts this at a lowly 5.5X P/E based on the FY27 forecast.

Net Fee Income

Why am I convinced my profit model is correct?

Analysing the past Net Fee Income (NFI) we can see this leverages in both segments relative to its operating expense meaning that NFI grows from covering 23% of all overheads to 59% in the most recent accounts.

At above 100% then you get Profit Before Tax, right? So NFI on its own and LINV would be toast.

But we also see the gross profit margin is 72%-88% for mortgages and 86%-97% for Capital. Almost pure profit!

Net Interest Income

Thankfully LINV also earns net interest income. NII. This is a commission from a 3rd party lender (like Lloyds Bank) and that is much lower GP margin…. but the margin has been growing - a lot.

11% grew to 25% in 1H26 for mortgages, and 17% grew to 31% for Capital.

But relative to the (same) overheads as NFI, the contribution is growing strongly. To the point where NII nearly covers all direct overheads so that the NFI is 80%-90% pure profit.

Add both together and you see the progression from 37% (i.e. -£15.7m LBT) to 106% (£1.2m PBT)

Conclusion

The year end results are due in July, and the rerate on this could take longer than one month since some exceptional costs from the refinancing of a bond means some up front costs landing in 2H26. But the trajectory appears clear. The need for more rental properties is clear.

The Renters Rights Act has created a moat for incumbents and yes has made the job of being a landlord more difficult and likely all of that drives up rents for the very people the government claims to want to support. The benefit for LINV is that this means more business, as landlords professionalise and in order to stomach the costs of red tape, they require scale and leverage.

Scale and Leverage is precisely what LINV can profitably provide through its winning mortgages/bridging loans platform, designed to be as friction free as possible and the proof is in the 56% of customers returning for more.

Regards

The Oak Bloke.

Disclaimers:

This content is for educational and informational purposes only. It does not consider your personal circumstances and is not financial, investment, tax, legal, or professional advice. Nothing here is a recommendation, offer, or solicitation to buy, sell, or hold any investment. Investing involves risk, including the loss of capital. You are solely responsible for your own decisions

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

*- I wrote this article last week when the share was at $307 per share. Looking at the market today it seems I’ve been too slow and it’s up about 16%. Oops. I’m not going to think up a new title but perhaps the SAAS-pocalyse is over for INTU, one to ponder.

Dear reader

It’s like an episode of Catchphrase. Running books? Book runner? Good… but it’s not the right answer croons an imaginary Roy Walker.

Quickbooks? There we go. That’s one of the products. Part of the Global Business Solutions.

Next one?

Mailchimp. What are you, a marketing expert? You got it in one. Another part of the Global Business Solutions software.

Next one?

Err, Rachel turbo charges the economy with the ultimate driving machine? Are you serious? That’s very wishful thinking!

I’m sorry but the right answer is Turbo Tax. There’s CreditKarma too, which is like a Moneysupermarket equivalent, and these are collectively the Consumer segment.

INTU’s delivers a growing platform of software because businesses struggle with too many apps. Don’t have too many apps….Just have one…..suite.

From INTU, of course.

Welcome to the world of Intuit.

The cheap to buy world at $83.2bn marcap down over 60% yoy.

$304 a share at the time of writing.

$8bn of that $83.2bn marcap will be purchased via buy backs in 2026 say INTU.

Watch out though. Stock commentators might warn you that stock-based compensation is $2bn per year. Eagle-eyed readers will say ah hah I remember you spoke about this in the article “Power of AI” when a stock commentator said INTU was “greedy”. I used INTU’s competitor SGE to test whether that was true. SGE by comparison in 2025 was nearly £1.1bn “human cost” so 13.9% (of its marcap) vs 10.9% for Intuit (vs its market cap). So different proportions but SGE hand over a greater amount of cash pro rata to its humans than a more restrained INTU does.

SGE:

The point is $2bn sounds dreadful but actually it’s not excessive, I might even say modest. After all, I also compared INTU vs US software companies too and found 1.82% of the market cap as SBC wasn’t remarkable.

Besides how much is performance related? 100% of it is at INTU.

So why the drop at INTU?

AI is “destroying software” ergo INTU is worth less goes the mantra. New LLMs can complete knowledge-based tasks.

Turning on the TV yesterday Bloomberg were reporting with vim and vigour that Snowflake is “destroying” Salesforce explaining the drop in price at CRM as though it has already happened.

So software is destroying other software, is it? The irony of that sentence seems to be lost on the commentator. Will one software provider wane while another waxes? If it happens, then it’s been happening for decades. Software is an intensively competitive game where winner takes most.

How many years has Snowflake spent understanding the needs of business development teams collaborating with customers and with all parts of their business? Sales people don’t want reams of generative text slop, they want to have info “at their finger tips”.

Will a new world of collaborations with AI occur? It’s already happening at INTU.

So why consider INTU?

What’s the bear case?

The bear case is apart from the above mantra, that INTU slightly reduced their 2026 outlook for TurboTax. Specifically Total TurboTax Online units will decline 2% in 2026, and TurboTax share of e-files to decline by 1% . INTU reported the number of pay-nothing customers reduced to approximately 7 million, down from 8 million last year. Pay-nothing customers are freeware version users that INTU hope will upgrade to the paid-for version.

Never mind that TurboTax Live revenue is projected to jump 36% in 2026. It is already well on track to do so given the USA tax deadline is 15th April and it reported the results for these (up year on year).

This means Intuit is successfully convincing users to pay a premium for AI-driven or human-assisted help, vastly improving its Average Revenue Per User (ARPU grew ~7% in 3Q26).

AI destruction? Or AI profit enhancement?

Does a pure-play AI-software alternative offer a guarantee like paid-for Turbo Tax?

INTU claim its calculations are 100% accurate on your state tax return, or it’ll pay any IRS penalties. Gemini? Claude? GPT? Any guarantee from those?

Err, no.

Ah, so destruction by AI is just bluster, a repeated mantra, for now. A hallucination you can profit from. A misnomer that INTU investors are profiting from.

Consider that INTU’s 15+ LLM are available to developers, that its systems are creating 60bn ML predictions per day handling $2tn on invoices, each AI-participating business customers contributing 625k data attributes…. and it has 10m of those it serves.

AI runs on data, and INTU has the data.

The free Do It Yourself could further decline, but even within that, does Brand not count for anything? What about Word of Mouth?

94% of 190k reviews give it 5 stars on average.

INTU offer a range of services to suit different people.

Mailchimp

Mailchimp is a marketing automation platform trusted by 11 million+ users worldwide to personalise every email and SMS for every customer using AI-powered insights and content creation tools. With a 99% delivery rate and over 300 integrations, Mailchimp helps businesses connect with their customers, foster repeat business, and build lasting brand loyalty while seamlessly fitting into their existing workflows.

It is rated 4.4 out of 5 on G2. Interesting its competitors are also in the low 4 out of 5 too. Some criticism was made of its interface and learning curve. Those negative harrumphing reviewers will be delighted with today’s news then:

As well as a new chat interface with an Agent Mailchimp offerings include marketing automation and customer relationship tools. Mailchimp has announced integrations with ChatGPT, Claude, Wix, Shopify and WooCommerce that unify ecommerce data and bring AI-powered marketing capabilities directly into the platforms merchants already use. The enhancements are designed to help ecommerce brands and small and mid-sized businesses scale with confidence using Mailchimp, the #1 AI-powered email marketing and automation platform.

QuickBooks

Quickbooks is also part of Global Business Solutions: This segment serves small and mid-market businesses around the world, and the accounting professionals who assist and advise them.

QuickBooks Desktop, Quickbooks Online and Intuit Enterprise Suite are its three Accounting offerings, plus there are human capital management solutions such as payroll and time tracking, money solutions, such as merchant payment processing, invoice pay, bank accounts through an FDIC-member bank partner, and financing for small and mid-market businesses.

Intuit Enterprise Suite provides mid-market businesses with a configurable, AI-powered solution that includes multi-entity and multi-dimensional financial management capabilities designed to seamlessly scale and enhance productivity and profitability for more complex businesses to streamline operations.

HISTORY

Founded 1983 with its “Quicken” product, crushing Microsoft’s “Money” product (remember that?) and launched Quickbooks in 1992. It acquired Turbo Tax, flirted with a Microsoft takeover that got blocked (anticompetitive grounds) and bought Credit Karma ($7 billion in 2020) and Mailchimp ($12 billion in 2021), bolstering INTU’s consumer and SMB ecosystems with complementary services.

INTU has been delivering automation for years but in 2025, Intuit accelerated its AI strategy, introducing a system of intelligence that relies on agents and AI-enabled humans to automate important workflows for consumers and SMBs, saving them time and money including partnerships with ChatGPT and Claude.

This is the product sales mix in the latest quarter. As can be seen much of this revenue is recurring.

Note that Tax 55% is disproportionate in Q3 (to 30th April) due to the US tax year deadline of 15th April.

A 10% year on year improvement in EPS.

If we focus in on the Business Management segment this shows revenue growth since 2020. Mailchimp was acquired late 2021. The growth of its mid-market offering (57%) and Payments Services (50%) are noticeable as classic upsell as a customer grows, and cross sell more services. Bodes well for the strategy to cross sell AI services.

Here we see revenue at the two segments of the business quarter by quarter.

With corresponding growth of operating income.

In 9 months to the 30th April 2026 INTU generated $7.5bn of Operating Cash Flow. Compared with 12 months of FY24, FY23 it has doubled and is substantially up on FY25 ($6.207bn full year as seen below)

About $2bn a year gets consumed with share-based compensation so net income is $4.2bn and includes various non-cash entries like amortisation.

Broker guesses meanwhile are very positive.

Expectations are, in aggregate, for a strong FY26 outturn with increases in FY27 and FY28.

Overall, for fiscal 2026, Intuit expects: 13-14% revenue growth, non-GAAP operating margin to expand by about 1-point, and non-GAAP EPS to grow 18%:

The broker consensus runs counter to the market and the “AI will destroy” mantra, instead forecasting growing profits and cash flows.

Balance Sheet

Year to date cash grew by $2.2bn.

Current ratio 2.23x showing a fortress balance sheet.

Debt-to-equity 0.3x and cash covers debt 100%

Treasury stock -$24.9bn and YTD -$3.4bn shows the extent that stock buy backs are being used to reward shareholders.

The Cutback

A $300m restructuring charge and 3,000 roles cut as INTU streamlines “reducing complexity” earlier this month, including reductions at Mailchimp, the merging of TurboTax and Credit Karma into its merged Consumer Segment.

The cuts are management layers, project managers and engineering and product roles.

AI replacing roles? Sort of. The talkers and coders are being cut back and INTU says: “it’s around managing agents, as opposed to managing a set of people.”

INTU has signed multi-year deals with different AI startups, like Anthropic and OpenAI, to integrate and power their AI models into its software. Intuit signed a $100m deal with OpenAI to power its vast portfolio, such as TurboTax, QuickBooks, Credit Karma, and Mailchimp.

So greater automation and fewer “do-ers” too? Yes.

Management

INTU’s Chairman and CEO is Sasan Goodarzi. Since taking the helm in 2019, Goodarzi has proven to be a master of strategic evolution, steering Intuit’s impressive financial growth—more than doubling revenue while transforming the company from a traditional tax and accounting software provider into a dominant, global financial technology powerhouse.

Founder Scott Cook remains on the board. The founder still owns about 2.2% of Intuit. The CEO owns less than 1%, but still has meaningful dollar exposure. Directors and executives together own roughly 2.5%. Compensation is strongly performance based.

What makes this leadership team particularly exciting for investors is their aggressive, proactive “day one” mentality and absolute clarity of vision regarding artificial intelligence. Rather than waiting to be disrupted, Goodarzi and his C-suite—including CFO Sandeep Aujla and CTO Alex Balazs—regularly challenge their own business models to stay ahead of the curve. This was vividly demonstrated by their decisive decision to cut 17% of their workforce to eliminate bureaucratic middle management and aggressively reallocate capital toward building an “AI-native platform” and creating “done-for-you” automated customer experiences.

By leveraging Intuit’s massive proprietary data moat (via TurboTax, QuickBooks, Credit Karma, and Mailchimp) and strictly focusing on maximising customer cash flow and refunds, this management team consistently proves they are highly disciplined capital allocators. They possess the rare executive courage required to make tough operational pivots that protect margins and secure long-term, high-growth market dominance.

Conclusion

My eye is firmly on cash generation and growth. INTU continues to achieve this and its recurring income is in large part defensive. There are two certainties they say: Death and Taxes. Well INTU can’t help with the former, although just like in Monty Python “I ain’t dead yet” is its loud refrain.

And taxes? Those remain certain, and would you introduce the uncertainty and fear of using an AI or would you use an INTU human/AI + get a guarantee? The choice is clear and brand matters.

Accounting is also a defensive, although highly competitive sector. The growth of its mid-market and payments businesses to upsell and cross sell are particularly encouraging. Cutbacks appear to make sense and turning Mailchimp into a cash generative aspect too. Mailchimp remains an important comms tool for small businesses especially those loathe to pay for a marketing agency. It has its place.

CreditKarma is highly cyclical so could struggle in a post third Gulf War world of plummeting confidence but this is 10% of the income so even a halving will be offset by growth elsewhere.

Overall, the opportunity to buy INTU at a forecast 10X earnings and with 10% forecast growth was a clear decision for me, of an extreme mispricing.

Regards

The Oak Bloke.

Disclaimers:

This content is for educational and informational purposes only. It does not consider your personal circumstances and is not financial, investment, tax, legal, or professional advice. Nothing here is a recommendation, offer, or solicitation to buy, sell, or hold any investment. Investing involves risk, including the loss of capital. You are solely responsible for your own decisions

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader,

Why are more than 3.5m Brits choosing Starling? Could it be that it’s a more interesting world with Starling in it? Or could it be that zero FX-fees abroad and a 15% APR overdraft? Hmm.

#1 Starling is attractive

As a person paying a whopping 40% overdraft APR I’m eyeing up Starling thoughtfully.

Starling’s name was inspired by the collective intelligence, agility and beautiful simplicity of a starling murmuration: A unified force, able to change course with speed and precision and to win new territories.

This isn’t the full list but Starling also offers a compelling Top Trumps for businesses:

#2 Starling the BTL Lender

Starling expanded its BTL mortgages by over 20% year on year.

Safe as houses? Err well safer, since there’s about a 40% cushion to its lending so safe as long as those ‘ouses don’t go ‘alf price, innit?

And if they do, then the BTL market will become the BTTL won’t it? Buy two to let. Never let a bargain - or a pun - pass you by.

#3 Starling P&L

This sums up the performance: Growing numbers of customers where over a third use Starling as their primary account, ROCE of 24.9% while maintaining a static PBT. A lower PBT mutter detractors. More on that next.

The business generated actually £146.6m comprehensive income up from £143.4m so profits rose, but the banking business was affected by lower interest margins as rates fell during 2025.

#4 LEADERSHIP

CEO Bhatia is ex-HSBC Head of Digital Bank and ex-CEO of OVO Energy.

CMO Rousseau is ex-Expedia who oversaw the team marketing the launch of its travel apps, and prior to that Apple’s MD for Services Marketing so launched Apple Music, Apple News, Apple Arcade and Apple TV+.

CIO Rees advises the UK government on AI in Financial Services serving as their “AI Champion”

The remaining management team are long-term Starling folks of 10+ years.

#5 MARKETING

In FY27 (from 1st April 2026) Starling has leaned into its “Good with Money” campaigns to drive new customers. Active users (of Starling paying in £500+ per month) grew from 3.07m in FY25 to 3.18m in FY26 - and this was without any advertising! 0.11m more active accounts vs 0.3m accounts opened.

Transaction volumes increased by 10% to £216.7bn from £197.1bn suggesting a deepening relationship of £68.1k of txns per active user vs £64.2k the year before. Also implies that wealthier people use Starling, doesn’t it.

Its advertising campaign began in FY27 once the FCA restrictions had lifted. It fell foul of AML (anti-money laundering) and KYC screening. It learned its lesson.

The CEO says the rate of customers onboarding is up over 100% implying a quarter of million further active users or more in FY27.

Of course no marketing in FY26 didn’t mean no new customers. Word of mouth helped. NPS of +62 means hardly anyone has a bad word to say (although a reader did express a negative experience of Starling just last week)

Being the recommended bank by Which? for seven years in a row helps too.

#6 CHRY’s VALUATION OF STARLING

CHRY-babies own 11.76% of Starling. It’s recent mark down to £374.7m implies £3.2bn valuation reduced from a £3.7bn valuation (previously worth £436m to CHRY-babies).

It describes the reduction as “peer compression” and “mechanical”. You what? Compression? Did it crush its competitors?

No, in plain English a basket of Starling’s listed peers dropped in price - so so did Starling’s valuation. I’m sorry Starling, it’s not you, it’s them.

#7 It could’a been should’a been

Starling achieved its fifth consecutive year of profitability, and a 24.5% PBT margin however, the macro-environment shifted dramatically between FY25 (to 31/3/25) and FY26 (to 31/3/26).

The Bank of England’s softening interest rate cycle directly hit Starling’s primary revenue driver (interest income from central bank deposits and lending), while previous financial crime control corrections temporarily restricted active front-book customer growth.

In plain English their profit margin dropped where the overnight rate drops immediately while savings products “roll”

Had the Macro environment been identical to those of FY25 we would have actually seen a 50% increase to profits year on year. Here’s the basis for that:

Assumption changes:

#8 ENGINE

The underlying growth does not fully reflect into the revenue numbers of 25% growth. The post period sale of a third and fourth customer at least triples the accounts footprint to 3.8m and that takes no consideration for the future growth (and success) of two start ups SALT and AMP (both owned by large banking groups).

The order book value is £70m ARR so Engine is well on its way to its £100m ARR target.

Will either or both of those start migrating their existing accounts to Engine? Banca Transilvania the parent of SALT has 5m customers, and AMP Ltd has 1m customers but £80bn of assets under management so don’t let the lower number fool you.

Nor let the lack of profits disclosure worry you, ARGP margin is “significant”.

The ARGP is 39% in FY26 and was slightly down from 41% in FY25.

Starling sees “credible runway” to hit a £100m ARR order book in 2026.

£40m ARGP on £100m at 25X EBITDA is a £1bn valuation and that’s the valuation probably as at 31/12/27 once the order book has been deployed.

Starling has deliberately have avoided a “best of breed” approach pulling in third parties for aspects and instead offers a suite of software called “The Engine difference” that provides Banking & Ledger but payments, API tools, CRM, marketing, monitoring all in one rather than bolting together multiple systems - as is typically the case. When you work with partners 30% is a typical partner margin. When you’ve built the software the margin is theoretically 100%, less maintenance costs and amortisation. Certainly, variable costs are not 70% of revenue so profits can leverage as revenue grows.

#9 Ember

Acquired for £5.5m but £2.5m net of cash acquired, Ember has added an SME software arm to cross sell a service to its SME customers.

Essentially they offer a free accounts platform with receipt scanning and VAT analysis and soon a book keeper’s portal access, which is enough for most one-man band (or woman or self-identifying humanoid band) businesses.

If you want the MTD submission then you pay £7 a month in year 1 and £14 a month thereafter. For its 492k SME customers that could bring in £42m ARR if half of them upgrade to that.

It’s not just that it’s a fraction of the £30-£40 a month minimum cost of Xero, Sage etc it’s a pleasure to use - with an AI assistant that can process stuff for you.

I like how “Transfer money to your spouse” is top of the list. Happy wife, happy life, eh?

#10. SWOT Analysis: Strategy & Operations

Strengths

• High Customer Primacy: Sector-leading engagement with 56% of SME accounts and 35% of retail accounts treating Starling as their primary bank, yielding an industry-top Average Revenue Per Active User (ARPAU) of £275.

• Capital Fortress: A surplus capital buffer exceeding £525m in May 2026 gives Starling immense flexibility for inorganic acquisitions without needing dilutive equity raises. Its CET ratio is 28.58%

• Proprietary Tech Stack: Upgrading the application with agentic AI tools (e.g. “Starling Assistant”) reduces operational overhead and customer service friction. The cost to serve at ~£40/customer/year is a fraction of its competitors.

Weaknesses

• Macro Interest Sensitivity: Unlike more diversified fintech peers (e.g., Revolut), Starling remains deeply anchored to net interest margins (NIM), leaving it vulnerable to falling interest rate cycles.

• FCA Dog House: 2025 meant carrying out risk mitigation which slowed customer onboarding whilst Starling cleaned up historic financial crime compliance gaps cooled historic hyper-growth curves.

Opportunities

• Engine (SaaS) Monetisation: The high-margin Software-as-a-Service banking platform is picking up international volume and targeting a massive £100bn global addressable market.

• Inorganic SME Ecosystem Expansion: The successful acquisition of tax platform Ember creates an all-in-one ecosystem for sole traders, unlocking immediate cross-selling and premium subscription revenues.

Threats

• Legacy Credit Drag: Continued provisioning requirements over non-compliant BBLS Covid loans where government guarantees were voluntarily stripped away.

• Macro Mortgage Exposure: Headwinds from the Fleet Mortgages buy-to-let portfolio as UK structural affordability limits property transactions.

#11 Sum-of-the-Parts (SOTP) & NPV Valuation Analysis

Evaluating Starling through a traditional single-multiplier model fails to capture its dual identity as a highly regulated commercial bank and a high-margin enterprise software business. A proper Sum-of-the-Parts (SOTP) valuation provides a clearer picture.

Component 1: Core Banking & Lending Operations (Starling Bank & Fleet Mortgages)

• Performance: Generated the vast majority of FY26 revenue (£876.4m) and £217m in PBT profits.

• Valuation Methodology: Applying a standard UK mid-tier bank Price-to-Earnings (P/E) multiple of 15x on post-tax earnings (~£150m).

• Implied Value: £2.25bn

Component 2: Engine by Starling (SaaS Division)

• Performance: Earned £11m in FY26 revenue, growing at 26% year-on-year, backed by a robust forward pipeline aiming for more than £100m in short-term annual recurring revenue (ARR).

• Valuation Methodology: Valued as a B2B enterprise software provider. Given its early stage but prestigious tier-1 deployments (Salt, AMP), an aggressive enterprise-value-to-revenue multiple of 25x forward ARGP is appropriate.

• Implied Value: £1bn

Component 3: Ember by Starling (SaaS Division)

• Performance: Lost -£1.8m including exceptional costs

• Valuation Methodology: Valued as a B2B enterprise software provider. Given its early stage but incumbent customer base and its outreach to accountants and book keepers a 10% attachment and a £4m ARGP seems reasonable. An enterprise-value-to-revenue multiple of 25x forward ARGP is appropriate.

• Implied Value: £0.1bn

Component 4: Surplus Capital

• Performance: Pure balance sheet strength.

• Implied Value: £0.5bn in liquid, unencumbered regulatory capital surplus.

TOTAL: £3.85bn valuation

That is broadly in line with the past valuations, meaning the reduced valuation to £3.2bn leaves in undervalued by £0.65bn, plus the CHRY discount of 42% to NAV means you are buying Starling for £1.85bn valuation.

#12 Conclusion

Starling is a premium, mature fintech. It has cleared its historical FCA compliance hurdle, holds an elite Net Promoter Score of 63, and is fundamentally self-sustaining. The primary constraint is capital upside relative to peers; it trades more like a highly efficient bank than a viral, global banking and SME software platform.

There’s more on offer than just bird food here in my opinion. Starling is already eating its lunch, with some fava beans and a nice Chianti.

Regards

The Oak Bloke.

Disclaimers:

This content is for educational and informational purposes only. It does not consider your personal circumstances and is not financial, investment, tax, legal, or professional advice. Nothing here is a recommendation, offer, or solicitation to buy, sell, or hold any investment. Investing involves risk, including the loss of capital. You are solely responsible for your own decisions. It’s your money; it’s your responsibility.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader,

A huge congratulations to readers who decided to join Team Orange and agreed it was ¡Scorchio! Tomorrow will be an exciting open and will we see a counter to the $36bn AuM Castlelake? Perhaps Wizz will have another go? Perhaps one of the Middle East Carriers worried about demand for long-haul. Perhaps EZJ shall remain a FTSE100 company that we can still invest in. We’ll see!

Dividends!

From Scorchio to it’s raining dividends…. hallelujah. The picks for 26 have announced/delivered 2Q dividends as below.

Cha-ching.

I felt I needed to reach behind the settee as the 48% ITD gain at the 16th May the picks has dropped to “just” 36.7%.

This is largely due to the falling price of oil affecting ITH, SU, HTG, ENI and others. More on that later. A temporary state of affairs?

Others are doing nicely.

A big shout out to the GRG shorters who had to pay a £34 dividend to borrow my imaginary shares on top of the 0.9% cost per month. The remaining shorts are dwindling and are now below 10% of shares (£160m still borrowed) but grimly holding on waiting to lose even more money. How sad. Inevitable.

The Oak Bloke substack is closing in on 5,000 subscribers as more and more people enjoy the mix of moments of irreverence and proper deep-dive analysis. Please do tell your friends and people about this substack, your support is deeply appreciated.

A big thank you to all the readers who support this publication and the two charities I am supporting TreesForLife and Aspire. We are now over a third of the way there and at month 5 of 12. Pro rata behind. If you’ve not yet helped in 2026, now is your chance. Please help.

Choose TreesForLife, choose wondering who you are on a Sunday evening or choose Aspire.

Just think about that warm fuzzy feeling you’ll get when you do, stood among the PROUD readers who’ve actually given something back.

I’d love to cover all the ideas, but I suspect I’m going to struggle to do so but I’ll do as many as I can. Here goes.

#1 ECOB

A fund raise at 12p (zero discount) spooked the market a bit but my eye was drawn to the doubling of capacity to cope with its increasing order book. The tangible proof of a half built block of flats as of 1 month ago. Given the ground works were completed end of Jan it took three months to built that plus the humanitarian house.

I look forward to getting my teeth into the FY25 accounts to be released in the coming month.

#2 CORN

Down but evidence of food inflation, farmers struggling, el nino dry weather, mean I remain convinced on this.

Funny how forthcoming food inflation and el nino is being spoken about widely but the reality hasn’t yet hit the market.

#5 Altyn Gold Up 12.2%

Turnover grew to over $100m in 2H25 effectively more than double that of 2024. 1Q26 revenue ws $56.3m so 12% higher than 2H25 despite a lower volume of sales (11.5koz vs 12.5koz)

Plans to expand production from 1Mtpa to 2Mtpa will be announced in the coming weeks.

Shareholder equity grew to $150m from $82.2m, and comprehensive income was $68m putting ALTN on a 6.7X P/E. A broker guess puts 2026 net profits at $85m based on a forecast $4000/oz gold price putting ALTN at 4.9X P/E.

My own reading for 2026 is a result closer to $100m net profit, a 4X P/E where expansion of 2Mtpa implies a below 2X P/E.

Looked at another way and based on proved and probable reserves of 3.8Moz ALTN is valued at just $1.31 per ounce of gold in the ground, where the likely margin in 1Q26 was $3,500 per ounce. That’s a heck of a mark up.

#9 Silvercorp

Assuming $5/lb copper, $3,350/oz gold, $1.15/lb Zinc, $1/lb Lead and $50/oz Silver then revenue would grow from $432m this year to $2.1bn by 2032.

Today those metals prices are hopelessly out of date.

$6.40/lb copper, $4,500/oz gold, $1.61/lb Zinc, $0.96/lb Lead and $75/oz Silver.

The forward value of SVM is “off the charts” particularly for its gold expansion. It’ll be renamed GoldCorp.

El Domo starts production end of 2026.

Insatiable they call it. The demand for minerals.

Here is the supply of minerals. Notice all metals are being mined at record levels…. except two. Chromium (mined by OB 25 for 25 pick Tharisa) and Silver.

#Oil

This is an interesting graphic as to how crude oil gets converted into fractions. Oil in different parts of the world have differing proportions, called sweet and sour. Ah so.

Considering OIL

A large factor in the drop at the OB picks for 26 is oil. Down from above $110 to $91. Is the green chicken correct? Will we see the Oil price collapse ever downwards? Nothing to see here. There are other people who agree that the surplus of oil is so large that even the Strait of Hormuz disruption is just a temporary blip.

They point to the future markets and say the oil market “knows”. Hmm. If that were true why would future prices ever change? If the market knows?

It is my contention that a raft of assumptions are being made based on historic information, and the track record of accuracy is laughable. I’m talking about the accuracy of the IEA, but I don’t intend to repeat my critique of that today but you can read “Oil be the Judge”.

Here’s my thoughts on the state of Oil:

The world today has approx. 8bn barrels of Oil. The red dotted line above. Not all of that is Crude Oil.

Deduct - 3bn refined products (you can’t refine what’s been refined)

---

There’s ~5 bn barrels of Crude Oil worldwide.

Deduct -1.5bn China (they ain’t sharing + an export ban on refined products)

Deduct in Transit -1.7bn (20 days at 81m barrels/day of seabourne)

Deduct -0.5bn “Heel”/Sludge

Deduct -?bn for damage/shut ins in Iran/other Middle East/Russia

Leaves 1.3bn or less

Deduct -1bn cumulative shortage to date due to Strait of Hormuz. (90 days at 11mb/d)

Leaves 0.3bn

(less than a month until 11 mb/d of demand destruction must occur)

But If you remove China demand/supply and assume China will draw 100% from its stockpile/domestic production then the ex-China depletion drops to 3mb/d so the destruction date extends to 100 days from today. So early October.

China consumes 15 mb/d and produces 5 mb/d, so imports 10 mb/d. China only has 100 days of storage (1.5bn stored and 10mb/d shortfall). So realistically it is not the case that China can forego any imports for the next 100 days.

Different Crude Oil Types/Densities/Blends and the impact on Refiners. The reduced supply means refiners adapting - and that takes time.

I said. ? deduction for damage and shut ins. That ? is not zero. The damage extends to Iran, its neighbours in the Arabian Gulf, but also Russia who has had various facilities damaged by the Ukrainians.

Can you empty the pipes? No. Due to physics. The Immediate Void (Slack Line Flow). The moment that 1% of volume disappears from the 240,000 miles of pipelines worldwide, it creates a massive physical vacuum inside the steel. Because crude oil is a liquid, it is virtually incompressible. Removing liquid leaves behind an empty pocket of space, a dangerous condition engineers call “slack line flow. Without 100% liquid contact against the pipe walls, the hydraulic pressure wave that pushes the oil forward completely collapses.”

Commenting on the latest EIA Short Term Energy REPORT (May 2026)

The EIA’s timeline is incredibly optimistic. According to their own report, they are banking on traffic picking up right now (late May/early June). If you factor in the $25 billion in estimated regional infrastructure damage, the sea mines left in the shipping lanes (which Iran says needs 30 days to be removed), and the pressure loss in shut-in reservoirs, the EIA’s December targets are highly likely to fall short.

The EIA admit that forecast shut ins are growing not shrinking, up to May. The idea that 2mb/day can be reversed and reduced in the month of June is fanciful. How?

Another 2mb/day by the 30th September is 4 months from today. How?

In just 7 months from today 9 million disrupted barrels a day will flow again. How?

Oil will be $89 by the end of 2026 and building inventories (that’s 3mb/day more supply than demand remember for over a year) leading to $79 oil.

Of course markets have reacted positively to Trump’s latest “it’ll all be over soon” message (the seventh time I believe) and Oil is $87 so nearly $20 a barrel lower than EIA estimates.

The EIA couch their assumption that the Strait reopens late May. Even if it does tomorrow (the 31st May, then 30 days is needed to clear mines say Iran, and yes let’s assume they send out their mine sweepers tomorrow, then the EIA say that Oil will be $20/b more in the near term.

Erm. So the price of oil is today about $40/bbl below the EIA assessment.

There is an assumption that US can drill baby drill. The might Permian will roar into action. But Hubbert Peak theory says that’s impossible. Think about seventy years of history.

A strong indicator of hubbert’s peak is rising levels of gas-to-oil. It was therefore shocking to read in the Natural Gas section of the EIA May 2026 report that that is exactly what is happening in the Permian. Falling productivity levels means even if people drill baby drill, the productivity drops will disappoint. Like King Canute you can’t stop the forces of nature. Depletion is one of those forces.

In my opinion and based on my analysis, Oil will be sharply rising in price quite soon. Position accordingly.

The 25 for 25

The return in 2026 is 11.9% and the ITD is now 71.8%

The 2024 picks

These have risen 10% in 2026 and are at a 29.1% gain overall. Not bad when you consider there were three failures in those twenty ideas.

Eagle-eyed readers will remember I mused about the Cash from realisations and dividends sat around doing nothing. I said I would redeploy it. Read on reader, read on!

DEC

I last wrote about DEC in “DEC-ades of performance” pointing out that its EBITDA profit performance was grown 730 fold in 12 years from $1.6m to $287.2m in 1Q26.

It’s been a breathtaking performance, yet it has dropped since then to £10.74.

So I’m placing the imaginary £6,109.48 accrued cash to this septuple-down on the idea. Back in 2024 I said “if I’d had the chance I would have gone in big on DEC”.

Now’s my chance. Let’s do it. Even if I’m half right about Oil and the forthcoming crunch DEC is a beneficiary to this.

Those 1Q26 results are an annualised US$540m underlying net profit earnings for a company you can buy this evening for US$1,033m. A P/E of under 2X…. ignoring property sales! …. ignoring its latest Sheridan acquisition too!

Want to know the best bit? I could be spectacularly and embarrassingly wrong about a crude oil shortfall and it won’t matter. Want to know why?

AI is rapidly growing. Power generation equipment is up. There’s a long runway for Nat Gas to power all of that and be the source for LNG exports.

DEC released their sustainability report this month. Few care about this now, since DEC has resolutely proven the short attack from 2023 and 2024 and the garbage spewed by detractors was err total garbage.

The sustainability report contains important clues for DEC’s future success.

The methane no leak 99% rate is superb and far exceeds the >97% target. Further work with Bridger for methane monitoring continues and is clearly yielding results beyond expectations.

DEC reduced CO2e emissions by 9% in 2025 on a pro forma basis. Clearly the 2025 acquisitions weren’t nearly as efficient as DEC adding 60% new emissions so work continues in 2026.

DEC tell us work continues to make use of end-of-life wells for Geothermal and Carbon Capture. A liability becomes an asset - as I posited many times.

Imagine converting 10% so seven thousand end of life wells for geothermal use. That’s a -$0.4bn liability that’s now a $0.7bn asset.

As forecast well retirements accelerate by 50% in 2026.

Changes to the plugging/decommissioning in WV reduce costs by 20%, and shorten the time to plug by 1-2 days say DEC. It is asking for the same treatment in other states.

So this is the OB 2024 and now 100% of cash (except for my 2026 dividends of £500) is committed.

I’m going to leave it there. Happy hunting as you make your own investment decisions.

Regards

The Oak Bloke.

Disclaimers:

This content is for educational and informational purposes only. It does not consider your personal circumstances and is not financial, investment, tax, legal, or professional advice. Nothing here is a recommendation, offer, or solicitation to buy, sell, or hold any investment. Investing involves risk, including the loss of capital. You are solely responsible for your own decisions. It’s your money; it’s your responsibility.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader

A $324m marcap, OB picks for 26 idea IDHC reported EGP437m net profit in 1Q26.

That’s $8.4m, or annualised $33.6m so a PE of just 9.6X.

IDHC have delivered medical diagnostic services for over 40 years and serve these countries.

That is annualising a result that includes two Muslim festive seasons which slows things down, similar to Christmas in the UK. And despite a month of the 3rd Gulf War too.

1. Executive Summary & Core Narrative

IDHC delivered a highly resilient, volume-driven Q1 2026 performance, marked by 31% revenue growth to EGP 2.1 bn.

The defining theme of this quarter is aggressive network expansion paying off in volume, which successfully diluted the seasonal headwinds of Muslim Festive Season.

While heavy investment in branch expansions (153 new branches year-on-year) and investment to introduce radiology into the KSA slightly squeezed core operating margins, bottom-line profitability was supercharged by massive foreign exchange (FX) gains, sending net profit soaring by 78%.

2. Deep-Dive Financial Analysis

Top-line & Revenue Quality

• Revenue Growth (31% YoY to EGP 2,073m/$39.7m): Growth is remarkably healthy because it is driven primarily by volume (tests up 22%) rather than just inflationary price hikes (Revenue per test up 7%). This proves deep-seated consumer demand and successful market-share capture.

• Segment Dynamics: The Contract Segment (corporate/insurance) remains the heavy lifter at 68% of revenue and grew faster (32%) than the Walk-in segment (29%). However, the Walk-in segment boasts much higher pricing power—yielding EGP 368 per test compared to the Contract segment’s EGP 164 per test.

• I’ve recently been writing about the “rule of 40” in software and how world-class companies like Microsoft score 62, Intuit 48, ActiveOps 33, Sage 32 if you add their revenue growth and EBITDA margin. IDHC scores 60 in 1Q26.

• Compared with a US-listed peer IDHC trades at a substantial discount

  

Profitability & Margin Compression

• Gross Profit Margin (38.9%, down 90 bps): The minor drop was due to structural shifts in Cost of Goods Sold (COGS).

  • The Good: Raw material costs dropped as a percentage of revenue (18.7% vs 19.5%), proving that IDH has massive bulk-purchasing power and supply-chain efficiency.

  • The Bad: Direct Wages & Salaries jumped to 21.2% of revenue (up from 20.1%). This reflects the immediate burden of staffing 153 new clinics before they reach optimal patient capacity.

• EBITDA Margin (29.5%, down 200 bps): EBITDA grew a solid 23%, but the margin compressed due to rigid operating leverage under holiday seasonality and a 54% spike in marketing costs (to EGP 66m) utilised to launch Biolab KSA.

• Net Profit Breakdown (The FX Distortion): Reported net profit spiked 78% to EGP 437m/$8.4m. However, this includes a massive EGP 145m ($2.8m) in FX gains (likely due to holding foreign currency balances amid EGP devaluation).

• Adjusted Net Profit (Up 36% from EGP 214m/$4.1m to EGP 292m/$5.6m): Stripping out the non-operational FX noise, the true underlying net profit margin actually expanded by 60 bps to 14.1%, proving that underlying operations are becoming more profitable.

  

• FX Gains meant headline Net Profit was $8.4m so 50% higher than the adjusted one.

3. Operational Performance & Efficiency Metrics

IDH’s aggressive strategy over the past 12 months is clear: Network Density. We particularly see growing branches in Egypt (from 635 to 751), growing patient numbers in the KSA, growing EBITDA per patient in the KSA, Egypt and Nigeria.

Price rises per test translate into stronger profit performance in Nigeria.

The loss in the KSA also includes one-off costs where a new Al Borg Scan (Radiology) and marketing is supporting the expansion of patients and breadth of services (higher value radiology tests)

So compared with 2025 we see no slow down in performance in 1Q26 across key markets.

4. Geographic Insights & Regional Drivers

Egypt (85% of Revenue) — The Core Engine

• Performance: Grew 35% to EGP 1,762 million. ($33.7m)

• Key Drivers: The strategy to diversify into high-margin radiology and oncology via Al Borg Scan and the Cairo Ray acquisition is working, with radiology/radiotherapy revenue exploding 67% YoY.

• Furthermore, House Calls have permanently commercialised post-pandemic, making up a massive 23% of Egypt’s revenue. Will the UK catch up with Egypt and offer this one day?

Saudi Arabia (Biolab KSA) — The Hyper-Growth Venture

• Performance: Revenue expanded 171% in local currency (SAR 2.2m).

• Key Drivers: Patient traffic exploded 146% as IDH expanded from 2 to 3 branches.

• The KSA is currently minor (1.5% of group revenue) but the pipeline to move to 6 branches indicates KSA is positioned to be IDHC’s primary future growth vehicle outside Egypt.

Nigeria (Echo-Lab) — Turnaround Story

• Performance: Local revenue grew 23% (NGN 1,032m).

• Key Drivers: Despite massive inflation in Nigeria, aggressive pricing adjustments successfully protected the bottom line. More importantly, operational efficiencies caused the EBITDA margin to nearly double to 13.9% (up from 7.7%).

Jordan & Sudan — The Drags

• Jordan (Biolab): Revenue grew a muted 4% in EGP terms. Price caps in Jordan’s highly regulated healthcare market forced an average revenue per test decline of 5% in EGP terms. Growth here is strictly volume-dependent.

• Sudan: Effectively a write-off for now. With 17 out of 18 branches indefinitely closed due to civil conflict, Sudan acts as a localised geopolitical drag.

5. Strategic Outlook & Health Check

• Balance Sheet Strength: IDHC sits on a highly liquid cash balance of EGP 1.85 billion ($35.4m) (up 12% and equal to 11% of the market cap)

• This allows them to fully self-fund their aggressive branch rollout without relying on expensive debt in a high-interest-rate environment.

  

• The Hub and Spoke Model: IDHC’s proprietary expansion architecture continues to yield fruit. By utilising its world-class mega-lab as the hub to process tests, fed from cheap, micro-collection branches (”Spokes”), they are successfully scaling volume while capping variable costs.

  

  

• The arrival of Elliott Investment Management in April 2026 is a massive signal to the market. Elliott an $80bn hedge fund, led by Paul Singer, is one of the world’s most formidable “activist” hedge funds. They don’t just buy stocks to watch them grow; they buy stakes to force changes that they believe will drive the share price higher. Following the completion of their transaction on April 9th Elliott now holds exactly 21.67% of IDHC.

Conclusion

1Q26 yet again demonstrates a company aggressively outgrowing its macroeconomic constraints. IDHC is effectively leveraging its dominant position in Egypt to fund high-growth international expansion (KSA, Nigeria), ensuring a well-diversified, cash-generative future.

I recently wrote that IDHC has plans for further growth during the rest of 2026. 1Q26 is the proof.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader

It’s now just over a year since fellow 2025 fun runner Stocks commentator Mr Head gave Harbour the Heave Ho in his April fools 2025 announcement due to it breaking his rules, when selling HBR would have been at below 150p.

I heartily disagreed and bought.

Glad I did. Since then it has doubled in price.

So at a £4.38bn market cap at 279p should I leave safe HBR like Mr Head did or keep sailing on based on a thesis that Dire Straits lie ahead (for competitors in Oil and Gas)?

Historically, Harbour was a heavily UK-centric producer caught in the crosshairs of Milli’s punitive Energy Profits Levy (EPL / windfall tax).

Someone please tell silly man Milli that we are punishing companies delivering spectacularly gas and oil with good emissions intensity, at a fraction of that of the muck we buy from abroad.

Look at HBR just 13KG per BOE.

This update shows the “New Harbour” fully emerging—a diversified, international, cash-generating machine, not wholly reliant on Milli’s whims and rhetoric.

With a long future of large reserves (1.12 bn barrels 2P and1.88 bn 2C so 3 bn in all)

That’s a valuation of $2 per Barrel of 2P+2C, or $5 per Barrel of 2P.

Let’s look under the hood of the LLOG acquisition, map out the massive cash flow upgrade, and evaluate the valuation.

1. From One to Five

The defining feature of this update is the structural shift in Harbour’s production base and that the UK is no longer the sole engine.

Key Takeaways on Production:

• The US is now the Crown Jewel: Thanks to the $3.2 billion LLOG acquisition completing ahead of schedule (Feb 11th), the Gulf of America is now Harbour’s largest single production hub.

  

• UK Downside Protected: UK production fell from 165 to 153 kboepd. This natural decline, supported by the Waldorf acquisition mid-year, means Harbour is successfully shrinking its exposure to harsh UK fiscal policies while replacing it with high-margin US, Argentinian and Norwegian barrels.

2. The Financial Turbocharger: Upgraded Guidance

The meat of the HBR trading update lies in the massive upward revision of the 2026 Free Cash Flow (FCF) outlook.

• Old FCF Guidance: $0.6 billion (based on $65/bbl Brent and $11/mscf European Gas).

• New FCF Guidance: $1.4 billion (based on $80/bbl Brent and $13/mscf European Gas).

• Current YTD actuals are $88.50 Brent and $14.50/mscf ($85.29 BOE) European Gas implies an actual FCF of $1.9 billion assuming Oil and Gas average today’s prices for the rest of 2026. If that’s correct that’s a P/FCF of 3X. In other words £1 of HBR shares delivers 33p free cash flow this year.

• Based on a 45%/55% split of returns and debt reduction that represents a 14.2% dividend yield while reducing debt from $6.3bn (at 31/3/26) to about $5.3bn by the end of 2026.

Even if that’s not the case and it only achieves its new guidance per the forecasts below Harbour will have effectively more than doubled its expected cash generation for the year.

Many stock commentators rely on broker guesses. I am sceptical of these guesses implying that FCF might hit $1.36bn in 2026 and that revenue might only reach $11.5bn in 2026 falling to $10bn in 2027 and $8.8bn in 2028.

So I built my own model.

2025 Actual Performance (Segmented)

2026 Forecast (Segmented)

My model implies a $14.3bn revenue and $1.9bn FCF based on the 10.5 month contribution from Wintershall Dea (which closed 11th Feb 2026)

3. Sizing the “Oak Bloke” Cash Monster

Let’s see how achievable this $1.9 billion target is based on current macro conditions. Harbour provided their exact FCF sensitivities:

With Brent at $100/bbl today and 2026 futures hovering around the $80-$85/bbl range and European gas remaining resilient due to geopolitical tensions in the Middle East, that $1.9 billion FCF figure looks highly conservative and highly deliverable.

Consider that HBR have already achieved $0.7bn of the $1.9bn FCF in 1Q26! Its Opex is ahead, production ahead, prices ahead.

3a. Crude Oil / Liquids Pricing Structure

The model applies a weighted average realised price across the global segments.

• Base Unhedged Benchmark: $88.50 / bbl (YTD 2026 actual average for Dated Brent).

• US Segment (GoM): $83.50 / bbl. This accounts for the 12,000 boepd of oil hedges (zero-cost collars) capped between $68 and $105/bbl, as well as regular regional quality differentials between Gulf Coast crude (WTI/Mars) and North Sea Dated Brent.

• Norway & UK Segments: $81.00 / bbl. These regions are model-adjusted downward because European oil production is subject to older, legacy corporate hedges that drag down the overall realised value when spot prices spike rapidly.

• Argentina & North Africa: $72.00 / bbl. Reflects heavy exposure to localised domestic pricing caps (especially in Argentina) and regional marketing discounts relative to international Brent.

3b. Natural Gas Pricing Structure

Because Harbour separates its gas reporting by product type, two completely different sets of assumptions have been applied:

European Natural Gas (UK, Norway, Germany)

• Base Spot Metric: $14.22 / mscf (the volumetric equivalent of the €41.80/MWh YTD European TTF benchmark).

• Model Realised Price: $14.50 / mscf. This directly aligns with the actual 1Q26 financial update, where Harbour reported realising an average post-hedge European gas price of $14.80/mscf (pre-hedge: $14.70/mscf). The model maintains this high run-rate for the dominant European segments, as the company has strong downside protection with 19,000 boepd of gas hedges floored at a high average of $16.50/mscf.

3c. Other International Gas (Argentina, North Africa, SE Asia)

• Model Realised Price: $5.50 / mscf (Average across regions).

• International gas from fields like Vaca Muerta (Argentina) or West Nile Delta (Egypt) does not trade on European TTF hubs. Instead, it is locked into local, long-term state utility contracts or regulated domestic pricing matrix systems, which typically sit significantly lower than European import rates.

3d. Condensate Sales

• Model Realised Price: $74.00 / boe.

• Condensate (ultra-light liquid hydrocarbons) tracks global oil values but historically prices at a 10% to 15% discount to pure Brent crude depending on specific regional processing, blending, and refinery infrastructure access.

3e. “Other Revenue” and “Other Operating Income”

These categories do not use a standard commodity unit price. Instead, they represent flat-rate financial inflows:

• The Mexico Segment Inflow: A specific $75 million cash transaction has been written into Mexico’s “Other Revenue” line. This directly accounts for the post-period divestment of Harbour’s 5% interest in the Zama field to a subsidiary of Grupo Carso, which was structured explicitly as a financial investment carry.

• Midstream & Infrastructure Tariffs: The remaining items represent standard third-party processing fees, platform access tariffs, and minor currency hedging adjustments based on 2025 structural run-rates.

4. Balance Sheet & De-leveraging Mechanics

The acquisition of LLOG added serious debt to the balance sheet, but Harbour’s cash machine is already chewing it down.

• Net Debt at Year-End 2025: $4.4 billion

• LLOG Cash Consideration: +$2.7 billion

• Q1 FCF Generated: -$0.7 billion

• Net Debt at 31 March 2026: $6.3 billion

• Forecast at 31/12/26: $5.5bn (based on a 55% distribution of FCF)

5. The Debt Runway

While $6.3 billion sounds like a massive number, look at what management did immediately after the quarter ended (in April and May):

1. Repaid the $240 million October 2026 bond maturity out of cash.

2. Fully repaid the remaining drawn balance under their Revolving Credit Facility (RCF).

With $1 billion of the remaining 2026 cash flow explicitly earmarked for debt reduction, Net Debt should quickly slide under $5.3 billion by year-end, well supported by investment-grade ratings from Moody’s (Baa2), Fitch (BBB-), and S&P (BBB-).

6. The Capital Allocation & Shareholder Yield

Under their capital allocation framework, the updated $1.9 billion FCF will be split as follows:

• Debt Reduction: c. $1 billion

• Shareholder Distributions: c. $0.85 billion (£0.65bn)

A $850 million shareholder payout on a company with a market cap fluctuating around £3.2 bn ($4.5bn USD) implies a staggering 14.2% shareholder distribution yield for 2026 alone. This begins with the final 2025 dividend of 8.05 cents per share ($150 million total) being paid out last week (May 20th, 2026).

7. Hedging: Leaving Money on the Table?

As an Oak Bloke style analysis always highlights, hedging can be a double-edged sword. Harbour’s massive derivative book historically capped its upside. How does it look now?

For the rest of 2026 (Q2-Q4):

• Gas: 24.5 mmboe hedged at an average of $13.0/mscf. (Collars have a floor of $11.7 and a cap of $20.0). This perfectly aligns with current guidance assumptions.

• Oil: 17.4 mmbbl hedged at an average of $77/bbl.

The Verdict on Hedging: While the $77/bbl oil hedge means Harbour gives up some upside if Brent spikes to $90+ due to Middle East conflicts, the $64-$91/bbl collars on 5.2 mmbbl provide excellent downside protection while leaving the ceiling high enough to capture decent margins. It’s a pragmatic book for a company carrying $6.3 billion in debt.

8. Hidden Value & Optionality Pipeline

Beyond the immediate cash generation, Harbour is quietly building multi-year growth legs that the market is likely assigning zero value to:

1. Argentina LNG (Southern Energy): On track for a late 2027 start-up. They’ve already signed an 8-year, 2 mtpa offtake agreement with Germany’s SEFE. This transforms Vaca Muerta shale gas into global LNG pricing.

2. Mexico (Zama & Kan): Monetising early. Selling a 5% stake in Zama to Grupo Carso for $75.25 million structured as a capital carry means Harbour gets a free ride on a chunk of future capex while retaining a massive 27.3% stake.

3. CCS (Carbon Capture): Project Greensand in Denmark hits commercial operations at year-end. If carbon tax credits tighten in Europe, Harbour has a first-mover infrastructure advantage.

9. Oak Bloke Summary & Investment Thesis

   Old Harbour (Pre-2026)                 New Harbour (Post-LLOG)
 ┌─────────────────────────┐            ┌─────────────────────────┐
 │ • 80%+ UK Exposed       │            │ • ~30% UK Exposed       │
 │ • Crushed by EPL Tax    │     ───>   │ • High-Margin US/Norway │
 │ • Low FCF Visibility    │            │ • $1.9B+ Annual FCF     │
 │ • High Sovereign Risk   │            │ • 14.2%+ Shareholder Yield│
 └─────────────────────────┘            └─────────────────────────┘

Harbour Energy has successfully executed a corporate transformation. By buying LLOG and entering the US Gulf of Mexico at scale, they have diluted their UK windfall tax problem.

At a $1.9 billion FCF outlook against an enterprise value of roughly $10.8 billion (Market Cap + Net Debt), Harbour is trading at an EV/FCF multiple of roughly 7.8x, and a Price/FCF multiple of under 4x.

10. Conclusion:

The market is still treating Harbour like an endangered UK-only independent. In reality, it has become an international mid-major with high-margin production, a diversified global footprint, an institutional-grade balance sheet, and a double-digit shareholder yield. This update proves the bull case is playing out exactly as planned.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - you make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader, bono istente, bono istente,

EZJ delivered a strong performance in 1H26 (to 31/3/26): They lost -£377m.

Wait, what?

Is that strong? Well, winter is tough for airlines. Brr. Go back 10 years and they typically lose money in the winter and make hay when the sun err shines in summer. Y’know when it’s Scorchio! More on that later.

The Case for easyJet (EZJ): A Structural Winner Flying Under the Radar

The market loves to panic over airlines—obsessing over short-term fuel spikes, inflation data, and whether cash-strapped consumers will cut back on travel. I’ve been buying on the sell off because if you look past the macro noise and look at the actual plumbing of the business, there is a serious structural growth story continuing here. A compounding machine disguised as a volatile airline stock.

Here’s 10 years of EZJ first half results:

How much of that reduced profit year on year was Third Gulf War related? £25m. So 1 month of war and inflated jet fuel prices led to about 5% of the 1H losses. An interesting point was the “backwardation” they are seeing in fuel markets which means the price of jet fuel in the future is much lower and the comment that EZJ are aggressively adding Hedges 12-24 months ahead. Good to see and a smart move. That means you can offset the potential future higher cost of fuel.

EZJ report no physical shortage of jet fuel for Europe nor do they anticipate any. Increases from the US, West Africa and Europe itself have made up the middle east shortfall. Are competitors blaming fuel shortages for flight cancellations as a cover for their weakness? Seems so. Blue Leader O’Leary confirms the no fuel shortage in Europe on Squawk Box.

EZJ report plenty of half-price (to spot price) hedging out to September 2027 as well as £4.7 billion of liquidity and Net cash of £434m too.

Reduced profit was also due to Legal Provisions of £32m.

And expensed investment into two new Italian bases and a Moroccan one of £30m

So that’s £87m of arguably extraordinary costs pre tax and excluding those factors underlying profits were post tax around -£310m vs -£297m a year back - arguably. A modest 3% underlying difference y-o-y.

That was despite 11% crew wage inflation, and a 23% increase in overheads, which is particularly IT and marketing investments. More extraordinary cost? More on those later too.

Route Maturity = Profit Harvesting

Building out an airline network is expensive, but easyJet has already done the heavy lifting. A significant portion of their newer routes are now entering the maturity phase.

When a route matures, brand loyalty locks in, marketing spend drops, and load factors stabilise. EZJ is moving out of the expensive “investment” phase of much of its network and into the highly lucrative “harvesting” phase, which is set to drive unit revenues steadily upward. New elements like in Italy are noticeable in the chart below.

As pictured above EZJ are culling specific routes and aircraft that are not performing. Retiring A319s in favour of cheaper per KM Neos. Look at the profitability building for new routes too. Will we see improved profits for EZJ as more competitors go to the wall? European flag carriers are not in a happy place in May 2026. If you watched Blue Leader’s interview he reckons several will go to the wall in 2026.

Improvement in the Airline Segment

Geographic revenue growth for EZJ was impressive in 1H26: Nearly 30% revenue growth for Italy and Spain speaks to the improvements through those EZJ new bases in Milan and Rome while also achieving 10% growth for the UK.

EZJ delivered strong improvements to its own efficiency where utilisation is up 20% in three years for the winter half year. While capacity also increased by 9% over the same three years, but efficiency improvement meant seat capacity grew 24% and available seat kilometres grew by 33%.

Year on year non-EU grew substantially where Turkey, Tunisia, Morocco and Egypt particularly were part of that growth. Load factor grew nearly 2% to 89.8%. Going forwards certain destinations were stopped including Tel Aviv while some Cyprus, Egypt, Greek and Turkey flights have been modestly reduced.

Improvement in the Holiday Segment

EZJ holidays revenue in 1H26 grew from £542m to £687m and over 1.3m customers flew EZJ for their Easyjet Holiday.

easyJet holidays delivered 22% more customers y-o-y and a growing number who buy a flight AND a holiday (aka the attachment rate).

Pre-tax Profits were up 39% at £61m and the margin grew to 9%.

The beauty of Easyjet holidays is that they are asset light and high margin yet come at a much lower price point than JET2. £623 average

EZJ launched of flight-plus-hotel deal to increase hotel inventory from c.8,000 to c.13,000 particularly to drive more city breaks. The EZJ app basically lets you add the hotel with a click.

But what if you don’t? Bizarrely, (least I think so) 70% of zee Germans buy their holiday via a physical Travel Agent (remember those?). Therefore EZJ is launching in 500 Hauptstraße (high street) retailers within the Berlin catchment area. Wunderbar!

EZJ delivered continuing improvements in satisfaction with customers, particularly to its Holidays customers. With a CSAT of 85% vs JET2 84.3% CSAT there’s not much - statistically speaking - between the pair except the price.

• On-time-performance 78%, +1ppt

• Airline CSAT 84%, +2ppts

• easyJet holidays CSAT 85%, +1ppt

Although Stats can be used selectively and JET2 themselves say “With customer satisfaction levels exceeding 90% and net promoter scores consistently in the mid-60s for both Jet2.com and Jet2holidays, coupled with our high customer retention rate of 59% across both brands……”

So is it 60%, 84.3%, >90% for JET2 - you decide. But the argument that JET2 offers a superior product and EZJ doesn’t? Is that true?

And at what price?

Whatever your view on this, travel remains an important priority for people, particularly for young ‘uns according to AMEX 2026 travel survey. In my prior article I spoke of how people were PRIORITISING holidays. More than that AMEX furthermore tells me it’s non-negotiable. That means DEFENSIVE.

Defensive. Not the usual thing you’d say about a cyclical airline is it? Military perhaps. Civil? Well non-negotiable means just that.

A customer who considers foregoing your product or service non-negotiable a useful place to be when faced with an extended peace negotiation between the USA and Iran both with their non-negotiable positions.

EFFICIENCY AND UPGRADING THE FLEET

New aircraft will mean £250m of savings equal to £10 to £16 cost per seat. The 1H26 equalled a -£13.09 loss per seat, so you can see how that profit boost is massive. It could make Winter profitable.

In an inflationary world, how do you beat rising costs? You scale up efficiently. easyJet is currently undergoing a massive “up-gauging” process, systematically replacing older, smaller aircraft with larger, hyper-efficient Airbus A321neo planes.

More seats per plane means the fixed costs of the pilots, fuel, and airport slots are spread over a larger number of paying passengers. This structurally drives down the unit cost per seat, giving them a massive competitive moat over smaller rivals who can’t afford to modernise, and flag carriers muddling on with their ageing A319 fleets.

FY25 delivered an overall £3.99 profit per seat where the 2H makes up for the first half. Overall in FY25 the profit per KM flown was 31p. But for the 5.6% who were also an EZJ holiday customer that seat was not a 31p profit per KM. It was £1.29 because the holiday added 98p.

In 1H26 two things happen that make me very happy. First is the attachment rate went up from 5.6% to 6.3%. That means 15% more Airline seats were for EZJ holiday folks.

EZJ cross sold a holiday 6.3% of the time.

Second of all the profit per KM flown by a holiday person was £1.58. This did not fully offset the -£1.75 average loss per KM flown but it makes the 1H results a lot better. Winter people went on much cheaper holidays too, where £195.77 revenue is lower than the £341.35 average in FY25.

Clearly customers pay more for ¡Scorchio! in the summer.

Fortress-Like Balance Sheet

Airlines go bust because they carry too much debt when a recession hits. Not easyJet. They boast an exceptionally strong, investment-grade balance sheet.

This financial cushion does two things: it protects the downside against any unexpected macroeconomic shocks, and it ensures they can comfortably fund their massive upcoming aircraft deliveries without diluting shareholders. When weaker, debt-laden rivals are forced to cut routes, a well-capitalised easyJet is perfectly positioned to step in and grab market share.

The EZJ remains strong with a near £1bn gain from fuel derivatives, and a fleet worth £5bn.

A NAV of £3.66bn vs a Market Cap of £2.77bn puts this at an incredible 24% discount. That £5.042bn of PP&E includes £4.92bn net book of actual aircraft it owns and there’s a further £0.9bn right of use offset by the lease liability.

And a holidays business thrown in for free!

Wait, what?

The Real Crown Jewel: easyJet Holidays

The market is completely missing the genius of the easyJet Holidays division. This isn’t just a side hustle; it’s an absolute cash engine.

By bolting a package holiday business onto their existing flight network, they’ve created an asset-light, high-margin monster. They don’t need to own the hotels to clip a massive ticket on the booking. It’s growing rapidly, printing high-margin revenue, and structurally transforming the profitability of the entire group. This shifts EZJ from a pure, cyclical airline to a highly profitable travel platform.

AI and Customer Service

EZJ continues to invest in frontline delivery. During the period, it launched the next phase of its enhanced training programme for ground operations colleagues, alongside the continued rollout of the internal colleague app.

The internal app provides real-time information to ground staff, customer service teams and crew, supporting more consistent service delivery and faster issue resolution. Seems to me the CSAT scores will go up for that one. Well done EZJ!

EZJ seems on track to hit its medium-term targets despite some serious headwinds.

CROSS CHECK!

What about the 2nd Half?

They think it’s all over? It isn’t now!

I showed the 1H results for 10 years. But consider the 2H results over 10 years.

The good stuff. The money making season.

The outlook is for low double digit growth at EZJ Holidays and -4% revenue for the airline but impacted by an earlier Easter. That implies £6.5bn out turn so flat on 2H25.

With ticket yield modestly up and costs up too a flat 2H26 PAT of £0.8bn seems not unreasonable. If I’m right that’s a £400m FY26 net result.

Much higher than the £71.2m PAT aggregate broker guesses.

Even if they are right and the OB is wrong (won’t be the first time mutter detractors), the brokers believe there’s a profit bounce in FY27 which starts on 1st October 2026 so is just over 4 months away.

At 370p a share the forecast is for a 8X P/E in FY27 dropping to 5.5X in FY28.

The Oak Bloke’s Conclusion

The market prices EZJ like it’s just another cyclical punt subject to the whims of the economy. But with the high-margin holiday business firing on all cylinders, with customers considering holidays “non-negotiable”, while EZJ implements cost efficiencies locking in from AI, clever IT as well as larger more efficient aircraft, and a fortress balance sheet, the reality is a business transitioning into a long-term, structural winner.

At a discounted valuation well below just the value of its aircraft, let alone the sum of the parts for its airline and holidays businesses, £3.70 a share looks….¡Scorchio!

…. and a compelling, mispriced opportunity.

Regards

The Oak Bloke

Disclaimers:

This is not advice - you make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader

Fair Oaks (ticker LON:FAIR) is one of the OB picks from 2024 that continues to deliver bags of Cash. FAIR is a collateralised loans manager where the underlying debtors are Corporate businesses like McAfee, Ineos and Exact plus hundreds of others you’ll probably have never heard of. To buy FAIR you need to prove you’re a sophisticated investor so spruce yourself up reader, if you choose to partake.

Two months ago in “Fair Euro-Nough” I described a watershed moment, and a pivot to a higher quality, more defensive European position. Where are we today?

On April 30th, shareholders voted an overwhelming Yes to change the reporting currency and to carry out a 10-to-1 consolidation of shares. To understand why this re-coring matters, we have to look back at the dramatic rollercoaster ride of February and March that set the stage for April’s rebound.

Section 1: The March Disconnect (When Mr. Market Lost His Mind)

Let’s look at what happened when geopolitical tensions boiled over in the Middle East and fears over AI hitting the US software sector sent retail investors scrambling for the exits.

In March, US software loans got absolutely hammered, trading down to a miserable average of $0.88. Panicked investors saw ‘CLO’ and sold everything. Look at what it did to FAIR’s share price vs. its actual underlying value:

• Share Price: Plunged an ugly -9.4% in March, dropping down to $0.424.

• Underlying NAV: Actually rose +0.30% to $0.475!

Because of this emotional decoupling, the discount to NAV ballooned to an eye-watering -11.02%.

But as smart income investors, we look under the hood. While the US market was sweating over high-tech exposure, FAIR was sitting pretty in Europe. European CLOs only carry about 10% software exposure compared to 15-16% in the US. Furthermore, FAIR’s internal CCC-credit exposure sat at a fundamentally safe 3.28%—miles away from the restrictive 7.5% threshold that triggers cash traps.

Management quietly walked away from a US CLO warehouse that didn’t meet their return thresholds, doubling down entirely on expanding their European footprint. The business didn’t change; only the market’s mood did.

Section 2: April’s Rebound & The Tight Euro-Pricing

Fast forward to April, and the tables turned. A massive global risk rally—spurred by blockbuster US earnings and an electronics rebound—dragged leveraged loan markets back into the green.

The result for FAIR?

• NAV rose +2.17%

• Share price surged +6.13%

• The discount snapped back from -11.02% to a smaller -7.31%.

But the real magic happened in the primary markets. On May 4th, right after the April books closed, the Master Fund anchored a brand new €381m European CLO: Fair Oaks Loan Funding VII.

This is where the competence of the manager shines. They priced their AAA liabilities incredibly tightly at just 130bps over Euribor, bringing their blended capital costs to 174bps. Compare that to the broader market average of 182bps for deals pricing that same fortnight! Because they locked in cheaper liabilities while buying discounted secondary assets, they expanded the structural arbitrage window. Even better? FAIR locks in a 4.5-year reinvestment runway out to 2031 for Fund VII.

Section 3: The New Euro Era — What the Maths Looks Like Now

Now that the April 30th resolutions have passed, your broker statement is going to look a little different.

First, the company has executed a 10-for-1 share consolidation, clean-cutting the penny-stock optics. Second, everything is officially moving to Euros (€).

Let’s look at the clean, post-restructuring April numbers:

• Post-Consolidation Price per Share: €3.84

• Post-Consolidation NAV per Share: €4.14

• The Cash Harvest: April was a quarterly distribution month, bringing in a massive €8.5 million in cash to the Master Fund—equating to a robust €0.21 per share for the quarter. (So about 5% of the market cap)

By alignment of the reporting currency directly with the asset base (90% Euro vs 10% USD), FAIR is stripping away the deadweight loss of FX hedging contracts. What you see is finally what you get.

#1 US CLO Equity

The 4 months of 2026 data proves that while US software concerns did cause a spike in stressed loans with assets under 80c peaking in March at 3.28%, but falling in April to 3.23%, the portfolio didn’t suffer any material defaults holding flat at a 0.03% weighted average default rate.

FAIR sold off a chunk of its weak CCC-rated loans dropping it from 3% to 2.4% keeping it away from the 7.5% trigger where quarterly cash gets diverted from FAIR. It also expanded its “over collateralisation” cushion (i.e. its safety buffer of assets less liabilities) to 5.1% so higher than at the end of 2025!

Cash yields are at a mouth watering 28.5% weighted average.

#2 The Death of the US Warehouse

Earlier in the year, Fair Oaks was actually testing the waters for a move into US Mezzanine debt. They were running a dedicated US investment vehicle known as the BSP CLO Warehouse 2025-3.

Warehouses are temporary, short-term setups used by managers to accumulate US corporate loans before bundling them into a formal, long-term CLO vehicle (where they would typically buy the BB or B-rated Mezzanine tranches).

However, when the market became highly volatile in February and March, credit spreads widened significantly. Rather than forcing a bad deal in an unstable market, management executed a defensive pivot: they completely liquidated and shut down the US warehouse.

Management explicitly confirmed this move to the market:

The Master Fund does not expect any significant impact on NAV from the US warehouse liquidation and currently expects to reallocate the capital proceeds into CLO debt at attractive levels.

#3 European CLO Equity

Stressed loans dropped by a huge 4.83% down to 3.37% in April 2026. Defaults have been zero for all of 2026. The over-collateralisation (safety margin of assets minus liabilities) grew to 4.2%, again higher than at the start of the year.

CCC-loans fell to 3.22% in April from 3.28% in March too.

Annualised Cash yields for Euro CLO Equity are running at a storming 32.9% which is 3.2% more than at the start of the year.

#4 European Mezzanine Loans

Mezzanine assets are traded debt bonds and their market valuations fluctuate based on interest rate expectations and systemic risk. The total weighted average valuation of the EUR Mezz book (measured as a % of par value) tells a clear story of active accumulation during a market dip:

• January (95.0%): The year began with the mezzanine notes trading at a steady, high-quality discount of 95 cents on the dollar.

• February (94.0%): When the broader market panicked over Middle East oil shocks and US software tech downgrades, institutional investors dumped riskier debt. Fair Oaks used this dip to accumulate assets.

• March (93.4%): Prices hit their absolute bottom for the year. This 93.4% valuation represents the exact moment the manager finalized the liquidation of the US warehouse, rotating the cash into these temporarily mispriced, discounted European notes.

• April (95.3%): As global risk markets staged a massive comeback, the mezzanine book experienced a powerful price recovery, surging to its highest valuation of the year.

In April, the trailing 12-month loan default rate declined modestly from 1.4% to 1.3% in the US and remained unchanged at 1.4% in Europe. The distress ratio improved in both regions, falling from 7.8% to 6.3% in the US and from 6.6% to 5.5% in Europe.

FAIR’s mezzanine performed well ahead of that 1.4% rate at 0.24%

FAIR flushed out distressed (sub 80c) debt in April, again to levels below the start of 2026.

By April the average collateral bid price inside these 14 vehicles bounced back to €0.97, soundly beating the broader European market baseline of €0.945. The over-collaterisation cushion was 4.41% in April so at a strong level.

There is also a move into defensive verticals like Healthcare as well as those with real assets and out of software and high tech.

Because these mezzanine notes pay a floating coupon tied directly to Euribor, they provide protection against sticky inflation and shifting interest rates. They are currently generating an average EURIBOR +8.16% meaning a 10.89% yield in April.

If we compare the 4 months we can build a picture that looks like this:

Act I: January 2026 – The Calm Before the Storm

• The Macro Mood: Optimistic and steady. Management noted that trailing 12-month loan default rates were flat and highly manageable at 1.4% in both the US and Europe. Global credit markets were functioning smoothly.

• Management’s Focus: They were hunting for incremental yield and expanding their footprint. At this point, they were fully committed to testing the US waters via the BSP CLO Warehouse 2025-3, trying to build a new dollar-denominated engine.

• The Behind-the-Scenes Reality: The fund was still paying massive amounts of money to Wall Street banks to run cross-currency hedging contracts because their assets were in Euros but their public listing was in Dollars.

Act II: February 2026 – The Double-Shock Hit

• The Macro Mood: Sudden anxiety. Two major thematic roadblocks emerged out of nowhere:

  1. The AI Tech Panic: US credit markets began aggressively marking down software company loans over fears that generative AI would disrupt their business models.

  2. The Geopolitical Oil Spike: Late-February saw heavy US and Israeli military strikes on Iran. Brent crude oil suddenly spiked, throwing global inflation and interest rate expectations into chaos.

• Management’s Focus: Insulation and Defence. Management immediately used the commentary to reassure investors that their core European strategy shielded them. They pointed out that European CLOs carry significantly lower software exposure (~10%) than US packages (15-16%).

• The Big Move: Recognising that the US credit environment was turning toxic, management didn’t hesitate. They chose to freeze and liquidate their US CLO warehouse, taking their chips off the table before getting burned.

Act III: March 2026 – Retail Panic & The Corporate Pivot

• The Macro Mood: The peak of emotional market dislocation. Trailing default rates stayed totally stable at 1.4%, but “distress ratios” (the number of companies showing minor financial stress) spiked heavily to 9.2% in the US and 6.7% in Europe. Oil peaked at a staggering $118 per barrel on March 9th before cooling off (for now).

• The Disconnect: This was the month retail investors on the London Stock Exchange panicked, selling off FAIR shares and widening the NAV discount to an absurd -11.02%.

• Management’s Focus: Going on the Offensive. In the commentary, management calmly explained that the wider market volatility was actually good for existing CLO equity. Why? Because they were locked into cheap, historical financing costs, but could use fresh cash to buy up underlying corporate loans at massive, panicky secondary-market discounts.

• The Catalyst: On March 19th, tired of watching the US Dollar listing muddy their financial realities and impose heavy hedging costs, the Board officially proposed the complete corporate restructuring package to drop the Dollar, switch to the Euro, and consolidate the shares.

• Great harumphing was heard when they reset the dividend too, although it makes sense for a fund to live within one’s means so a move from $0.02 per quarter to €0.01 per quarter made sense to me and the expected return is still ~12%. The resulting sell off was an opportunity too and today at €4.00 a share FAIR remains cheap while the gross return to call is 19.3% and is quite a bit higher than the forecast yield at the start of the year.

  

Act IV: April 2026 – The Great Vindication

• The Macro Mood: Complete risk-on euphoria. Blockbuster US corporate earnings pushed the S&P 500 up nearly 10% in a month. The Iran conflict cooled to a double blockade and an uneasy stalemate, dragging oil back to $100. Leveraged loan indexes roared back into the green, and distress ratios plummeted across the board.

• Management’s Focus: Victory Laps and Capital Deployment. The commentary shifted to an incredibly confident tone. On April 30th, shareholders voted a resounding YES to all corporate restructuring plans, permanently moving the fund to a clean Euro footing and ending the FX hedging drain.

• The Power Play: Management proved their institutional clout on May 4th by pricing a massive new €381m European CLO (Fair Oaks Loan Funding VII). Because market conditions had stabilised, they printed their senior AAA debt at an incredibly tight 130bps over Euribor, securing an ultra-cheap blended financing cost of 174bps—crushing the wider market average of 182bps.

Conclusion

Periods of market dislocation are precisely when defensive, active CLO managers thrive. While the market panicked over US tech debt and Middle East oil spikes, FAIR maintained a high-quality collateral bias, keeping average portfolio loan bid prices (€96.8c) comfortably ahead of the wider European market baseline (€94.5c).

With an annualised inception-to-date NAV return of 9.0%, the removal of USD hedging friction, a fresh 2031 reinvestment engine in Deal VII, and a discount that is still serving up a decent margin of safety (although to be fair not an unlimited margin of safety and risks of course exist), FAIR’s gone through a short-term sticky patch and profited from that volatility and looks structured to keep generating attractive cash distributions.

The structural repair is done. The currency mismatch is gone. It’s safe to say this portfolio is looking more than FAIR Euro-nough.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - you make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader,

The chips are down and AI is destroying software. Is it? Where’s the evidence to that? Show me the declining sales of software companies; show me their declining margins. What? You can’t? Oops, not easy is it? There’s not too much proof is there. Just talk. Lots of talk.

The share prices are falling is the best evidence detractors can find.

You certainly can’t see it in the churn rates of the HGT top 10. You would see it - if it were happening. Customers would be upping sticks and “going to AI”.

Two weeks ago in “HGT out to dry” we discussed how improvements to trading profits at HGT holdings were steady and in fact growing quarter by quarter. So no decline. Record Trading profits at some holdings actually, despite 1Q26 to March 2026 including a month of the third Gulf War. More on that later.

To offset the increase to valuation via trading performance we have seen several years of multiple compression where EV/EBITDA valuation multiple decreased to a lower multiple.

This is depicted in green and red below.

The growth in valuation due to “Trading” is taken from the attribution analysis disclosures made by HGT, which were £154m in 1Q26. This is a proxy for the improvement to EBITDA in GBP terms across its holdings. Attribution of £154m growth due to EBITDA means this profits have grown by ~£6m per year at a 25X multiple to get us from £154m NAV performance from a £6m higher run rate (pro rata attributable to HGT and in that quarter).

This was the Trading element for FY2025 as part of the NAV bridge.

Has it occurred to the detractors that AI **IS** software? So you’re telling me a competing software vendor is claiming that their software is better than the next guy’s software.

Erm, yeah, I’ve heard that one before.

I’VE HEARD THAT ONE FOR DECADES!

Meanwhile the FACTS are that exits are being achieved at or above 24X EV/EBITDA, while you can buy similar companies today at HGT for a 15X EV/EBITDA valuation given the 39% discount to NAV.

Over and over.

Will the world be changed forever by AI? Yes probably. But the fallacy is that something promising in a laboratory changes the world today. The fallacy that the change will be to the detriment of the businesses that focus on delivery of systems. The fallacy that AI will not have strengths and weaknesses and its effect will require curation….. by companies focused on software systems!

Fallacy ONE - AI IS SOFTWARE

Has it occurred to detractors that if Claude is as clever and capable as described then I could ask Claude to build me a Claude.

So I could produce something identical to something that is valued at $0.9tn based on the May 2026 funding round with Sequoia, Altimeter and Dragoneer and Green Oaks.

So how is Antropic worth $0.9tn, if all software can be copied and reproduced? It would be a creature eating its own tail - if it’s capable of what detractors claim. Makes no sense does it?

The reality is that Claude Tokens and Seats cost money. Lots of money. Its current run rate of revenue is $45bn and its main committed costs by 2030 are a staggering -$450bn (to SpaceX, Google, Broadcom and AWS). Anthropic hopes to be cashflow positive by 2028.

A staggering 41p in the pound is tied up with the Mag 7 in the “average pension fund”. That’s a scary thought - least I think so.

How will Anthropic generate $45bn of ARR (or more) if Claude can produce a Claude? What, oh, it’s not that simple? So you’re saying Software companies DO have a moat then? Make up your mind.

Will business models change? Yes and they already are changing. Software will increasingly be priced on usage and outcomes rather than seats and modules.

Did software become less profitable when client/server was replaced with a SaaS subscription model? No, more profitable.

Today Software and SaaS is a $1 Trillion Software Market based on selling a digital tool to a human worker of interface and automation.

The new AI-SaaS Model addresses a $50+ trillion Global Labour Market. Sell an AI agent that increasingly DOES the work for the human. A new interface and more automation. AI is software. AI is more of the same.

According to Kellton the early production results from Claude are notable:

40% of enterprise software apps will embed task-specific AI agents by end of 2026 (Gartner, Aug 2025)
6.4 hrs was saved per knowledge worker per week in production AI agent deployments (McKinsey 2026)
5.1 month median payback period across enterprise AI agent functions (BCG/Forrester 2026)
$450B projected agentic AI software revenue by 2035 in Gartner’s best-case scenario

So Claude is making people more productive - making software more valuable.

According to Gartner:

Only 41% of enterprise agent rollouts achieve positive ROI within 12 months. Those that never reach payback share a common profile: no clear use-case scoping, no governance infrastructure at launch, and no named agent owner accountable for the program. These are implementation failures, not technology failures.

Gartner has had a similar bullish view about technology for decades.

Fallacy TWO - Software is also about people, not just software. Always has been.

Totally appreciate businesses are experimenting with Claude. But Trust is key. Do you realistically think a wholesale change will be made even within a few years? Experiment does not mean replacement. Where does trust come in?

If you believe you’re about to see a cliff edge to software you’re going to be waiting a long time.

How will businesses throw out all their software when it’s not that simple to “get Claude” - what about safeguards and fear impeding their decision to adopt AI. Will governments impede the development of AI, or is the genie too far out of the bottle? After all AI is and can be a force for bad as well as a potential force for good.

Gartner argues that software that acts merely as an interface layer will be completely bypassed. Future AI agents will route around clunky software user interfaces, communicating directly via APIs to execute tasks. Software companies that do not rebuild their products around a control plane for AI agents will become obsolete.

HGT tell us they are actively involved around UX and AI and are a large part of the value add between what they buy a company for and what they can sell it for later.

Fallacy THREE - Metcalfe’s Law

The Data Monopoly: AI is a commodity; proprietary data is the oil. HGT holdings sits on the transaction, payroll, and invoicing data of millions of businesses. By training internal AI models on this walled-garden data, Each can offer automated accounting features that no generic LLM can match.

What was true of telephones, train stations and in fact the Internet will be true of Data in a world of AI. A deep misunderstanding that some commentators make is that all data is accessible…. you can “google” the answer.

Err no. It doesn’t work that way.

Only what businesses want to share on the internet gets shared. Therefore the operators of AI Agents trained on a single business will be deeply inferior to those trained with trillions of data points from thousands and millions of businesses.

Does Claude have such access? No. Does Anthropic have that? No. So an organisation with no data and an automation tool valued at a sky-high valuations threatens another business with access to decades of data (where its customers opt in to use AI). Explain that one to me.

Producing an LLM requires high-quality data:

Who do you think “supervises”? Subject Matter Experts. Oh wait, like those who work for Software Companies and don’t work for Antropic?!

Then additional relevant data is needed. Will Anthropic have that? Or HGT?

Metcalfe’s law suggests a greater number of users (where humans and AIs are those users) means greater value. Exponentially more. Software is worth less or more when the value created is exponentially more?

FALLACY FOUR - Rome was not built in a day

The truth is commercial, NFP and government organisations still heavily rely on manual processes - even pen and paper. Some are generations behind. And will be for years to come.

Take this HMRC study dated May 2025, where less than one a quarter of businesses process invoices using ANY kind of automation. Yes, 98% handle PDFs but they are typing those in over 80% of the time. The real world is about four iterations behind the new world order which is supposedly replacing the world of software. Today.

Manual entry costs about three to ten times more than automation. But despite the obvious cost and time savings of scanning (and approving), the main barriers keeping businesses tied to manual keying are the upfront cost of software integration, fragmented internal systems, and a general lack of internal tech expertise. Also the fact that incumbents already do the job - so it looks like an additional cost and it’s only growing businesses that take the plunge. The back office is usually the unglamourous part of the business that isn’t the first place where businesses invest.

Why will Agentic AI be any different?

HG Trust’s portfolio meanwhile is growing in revenue, in profit and in cash generation. There is no slow down, no impediment due to AI. AI is driving even greater efficiency through software. Visma credits its €270m 1Q26 result in part to the AI-linked efficiency gains its delivering to its customers.

So the increased value from software increases its adoption. It is the Jevon’s paradox. Increased efficiency (through AI) actually increases demand for software.

Take invoice processing for example, and think of it as generations of progress:

1. Gen 1: Quill and Ink

2. Gen 2: Excel Spreadsheet logging invoices + Lever Arch File

3. Gen 3: Excel Spreadsheet + Sharepoint/Dropbox

4. Gen 4: Basic Accounting System + Lever Arch

5. Gen 5: Better Accounting System with Embedded Document Storage

6. Gen 6: Better Accounting System with Approvals

7. Gen 7: Better Accounting System with Mobile Approvals (iphone/android)

8. Gen 8: Better Accounting System with OCR based on templates

9. Gen 9: Better Accounting System with AI-powered Predictive Data Entry

10. Gen 10: Better Accounting System with Embedded Budget Control and LLM

11. Gen 11: Better Accounting System with complex 3-way matching of invoices and query management that integrates with supplier AI-agents for invoice resolution and disputing.

12. Gen 12: Better Accounting System with Predictive Purchasing based on AI analysis of business purchasing needs and auto-creation of budget

Ok, not many Gen 1’s out there any more (Ye Olde Sweate Shoppe) but plenty are still at Gen 2. The greatest competitor a software company faces is prospects do nothing - stick with the status quo - not being replaced by new software, that’s a fact.

Businesses that don’t even pay for a basic accounting system. Perhaps they just chuck their box of paper at a book keeper every quarter who types it in for them, or they do it themselves.

e-invoicing coming to the UK in 2029, but other countries like France 2026 and Spain 2027 promises to up end the above too. Will PDF invoices become a thing of the past? Yes, probably. Data will digitally flow between different parties…. and to Rachel who will know a lot more about those businesses VAT transactions, and will cross check these too. It is what MTD was intended to be.

Are there any businesses who have progressed to Gen 11 or Gen 12? No that is science fiction. But not too far away. Will Gen 11 and Gen 12 disrupt HGT’s holdings? Or will HGT’s holdings actually be leading at that forefront. Today they are introducing Gen 8 and Gen 9 through holdings like Dext (now sold), via Visma, via Iris and via Access Group.

The point is the value to a business of a Gen 11 system would be a colossal time saver and improve a fairly thankless job of data entry and pushing bits of paper. It would probably mean the end of any Purchase Ledger Clerks in an accounts team. They are tomorrow’s Typing Pool. There would be no need.

But that future is one of more software - not less.

HGT TOP 10

Let’s talk about the top 10. These make up nearly 2/3rds of the holdings.

HGT’s #1 holding Visma:

#1 VISMA 11.9%

Growing revenue and profits accordingly to their annual and quarterly disclosures.

EBITDA up 20.4% including 18.8% organic.

Double digit growth justifies the increase in valuation from HGT.

#2 IFS 9.6% of NAV

IFS is a global leader providing modular software for ERP, EAM, FSM and ESM with primary focus on all kinds of asset-heavy industries and a track-record of expanding its portfolio via M&A to cover a broader spectrum of adjacencies. WorkWave is a leading provider of vertical software within field service management, primarily in North America. The company provides a leading Industrial AI platform that empowers customers to dynamically manage their mission-critical assets, workflows, people and services in a responsible way. Performance IFS continues to experience strong >20% organic ARR growth with a key focus on investing behind its leading Industrial AI product portfolio. Workwave also reported solid organic growth over the period.

#3 ACCESS

2025 reflected a year of transition as Access worked through the “growing pains” of rapid geographic and vertical expansion of recent years (revenue and EBITDA growth of +50% via both organic growth and M&A). With this rapid evolution, the business had grown in complexity; this is being addressed with a number of management initiatives to re-focus on underlying growth. The next phase of growth is focused heavily on an AI-enabled, product-led strategy.

#4 P&I

#5 Howden

The Group continued to build and strengthen the Howden One Network, its retail broking proposition formed of owned offices and trusted partner brokers. The aim of Howden One is to improve distribution and service provision to the Group's international clients. The network has a combined presence in over 115 countries, and 50,000 insurance professionals.

The Group continues to develop a suite of products across the emerging environmental commodities markets. It is also building products enabling the insurance market to de-risk the transition to a low carbon economy by offering strategic risk transfer solutions that enable financing and lower the cost of capital. Howden is arranging this by deploying non-traditional insurance structures during the investment process, removing a key barrier for pilot-scale clean energy projects to become commercially sustainable.

Overall:

This illustrates the movement, by year of valuation less cost of injected capital. In each of the last three years. We see growth although not in all holdings in all years. Some like Access have been cash hungry as they grew, drawing in more capital.

Valuation increases in green and decreases in red (i.e. NAV less purchase cost) year by year for the HGT top 20 holdings.

The same data visually shows a broad range of winners. Where the top 6 holdings show the most growth (i.e. HGT clearly focus on its winners)

The above is based on valuation. Arguably an arbitrary measure.

Does CASH back up or undermine that growth?

Taking the Cashflow Statements of HGT since 2021 we see a consistent track record of income returns, albeit not substantial. These are cash hungry growth businesses after all investing into AI. Zero is more typical.

What is highly encouraging are the realised gains which sum to £677.2m over five years. That’s over 9% per year based on today’s market cap.

Include the income being returned to TopCo (which I estimate is about 25% of profits as a dividend that’s a 1.7% NAV return (£40m per year) but 2.5% of today’s marcap.

and you are looking at nearly 12%.

12% per annum

And that ignores the unrealised gains.

(Yes, there could be some overlap between an unrealised gain in 2021 and a realised gain in a lter year)

But if 2021’s £479.3m unrealised gain foreshadowed realised gains in 2022-2024 tell me what does the 2025 unrealised gain of £515.2m of EVEN MORE foreshadow?

That unrealised gain is over a third of the market cap.

Follow the Money - the story of HGT cashflow

• 2022 (The Peak Era): HgT was aggressively putting money to work. They spent a massive £527 million buying new investments, but they offset this by selling an incredible £553.8 million worth of mature investments. Cash flow remained flat (+£1.9m) because they perfectly recycled their gains back into the market.

• 2023 (The Shift): The market slowed down. HgT sharply slammed the brakes on buying, spending only £75.1 million (a fraction of the prior year). However, they kept selling, bringing in £170.2 million. This created a £125.6 million cash cushion to protect the trust as interest rates rose.

• 2024 (The Re-entry): Believing the market had bottomed, HgT went on its biggest buying spree yet, pouring £641.3 million into investments, resulting in a deep negative cash flow (-£279.5m).

• 2025 (The Cool-Down): They pulled back again, spending only £220.4 million to let the portfolio stabilise.

Conclusion

There’s a tonne of presentation material from HGT that illustrates their “deep sector knowledge” and their choice of holdings based on key business model attributes of critical need and strong retention.

With this article I’ve sought to ignore all that and build on my prior “pocket some HGT” and “HGT out to Dry” articles to prove (or disprove) what the numbers appear to show.

That the £1,450m marcap (in my opinion) represents an exceptional opportunity that is misunderstood by the market and mispriced.

Misunderstood, means unjustifiably cheap.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear Listener,

I’ve not recorded a podcast for two months, it was overdue to do so. I speak about my thoughts on the picks for 26 and an hour quickly goes by.

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Regards

The Oak Bloke.

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader

Regional REIT LON:RGL was a reader voted idea to be included in the OB picks for 26. Has the wisdom of crowds proved to be a folly?

Far from it. RGL’s portfolio graded EPC B grew from 60% to 61.1% in 1Q26. An “A rated” or “B rated” property is important to save money but also necessary by 2030 under MEES is Minimum Energy Efficiency Standard regulations which forces UK landlords to meet EPC standards. In any case more and more businesses and organisations are facing pressure to reduce CO2 under Mandatory Carbon Reduction Plans (CRPs) as part of public sector bids and tenders - but also from their customers registered with ISO14001. Part of ISO14001 is to audit your supply chain and this is beginning to drive compliance.

Charities are also facing growing scrutiny to their ESG under new SORP 2026 rules which mean they need to focus on reduction to impact and ESG reporting in their Charity Accounts. Leasing an office that is EPC C, D or E means higher operational costs and headaches, which is driving demand towards the A and B properties.

RGL tell us the market for these is tight. Tight means better rentals per Sq.Foot and higher occupancy. It’s not just RGL who tell us. The British Property Federation also tell us only 17% of commercial properties meet this criteria, meaning RGL is well placed to serve this growing segment of the market.

The latest RICs survey 1Q26 tells us office demand is rising and availability falling.

Demand of about 2m square feet per annum meets supply of less than a third of that in the 2026-2028 period where build times are extended and complicated through new legislation like the Building Safety Act. Rising rates will do nothing to improve the appetite to increase office supply or to carry out improvements to achieve EPC A or B.

RGL’s LTV shrank to 39.4% from 40.4% through a further £12.6m of sales proceeds which reduced the portfolio by £12.1m.

That’s £0.5m above book. That’s like selling something worth 100p for 104p when you can buy it for 45p (today’s share price). 45p? Yes because RGL is at a 54.6% discount (or estimated 54.8% at 1Q26) that’s how much you’re paying.

Technically the actual numbers are roughly double the “in the pound” example above. That is to say you pay 90p per RGL share to get 335p of Offices with an estimated -137p of debt net of all other assets to arrive at 198p of Offices.

I’ve set it out below:

If we consider what those offices generated in 2025….. Here’s the Cash Flow.

In per share terms RGL generated 7.4p of Rental Cash net of interest charges, and a further 30p of cash from selling off properties it didn’t want minus -8p spent to do up properties it wanted to keep.

But think about it. 29.3p of net cash gen. From a share you can buy for 90p.

You’d not see this interpretation from broker guesses. They don’t provide free cash flow guesses and they forecast stagnant and pitifully poor returns for the next three years, of low single digit profit growth.

Nothing to see here.

Can you also get peculiar interpretations in the chattersphere from people who invent their own numbers. 22p income? You’re inventing your own numbers or are incapable of reading simple info. 13p of refurb cost? No. Didn’t say any of that either. Laughable? Is your grasp of the situation.

Rental income net of all costs including finance costs was 7.4p. Ignoring gains and losses from property valuation (which is quite arbitrary) that’s a business generating a 12X P/E (at a 90p share price) when it is arguably in a low point of low occupancy etc etc.

The point was …. that’s not bad. If RGL can continue to improve that then that gets interesting.

The sale of property of 29.9p proceeds and refurbishment -8p per share costs are not P&L entries. They are capital movements. 8p per share is an improvement to property (Cash goes down and Fixed Assets go up) and 29.9p is property turning into cash (and reducing debt). (Cash goes up and Fixed Assets go down)

The conclusion you can draw by listening to the brokers and to the invented numbers in the chattersphere is that the near complete absence of competitive supply and rising demand for EPC A and B offices will do nothing to improve RGL’s fortunes - apparently. I think that view is deeply incorrect.

At face value the rent roll in 1Q26 can look less impressive too dropping £0.6m to £49.8m. But it’s likely, given the movement in occupancy and portfolio size that the “Core” element rentals grew in 1Q26 and now make up the lion share of the rent roll.

Here are the estimates and the 11.1% rental income growth in CORE properties (in 3 months!).

As unwanted properties get disposed and as net lettings to the Core category are carried out the Rent Roll actually improved.

How? As a proportion of the ERV it grew from 65.5% to 66.4% in 1Q26.

Once again we see strong evidence that the CORE market is tight when RGL are achieving 9.8% above the estimated rental value (ERV). £1.1m of new income in one quarter is £4.4m annualised. 26 tenants is nearly half of the 64 new tenants added in the whole of 2025.

We see a clear trend of improvement over time too. While we see a declining morass of numbers where the rent roll has declined from £72m to £50m since 2021 and ERV from £96.2m to just £75m we need to bear in mind a couple of key points.

Property Rents are rising in 2024-2025. Per property the ERV is heading upwards, even if we don’t see the benefit of that yet.

Per unit see the same with tentative signs of improvement in the latest results.

Similarly per tenants, some improvement per tenant but largely flat over four years.

If you compare annual reports the same conclusion can be drawn by comparing the equivalent yield (the return based on occupancy data) and the reversionary yield (the anticipated yield assuming occupancy is 100%).

Rent per £1 of RGL

What these “flat” numbers don’t really convey is the value in 1Q26 versus prior years.

Today the buy price is 90p versus a 500p+ price in 2021, or 168p in 2023.

In other words the rent per property, unit and tenant per £1 invested is hugely higher today compared with prior years. 600% higher. Some of that comparison is through share dilution back in 2024 halving the ownership, and some is due to the level of leverage in 2021 too.

Conclusion

With continued progress of £12.6m disposals + £2.5m post period and a continued focus on capex improvement too, the portfolio continues to grind inexorably towards improvement. Selling properties tha were 10% occupied at close to book value.

With a backdrop of rising rates this represents both opportunity and threat to RGL. The opportunity is a tightening market for real assets, where building more will likely be difficult under a high rates environment. This benefits the incumbents including RGL. With fixed/swapped/capped debt and a continued deleveraging and asset improvement programme RGL appears to be well placed in the UK regions.

Post period a further £0.9m of rental income adds to the £1.1m achieved in 1Q26.

I continue to believe - and the evidence shows - RGL is well positioned in the market and probably at a low point so despite a weak share price this is - in my opinion - an owner of interesting and increasingly valuable assets.

Regards

The Oak Bloke

Disclaimers:

This is not advice - you make your own investment decisions.

Micro cap and Nano cap holdings including REITs might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”.

Dear reader,

There’s quite some ground to cover today. 11 bonkers conkers updates. I hope you enjoy reading this. If you are feeling brave, I recorded a monster 2 hour video yesterday covering this article too. A reciprocal thumbs up to the 16 people (so far) who gave it a like too.

The OB picks for 26 are now at a 47.8% net gain.

#1 UTG

Unite is amber/green claim commentators because of its “decent update” and “deep discount to NTAV 7.8% yield and buybacks”.

UTG is a 7.85% dividend yield and 3.82% return via buybacks so that’s an 11.67% total return to shareholders.

Why is it half amber? “Market sceptical of valuations” we are told.

Is it though? Or should we be sceptical of the scepticism?

Did the market not read about the valuation of disposals in 2025? They were 1% below NAV, not 56% below.

Think about it. You buy something for 44p that says it has 100p of stuff that then sells for 99p. Should that provoke scepticism?

What about disposals in 2026? Guess what? Same again. Yep, 1% below NAV.

Historical? Those were disposals 0% below NAV. It’s quite hard to find any evidence why we should be sceptical. We should be sceptical of UTG because of UTG’s low share price - that is usually the last resort of desperate detractors flailing around for a “reason”.

The thing is for me that’s not a reason. I like buying cheap stuff.

Cheap stuff goes up in price. 47.8% overall. So far.

Is UTG seeing a lack of interest in its disposals? Erm no. Strong.

Are they disposing of the good stuff? No, the opposite. The low quality. Leaving the higher-quality portfolio.

Meanwhile the AGM statement provides further clues to the trading performance:

→ Direct-lets are 12.5% higher than 2025/2026 (25% of all bookings vs 22% in 2024/2025 as at May)

→ Direct-lets are about 25% more profitable than Uni nominations! (Based on 2025 results)

→ UTG tell us they are “on track” to their 2026 guidance.

→ UCAS tell us that Students are increasing in number, not decreasing.

#2 IIG

Now up 69% despite insinuations of dripping red flags by “smart guys”.

Red is a lucky colour in China. Auspicious. China is doing extremely well actually in 2026. OB idea BGCG is up 7.3% and China-based SilverCorp up 162%

IIG - the intuitive investments group plc - already has strong institutional holding but it believes it can get more through a move to the LSE main market.

I’m looking forward to further news of progress.

Meanwhile watch this, look them in the eye and judge for yourself. Real, or not?

This is how IIG’s software extends beyond just the Digital Lottery. This is its Loyalty programme convertor to Lottery Tickets. You’ve probably heard of Alibaba, right?

This is how the Red Envelope (“Hong Bao”) Lottery system works:

#3 Suncor

Elliott Investment grew its stake in CA:SU by 58% in 1Q26:

Suncor has 95 years of reserves.

C$110bn isn’t “cheap”. Or is it?

37 billion barrels values this at just US$2.32 per barrel, considering that we are not just talking about upstream Oil but downstream refining too. There were Margins of over US$16 per barrel on average between 2021 and 2025; potentially that Margin will be much stronger in the years to come.

$16 margin isn’t the limit.

Of course those historic margins ignore the fact that analysts like Kpler say there’s a structural deficit for Diesel and Jet Fuel and the outlook is “stronger further out” (than in the very short term)

We haven’t really seen the effects yet in the UK apart from a modest rise in Diesel to £1.90 a litre. Will it all blow over? Nothing to see here?

This entry in the May 2026 IEA report suggests a 4.5 mb/d “plunge” in the current quarter but a 82.3 mb/d (down from 83.2 so a 0.9 overall effect)

That implies production shall snap back and both 3Q26 and 4Q26 will have HIGHER throughputs of 0.4 mb/d more than before the 3rd Gulf War began! It’s a ridiculous forecast and obviously wrong, even if the war ended tomorrow and activity sprang back to life in the Arabian Gulf with no impediment from two blockades.

This is the Suncor Sulphur trading arm.

Suncor currently provides molten sulphur to agricultural based fertiliser producers, industrial end-use markets and chemical manufacturers throughout North America.

Suncor also delivers formed sulphur to the Port of Vancouver, B.C., Canada. From there, third parties market our formed sulphur to overseas markets such as China, South Africa and Australia.

#4 CORN

Suncor is a beneficiary to the sulphur shortage. Corn ETP might be too. But also the Urea shortage. Or it might not. Not if you take the latest USDA report at face value. The market did. Corn dropped yesterday. I’m now at a -3.5% loss with this idea. Or you can buy 3.5% cheaper than I did is another way to look at it.

I’ll freely admit I’m conflicted by this idea because the impact of fertiliser disruption could be severe. As in severe for humanity.

The gist of the latest USDA report is that supply will drop by 1 bn bushels but demand will drop far more, meaning the anticipated drop in supply doesn’t matter.

They say:

“the latest USDA outlook signaled ample US corn supplies extending into 2027, projecting production at around 16 billion bushels, still near record levels.”

Demand will substantially drop for Corn? Yes, according to the USDA despite acknowledging that Ethanol margins have shot up on the back of Gasoline price increases.

Here’s ethanol:

US exports or Corn will drop too, we are told.

Interesting then that this week US Trade Representative Jamieson Greer said China is expected to make “double-digit billion” annual purchases of US farm products over the next three years, reinforcing expectations of stronger export demand.

Corn Supply:

Kpler tells us “many” corn growers are reducing fertiliser use to manage profitability.

Two thirds of 5,700 farmers responding to the Farm Bureau Survey said this too.

Despite this evidence the USDA appear to believe yields will be 3% higher than 2024/2025 at 183 bushels per harvested acre.

Nothing to see here - and the market has repriced the CORN ETP accordingly.

Rising Fertiliser and Diesel costs impacts the planting and the harvesting. But it’s not just the cost of inputs. Eagle-eyed readers will have spotted the bit in KPLER’s report I didn’t highlight. The Weather.

In the USDA and the WASDE reports incredibly there’s no mention of El Nino. No consideration given. El Nino kicks in in July, NOAA say.

Warmest Year ever warn the BBC.

Is the combined effect of El Nino (forecast to be a super El Nino that will bring drought to the US, China and Brazil and flooding to Argentina) AND the increased cost of fertiliser going to reduce yields only by 3.5 bushels per harvested acre?

I’m no agricultural expert but that estimate seems deeply suspect.

In fact they say that 183 number in the WASDE May 2026 report is based on and assumes “normal” conditions.

Assumes?

Assumes?!

Assumes?!!!?!!

Normal?

Normal?!

NORMAL?!!!?!!

With input costs and El Nino a yield of 175 could be more realistic (and even that might be optimistic?) and that would bring world stocks at the end of 2026 from an expected and forecast 277.54m tonnes of Corn which is a comfortable 21% stocks to use to a much lower (critical) 18.4% ratio and end amount of 242m tonnes.

35m fewer tonnes than assumed.

Corn would easily be above $6 a bushel based on that outcome.

I remain firmly invested.

And I hope I’m wrong.

#5 NYSE:IE

Oh my. Ivanhoe Electric has bought a Robbins for $65m this week.

The Robbins replaces capital associated with roadheader decline development, silica gel grouting, and the Railveyor material handling system included in the 2025 PFS, for its Santa Cruz Copper Mine providing further certainty around mine access development costs. The net impact to initial project capital of implementing the TBM system is projected to be less than $20 million but it massively derisks both the permitting and construction risk of tough, variable ground conditions of Arizona.

• 3Q26: Feasibility Study & Technical Report Completion. Ivanhoe will deliver its definitive, bankable Feasibility Study (and an updated S-K 1300 Technical Report Summary) explicitly incorporating the Robbins engineering and material-handling data.

• 3Q26: Box cut excavation commences (utilising a smaller box cut design enabled by the Robbins).

• 4Q26 / 1Q27: Final Investment Decision (FID) & Funding Close. Utilising the $200 million bridge loan to fund early works, the company expects to finalise full project financing (including advanced negotiations on an $825 million loan from the US Export-Import Bank) alongside partners like Ma’aden.

• 1Q27: The Robbins arrives and assembly begins onsite in Arizona.

• 2Q27: Environmental Permitting: On private land

• 3Q27: Decline development begins.

• 3Q28: Underground mine development commences.

• 4Q28: First oxide copper ore is placed on heap leach pads.

• 2Q29: First copper cathode production is anticipated to commence.

Will this “come good” in 2026? The Santa Cruz Study and FID are the two big drivers here.

But a major, drill-confirmed blind discovery at one of their global joint ventures (e.g., their massive exploration sweep with Ma’aden in Saudi Arabia, BHP or SQM) or a lucrative licencing/spin-out deal for the Typhoon tech would re-rate this as a tech share.

Currently it is arguably valued at a discount to the NPV of Santa Cruz.

Market cap is $2.36bn. The PFS is $1.9bn NPV8 based on $10.5k copper. Today’s $14.5k copper price would be NPV8 of $3.6bn, and $2.36bn implies a $11.8k copper price to justify the NPV (with nothing priced in at that price for the Typhoon Technology.

#6 Oil be the Judge

ENI, ITH, GMS and HTG are all up substantially. 50.6%, 64.5%, 39.3% and 31.9% Inception to date.

The cumulative shortfall will reach a billion barrels in the next two weeks.

The shortfall to demand is 12.5m per day; we are living from stockpiles.

This week was quite painful for other parts of the picks but reality appears to be sinking in to markets.

Oil and Gas is today 2.9% of the S&P500. In 1980 it hit 29%.

According to the “wisdom of crowds” there’s a 66% chance that peace does not occur before July 31st and 34% chance by December 31st.

Yet Oil in December will be just $83.30 a barrel - according to the Futures market. A mere $20 more than the price forecast for December before the 3rd Gulf War broke out.

By what magic can this future price be achieved? By what conjuror’s trick will the world achieve $83 per barrel by December. Do not tell me the Oil market is “sophisticated” and “knows”. Come on! Do the maths. It is not possible, and investors need to position accordingly for when the market realises this.

One estimate I’ve seen is $179.17 based on the war ending yesterday. (Today is day 78)

#6 Greggs

Now nearly at £17, adding back at £14.55 has delivered a 16.6% gross return in 9 days (less £4 trading charge and £5 taxes for Rachel. £166 - £9 = £157 so 15.7% net (imaginary) return

The trading update gave us some useful info:

1. 7.5% sales growth implies sales tracking £20m ahead of forecast for the period.

2. At a steady 61.4% GP margin that implies an operating profit 10% ahead of 2025 (£77m Op Profit (Estimated) over 19 weeks)

3. The Chicken Roll - product innovation - superb!

4. +2.5% LFL implies no cannibalisation (…..yet again!)

5. Partnership with grocery retailers “contributing to growth” and “encouraging profit progress”

6. Repeated use of the word “Quality”. A reader made the very good point that GRG should create a Premium range (like the Supermarkets do). Is the repeated use of the word Quality the start of that?

7. GRG lands in Spain! Big Tenerife airport perfect road test 4 future GRG expansion - track Germans, Spanish, French etc buyers. Once they firm up plans for expansion overseas GRG will rerate and we can stop talking about the cannibalisation forever.

8.On Track with Investment, with Costs, with Guidance

#7 IDHC

Down at $0.54 this is (in my opinion) firmly in bargain territory I’ve been adding more this week. I added it back to the picks at at $0.56 in the article “Adding Back”.

Not convinced that IDHC is a bargain? (and this one’s for the wise Wizard Of Windsor who introduced me to IDHC)

Well lemme tell you…..

….About Dr Lal.

Who?

You know that NYSE listed company which operates a similar business to IDHC in India. How do India and Egypt compare? Both have identical 60% of healthcare spending in at point of service (no NHS), both operate a hub-and-spoke model, both have a Mega Lab, both countries have a large rapidly expanding population and a booming middle class. Both nations face a massive structural spike in lifestyle-related chronic illnesses—specifically Type 2 diabetes, cardiovascular disease, and hypertension.

How does IDHC compare? Per $ of shares IDHC delivers triple the cash, nearly triple the EBITDA and twice the net profit, by delivering a higher EBITDA margin, despite being smaller than LAL. You’d pay 8X more to buy LAL to get less than 4X the profit.

133% more revenue at IDHC per dollar of shares, 217% more operating cashflow, 187% more EBITDA and 110% more net profit.

And Dr Lal is no slouch as its FY26 results show.

India is a rapidly growing market like Egypt and healthcare spend grows faster than GDP growth.

#8 Picks and Calling Time

Don’t worry I’m not making further changes.

Eagle-eyed readers will spot SBRE Sabre hasn’t been removed from my list below but I did call time on this so it joins my “ex-ideas” list.

This was an interesting exercise I did using Sharescope. I basically pulled all of the valuation metrics to look at all my picks for 26 and what is working well and what isn’t - and why.

I use and recommend ShareScope. I used Sharescope reports and reporting to help build this article and will be showing off more of Sharescope’s capabilities over the next weeks and months. If you would like to take advantage of the same set of tools that I use you can bag an OakBloke discount AND at no cost to you 15% of your new subscriber, first year subscription will be donated to Aspire by Sharescope (or 20% if 25 or more people sign up this way). Click here to discover the advantage of Sharescope.

A big thank you to Sharescope for providing this and supporting Aspire in 2026. Please consider supporting Aspire in this way if it’s relevant for you.

If you watch my accompanying YouTube video I’ll talk about this further.

#9 MELLO

Fair dos, everywhere I look there’s folks offering 25% off Mello. Well here’s another instance of that.

Want 25% off tickets for Mello? I’ve got a code you can use :) OB25

Why use my code? Help a good cause - that’s why.

Mello Events are joining the Crusade to help raise funds for Trees For Life and Aspire and will make a £15 donation per ticket sold using the code: OB25

Mello 2026 in Chiswick, West London - 2nd/3rd June

#10 PINE

Covered by commentators back in February where they said “a lot of things have to go right to justify its valuation” at 290p. That was shortly after APAX thought it was worth 500 pence a share but then pulled the plug on the deal.

In March a profit warning (which was a customer delay**) sent this down to 210p and it was “coming into range but there are so many better bargains right now”. Since then it increased to 295p last week…so were there “better bargains” than this 40% rise?

The good news its valuation today is £308m at 267p

I think 267p represents an excellent opportunity given its strong order book and winning software.

Marshalls signed a five-year contract in 2024 and this was planned to begin September 2025. In its 1H26 update PINE told us the implementation had been delayed “a few months” and so the news of a second delay in March to the second half of 2026 means delay but also months of accrued salary costs where developers incur costs but don’t generate revenue - yet.

But Marshalls is currently modernising its entire tech stack. To ensure the Pinewood.AI system lands cleanly, they are “optimising the sequencing” of multiple complementary technology projects. Both parties claim this integrated approach will “maximise long-term benefits,” effectively saying that a slower, more deliberate launch will be more stable than a rushed one.

A key reason the implementation has become more complex is that Marshalls has grown significantly since the contract was signed in October 2024. Specifically, Marshalls has added several high-growth OEM partners to its portfolio, specifically focusing on new entrants like BYD, Geely Auto, Omoda, Jaecoo, and Genesis. More dealerships and more brands mean a larger and more complex data migration and integration process for Pinewood.AI including with Chinese systems that will probably be quite unlike US and European systems.

Because Pinewood has already allocated staff and invested in the integration work for Marshalls, the costs are being booked now, but the software-as-a-service (SaaS) revenue won’t start flowing until the rollout actually happens.

The point is these orders are already in the bag.

£64.5m Signed, Recurring Revenue - but not yet recognised.

That’s 191% of 2025’s recurring revenue.

That’s before they sell anything else.

That puts the forward P/E of something like 4X and that’s before they sell anything else to anyone else.

Do “a lot of things need to go right”? Or do they just need to do what they do every day and have done for years and years and just delivery a software system to its signed up customers? I think this perception of risk is massively overblown - but we’ll see - and I’ve put my money where my mouth is. At a £2.10 buy I’m already well ahead and I think there’s more to come.

#11 CHRY (NYSE:KLAR)

A barn-storming performance from KLAR this week. But KLAR is down -67% over 6 months.

CHRY holds 4.2m shares of KLAR. If KLAR returns to $45 a share then that’s £94m upside or 20p per CHRY share. Should CHRY-minals CHRY? Or can KLAR deliver?

I believe the market’s deeply, deeply wrong about KLAR.

RATIONALE

I see KLAR as a high-conviction play on a widening network moat where the market over-reacted to a temporary, macro-driven 2026 guidance revision, missing a massive structural inflection into true profitability.

The 1Q26 results this week were very strong with $1.01bn revenue and a $0.1bn profit swing (admittedly from -$99m to +$1m)… $1m profit who cares?

I care about the trajectory and growth. $300m more revenue and -$200m of additional costs. And 44% growth.

Revenue generation is divided across three core pillars:

1. Merchant Revenue: Take rates collected from retailers to boost checkout conversion and average order value. This network compounds via “default-on” distribution agreements.

2. Consumer Revenue: Structural interest income and service fees driven primarily by the high-margin “Fair Financing” installment product.

3. Marketing & Advertising: Leveraging hyper-granular, SKU-level shopping data to provide merchant leads.

The Structural Shift: Klarna is no longer just a “Buy Now, Pay Later” button. It is a full-scale digital neobank. Consumer engagement is deepening radically; the user cohort that signed up in 2022 generated a meager $12 in revenue per consumer in year one, but that exact same cohort generated $52 per consumer annualised in 1Q26.

The AI Multiplier: Since peaking its headcount, Klarna has aggressively automated workflows, handling 28 million annual customer service conversations via internal AI models. In 1Q26, revenue per employee hit nearly $1.4 million—a staggering 4x increase from 2022 levels.

Is KLAR a beneficiary to the Jevons paradox? By adding people supported by AI you can scale your business delivering huge profits.

A blind focus on AI is a mistake. Was a mistake for Klarna. Customer satisfaction ratings deteriorated at KLAR in 2024 as users became trapped in interaction loops, repeatedly restating their problems to a human agent after the AI failed to resolve them. The AI performed adequately on the predictable 30% of interactions. The remaining 70%, the complex cases requiring contextual judgment, empathy, and nonstandard reasoning, exposed the gap between theoretical capability and operational performance.

Siemiatkowski eventually acknowledged that the company had “focused too much on efficiency and cost” at the expense of quality, describing the results as “not sustainable” (Siemiatkowski, Bloomberg, May 2025, cited in Markman, Forbes, March 4, 2026). Klarna reversed course, began rehiring, and reframed human-led customer service as a competitive differentiator.

Capital Allocation & Risk Offloading: Rather than choking its balance sheet with credit risk, Klarna uses a highly capital-light “forward-flow” model. In 1Q26, management secured a new $2 billion forward-flow facility, unlocking $17 billion in total US financing capacity to fuel growth without diluting its Tier 1 capital ratios.

The Moat: Integrations with Stripe and Nexi are live, with JPMorgan Payments and Worldpay rolling out imminently. By placing Klarna alongside standard credit cards at checkout by default, Klarna secures zero-marginal-cost merchant acquisition across a $5 trillion addressable volume runway. New 1Q26 marquee wins include Lufthansa, Qatar Airways, and Uber.

Peer Comparison: At $15.55 a share, Klarna trades at a forward Price-to-Sales (P/S) ratio of roughly 1.4x P/S, an absurd discount compared to Affirm (AFRM) which commands over 5x P/S. While Affirm charge a higher percentage (the “take rate”), Klarna possesses an inherently superior model: its status as a licenced bank with low-cost consumer deposits insulates its margins, and its users exhibit 11x transaction frequency compared to Affirm’s ~6.4x.

At a current marcap of roughly $5.75 bn, Klarna is trading at an implied Earnings yield of ~3.5% while expanding its top-line at over 40%—a valuation mismatch usually reserved for stagnant legacy banks, not tech disruptors.

Listen to KLAR’s CEO

I highly recommend this interview with KLAR’s CEO. It’s fascinating and well worth a watch.

Key points:

• The Real Threat to SaaS is The Switching Cost Coming Down

• What revenue multiple will software companies trade at in the future?

• Why you need to build your own customer service AI to win

• Klarna has two times the customer base of Revolut.

• Klarna was 6,000 people. Now just 3,000.

• How Klarna got Sequoia to invest and Michael Moritz to join the board

Enjoy the rest of your weekend and a big thank you for your support of Aspire or Trees for Life in return for reading this publication. We are now one third there - two thirds not there. If you’re enjoying a 47.8% return, or just enjoying the read, why not share your good fortune by giving something back? Thank you!

Regards,

The Oak Bloke.

Disclaimers:

This is not advice

Micro cap and Nano cap holdings even those held in VC stocks might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

PS: Trees for Life is not just about helping the Scottish Highlands. It’s for all of us. Just look at this inspiring way that Red Squirrels are making a come back in England’s Forest of Dean - thanks to reintroducing Pine Martens that feed on Greys but Not Reds.

Wait, what?

Why? Colour blindness? Nationalistic Pine Martens - eating for victory? Or something else?

Dear reader,

It’s all in decline, it’s all going the wrong way declared a commentator.

A big congratulations to readers who ignored those doomsayers and believed that reports of FUTR being “just a dying business” were simply not the case. Yesterday’s results are a vindication to that view.

How well did I do vs my own forecast?

Adj.EBITDA of 24% vs their forecast of 20%-25% put this at the upper end of guidance.

Nearly beating guidance isn’t usually the sign of death.

FUTR bought back shares far faster than I anticipated, meaning only 92.8m shares remain today vs 102.87 as at 30/9/25.

This means shareholder equity rose by 76p a share during the 6 months to 31/3/26 to £10.86 per share.

Debt rose £20m, so we should consider that, although by -£20m less than the broker guesses had forecast. Debt was forecast at -£377.3m but the outturn was -£358.7m. Considering that it bought Sheerluxe for -£39.9m, paid dividends of -£16m and made over -£36.9m of buybacks the debt level is quite impressive.

Cash generated was -£5m less than in 1H25, when buying FUTR would have cost you well over £6 per share, so over double today’s £3.25 and yesterday’s £2.90.

It’s true that statutory net profit was down but more on that later.

In my recent article “OB universe” I observed a rising NAV that appeared totally disconnected with the share price.

You can’t have it both ways someone once told me. You either need to consider your assets are worth something and therefore worth depreciating/amortising - or the opposite. It was a good lesson to learn.

Those intangible assets are worth nothing at all, so don’t show me a balance sheet “worth” over £10 per share said one critical reader recently.

Err, ok, but that does mean profits are nearly 4x higher then doesn’t it? £32.3m gets added to £12.2m stat profit if we are saying intangibles are worthless… I can’t amortise them can I - not if they’re worthless. You can’t have it both ways either.

B2C REVENUE

£235.2m revenue down -6%

We see lots of growth in the period.

Particularly strong growth in Direct… 22% in 2Q26 for the USA (Wow), 17% UK too. Growth in Other Media, even Magazines are nearly flat excluding the one-off Rolex publication in the prior year.

We see decline in 1Q26, but crucially no further decline in 2Q26. No progression to the decline. I blame Rachel. Her Budget was last November. That was the 2 month of 1Q26. Everyone was whipped up into a negative frenzy last November, remember? Christmas was described as a bit of a washout and flat, but things have been surprisingly positive in 2026. I mean we were far more worried about taxes 6 months ago than fuel prices today.

Yes there was the Google effect too, but that appears a one-off effect and not a structural effect. The numbers tell that story.

Go.Compare

It’s the same for Go Compare. A poor 1Q26 but improvement (flat) in 2Q26 (for Car Insurance).

The relaunch of Renewal FUTR’s insurance wallet app in February 2026 also included the launch of its first ChatGPT app. Go.Compare has high-barriers to entry both as an FCA-regulated entity that requires relationships with insurers to drive policy enforcement and has very high brand trust through its transparent approach to sensitive data. This is a moat that we are building on in bringing innovation to the brand.

Buyers will “just ask AI for insurance” claimed a commentator so for this reason FUTR has no future because AI will just give consumers the answer and an AI agent will procure said insurance. But will it?

My question would be are Google and Claude are planning to circumvent the Laws of the UK?

If they did or their AI did, they would be in breach of the UK Financial Services and Markets Act (FSMA): Section 19. This states that no person may carry on a regulated activity unless they are authorised. Violating this is a criminal offence punishable by up to two years in prison for responsible executives and/or unlimited fines for the corporation. In the EU, the fines are not unlimited but they are 7% of turnover. That’s a $21bn fine for Google if Gemini seeks to Go.Compare.

Somehow I think Go.Compare is a tad safer than some commentators believe.

The new ChatGPT interface for Go.Compare looks great too.

B2B

Again, down organically -7% with 2Q26 only down -2%

Quite a lot of that was down to spend reductions in US schools impacting budgets and reductions in Retail and Financial Services. But growth was seen in other verticals like Tech. If this were structural decline why aren’t all verticals declining?

Ironic that commentators are claiming AI will be the death of FUTR and instead FUTR is selling an optimisation of search visibility for AI spiders for businesses, as part of its B2B offering - AEO - Answer Engine optimisation and GEO - Generative Engine optimisation.

Since its launch in December FUTR has already sold £2m and has a committed order book 500% larger at £10m.

You couldn’t make this stuff up. Well I did say FUTR had a great aim and some canny stones. Here’s the proof.

Future Optic is FUTR’s AI visibility ad package released in December 2025, which leverages FUTR’s high AI visibility in LLMs. This initiative is gaining traction with £2m of services sold to date and £10m booked for the full year.

The reason this initiative is successful is:

1. It solves a problem for advertisers (i.e. how they achieve visibility for their products in LLMs); and

2. FUTR has scale and expertise in AI visibility which is externally recognised (e.g. by SimilarWeb, Peec, Ahrefs and Promptwatch)

From “B2C, B2B and Go.Compare” to “Brands”

A BCG portfolio approach is being taken to the 31% cash cows (“portfolio”), 9% stars (“destination”), 45% problems (“in transition”) and 15% dogs (“Non-diversified”).

If we take this at face value and apply these weightings to the £15.99 per share of intangibles with a weighting then you get to a £4.86 NAV per share and therefore a >40% discount to the £2.90 share price this was at earlier this week.

CASH

FUTR remains highly cash generative and will use its cash for these five levers:

1. Organic investment into its products and service

2. More Bolt-ons. SheerLuxe boasted 72% growth in the period so is a fantastic acquisition - well done FUTR

3. More M&A - more bargains around?

4. A progressive dividend.

5. Supplemented by more buybacks.

£50.9m FCF annualised is an EV/FCF of just 5.8X

But the EV to the adjusted FCF is just 3.3X. That’s 30p of real cash FUTR get per pound per year to do with what they will. The adjustments being made to FCF are for one-off aspects of investment, rather than being hidden costs.

Whichever measure you pick Cash flow is forecast to remain pretty solid in 2027 and 2028 according to aggregate broker guesses. They didn’t get the FUTR is dying memo either.

TRUST

Trust and Expertise matters more when the volume of “slop” is much higher - including slop from AI. A friend on the phone bemoaned the fact that people do not write letters each other any more. I replied well write me a letter. But I also said, yes, that’s true, I’ve not sent a letter for many years. Yet many (all?) of us read far more words each day than we did 20 years ago. In such a world the increased “noise” leads us to seek sources we trust. Specialism matters too. Just look at this substack. Where else can you read about FUTR? Apart from visiting the poisonous chattersphere the only other source of info is on Substack where a writer called “Briefed Up” provided the following coverage in 2026:

Specialism - and yes that includes discussing FUTR - that’s authentic, unique, curated and has great taste does matter a great deal.

HELIX

How do marketers target people in a world without Cookies? They are still there but get it wrong and the fine is £17.5m or 4% of turnover. Ouch!

Helix provides an answer to marketers. Third-party cookies was the old way of tracking people across the web. That way is effectively dead. Logging in to FUTR sites like Tom’s Guide and TechRadar means FUTR sees exactly what products you are researching. Helix “packages” that behaviour—knowing you’re looking for a 4K monitor, for example—and sells that specific “high-intent” audience to advertisers (like Dell or Samsung).

From “Guesswork” to “Precision”

Helix isn’t just showing an ad to “someone who likes tech.” It’s showing an ad to “someone who has read three reviews of 27-inch monitors in the last 48 hours.” The 1H26 update tells us that Helix now uses Predictive AI to suggest audience segments to clients that they hadn’t even considered, based on real-time conversion data.

How valuable is that?

You don’t need to answer. FUTR gives us the answer. A +21% increase to click through rate is the answer. This tech is just at the beginning too, and it’s built around Trust.

SIGNAL

If Helix is the “brain” then Signal is the “hands” providing a buy button ecommerce capability to third party locations including web sites, ChatGPT Apps, Social Media like TikTok and Insta.

In 1H26 they’ve proven this out with their “WhoWhatWear” fashion brand where a dedicated ChatGPT app provides editorial advice to questions like “What accessories should I wear with a Kilt?” but then helpfully provides a link to a Sporran affiliate such as this Arctic Fox Sporran a must-have accessory in 2026 (according to the OB fashion) due to its chrome cantle and lovely celtic detailing.

From WhoWhatWear this embedded tech is being rolled out across other brands.

Noticeably on Go.Compare.

Why wouldn’t Gino help you with buying a new laptop?

Conclusion

The pace of change of AI is phenomenal. This isn’t a treatise on how to ignore that. But let’s put things in perspective. It’s easy to present a story of decline for FUTR. Here’s that story. Revenue down, operating profit down and net profit down.

Down, down, down.

But there’s also a different story of adaptation, of cash generation of curated quality content in a post organic search world. We see that and most importantly due to the strong cash generation and phenomenal buybacks we see growing rewards for FUTR-ists too.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader,

Britain’s Tin Coast is continually being discovered. The Romans did two thousand years ago when Brittanica became the Empire’s source of Tin. That knowledge reached land-locked Birmingham yesterday when stocks commentator Mr Hill learned about Tin and Tungsten from SW England for the first time in an interview with Premier Miton’s Mr Williams.

If only he’d read the Oak Bloke he would’ve known all about it. Tin and Tungsten at TUN has been extensively covered for some years, although not as far back to Roman times.

A Roman-Era Oak Bloke article incidentally would be:

Hominum Quercus.

Curae: Haec non sunt monita; consilia vestra de pecunia collocanda ipsi capite. Possessiones parvae et minutissimae pericula maiora et mobilitatem acriorem habere possunt quam societates quae ex more "tesserae caeruleae" appellantur

TUN is part of the reason that OB 2024 idea Baker Steel has gone from 39p to £1.30 in just over two years.

Worldwide demand for Tungsten is forecast to hit 85 kilo-tonnes in 2026 where 85% of the supply remains controlled by China. Prices have soared as a result. In Tungsten just got tougher 18 months ago I spoke of more recent history. How Tungsten shaped both World War One and Two. How Tungsten rose 700% in World War One and was a key reason that hastened the end of Nazi Germany. Franco turned his back on his Fascist pal and denied the Nazis precious supplies of Tungsten.

1. The “China Ban”

Under the FY2024 National Defense Authorization Act (NDAA), the US Pentagon is legally prohibited from procuring any “covered materials”—which includes Tungsten—that originated in China, Russia, North Korea, or Iran, effective January 1, 2027.

• In 2026 “legacy” stockpiles that contain Chinese tungsten are still being used.

• On Jan 1st every single gram of tungsten in a new US missile, tank shell, or aircraft part must be certified “Non-PRC.” This forces a massive, simultaneous rush to buy out the entire production capacity of Western mines (like Tungsten West), effectively “inflating” the demand as companies hoard compliant metal to avoid production shutdowns.

• The NDAA is somewhat academic since China has restricted Tungsten exports to the West for any military or any potential dual-purpose use - which effectively is a ban.

• Production lines for PrSM (Precision Strike Missiles) and GMLRS (Guided Multiple Launch Rocket Systems) are scheduled to hit “full rate production.” These systems use heavy tungsten penetrators. Factories are running at 100% capacity to replace lost munitions there is a scramble to obtain new supplies.

2. The Shift to “Kinetic” Weapons

The 2026 Iran conflict has proven that explosive warheads and “bunker busters” aren’t always effective against deep-mountain facilities (like Fordow). The US is pivoting toward Kinetic Energy Penetrators which use high-velocity “rods” of solid tungsten and rely on pure density rather than explosives to destroy bunkers.

A standard explosive shell uses a small amount of tungsten in its casing. A kinetic penetrator is a solid hunk of tungsten. The transition to these munitions in the 2026 “lessons learned” procurement cycle adds at least 800–1,000 tonnes of additional demand in 2026 with more to come.

3. Armour

Armour typically is based around Tungsten. As the most dense metal it has the properties needed to protect vehicles and for construction of everything from Tanks to Ships.

4. Fusion Power

While the world does not produce Fusion Power yet, Tungsten is a core material in a Fusion Reactor and research facilities are major consumers of Tungsten. Bill Gates is one of those funding such research.

5. Space

Tungsten is the “unsung hero” of the space industry. As interest grows in space and private companies like SpaceX, Blue Origin, and Rocket Lab accelerate their launch cadences, tungsten has become a bottleneck material because it possesses properties that simply cannot be replicated.

• “Heat Shield” Problems: Spacecraft re-entry generates temperatures exceeding 2,800°C. While SpaceX’s Starship primarily uses stainless steel and ceramic tiles, tungsten is used for the “leading edges” and specialised components that face the most extreme thermal stress.

• Rocket Nozzles: Tungsten’s melting point (3,422°C) is the highest of all metals. It is used in uncooled rocket nozzles and throat linings where even advanced nickel-based “superalloys” would melt like butter.

• Ion Thrusters: For deep-space satellites and probes, tungsten is the primary material for ion engine components because it can withstand constant plasma bombardment without eroding.

• Precision Navigation (Gyroscopes): Satellites and rockets require perfect orientation. The “heart” of a satellite’s navigation system is the gyroscope. The heavier the rotor, the more stable the system. Because tungsten is 70% denser than lead, it allows engineers to build incredibly stable gyros in a very small footprint.

• Ballast & Balancing: Rockets often require mass-balancing to maintain their center of gravity during launch. Using tungsten allows engineers to add “corrective weight” without taking up precious volume inside the fairing.

• Radiation Shielding: Space is a high-radiation environment that fries sensitive electronics. Lead vs. Tungsten: Lead is toxic and bulky. Tungsten provides the same level of gamma-ray protection with 40% less volume. For a space company, every cubic centimeter of space saved is worth thousands of dollars.

• Satellite Hardening: Most high-value communications satellites launching in 2026/2027 use tungsten “vaults” to protect their onboard computers from cosmic rays.

6. Strategic Stockpile Mandates

The US Defense Logistics Agency (DLA) has been given a massive 2027 mandate to expand its National Defense Stockpile.

• After seeing how close the “empty bin” scenario was in April 2026, the US government has authorised the DLA to buy and hold a 2-year buffer of tungsten.

• This “state-led” buying starts in late 2026 and peaks in 2027, pulling metal off the market that would otherwise go to the private sector.

TUN meanwhile has transitioned from a “struggling junior” attempting a mine restart to the holder of a key “strategic national asset.”

7. The Strategic Pivot: Hemerdon’s New Reality

• Production Timeline: As of May 2026, TUN is on track - and fully funded - for Phase 1 processing in 3Q26, which is the “Fines Gravity” restart with - Phase 2 - full-scale plant commissioning planned for 1Q27.

• The Price tailwind: The original Feasibility Study was based on $400/mtu for tungsten and $32,500/t for tin. Today’s reality (April 2026) is $45k/t for tungsten and $53k/t for tin. Just one month ago TUN gave a 1Q26 update speaking of $40k/t tungsten and $46k/t tin.

• £22.3 million Mining Fleet Funding from McHale Komatsu. This funds the entire mining fleet, allowing Tungsten West to “self-perform” the mining rather than paying a third-party contractor (Hargreaves). This is a key reason why the EBITDA margins look better in recent models.

• Strategic Importance: With the 2027 “Non-China” NDAA mandate approaching, Hemerdon is now one of the only Western mines capable of providing primary (newly mined) tungsten - while others remain early stage and Pre Feasibility.

8. Estimated NPV Calculation

Based on the current commodity price deck, there’s a large disparity between the 62p target price valuation guess of the broker versus today’s current prices.

Assumptions:

• Annual Production (Full Scale 2027): 3,320 tonnes of WO3 (Tungsten), ~462 tonnes of Tin, Aggregates ~350kt.

• Tungsten Price: $1,000/mtu (Broker Guess); $4,500 (Today, Actual)

• Tin Price: $46k/t (Broker Guess); $53k/t (Today, Actual)

• Aggregates*: £10/tonne

• (* Regarding Aggregates: there is also an application to increase the number of road trips per day to 300 although this has more of a bearing on the Tailings Cost of Storage than the incremental revenue so isn’t discussed here in any detail)

• Operating Costs: $85m/year

• Annual Revenue: Broker Guess: $121m; $357m)

• Annual EBITDA: Broker Guess: $36m; (Today, Actual $272m)

• EBITDA based on today’s actuals projected at £200M at current price levels.

• Base Case NPV (7.5%) Broker Guess: NPV7.5% (recent market pricing) = US$1,693 million (US$1,313/mtu WO3 ; 55,953/t Sn) £1.3bn; (Current, Actual £3.5bn)

• Current Market Cap ~£442 Million (at ~35p/share)

• P/NPV Ratio: 0.28X to 0.12x

9. What This Means for TUN

Despite the stock rising ~1,000% since May 2025 (from 3.25p to ~35p), it is still trading at a significant discount to its underlying asset value:

• Risk Discount: Phase 1 (to initial production) is fully funded; however the Ramp Up to Phase 2 (full production) is not yet fully funded. TUN needs $85m and $25m is committed while $60m is in “the final stage of due diligence” - expected imminently.

• The “Strategic Premium”: Typically, a mining company in production (or months away) should trade at 0.8x to 1.2x NPV.

• The broker guess according to Sharescope meanwhile is for a target price of just 62p. Should we be concerned by that disparity in valuation? According to TipRanks, no, the analyst who produced this guess is ranked #9,801 out of #12,243 Wall Street Analysts and achieves an average -12.2% return per rating. Of course assuming today’s Tungsten and Tin price can continue for the life of the mine is a bold assumption and the broker guess is based on a much lower expectation.

• Target Price Potential: If the market re-rates TUN to a standard 1.0x NPV once the debt package is finalised and production begins in Q3, the share price would logically sit above 100p

• M&A “Bidding War”: By 2027, as the 6,500-ton replenishment cycle peaks and Chinese supply is banned from Western defence contracts, TUN will likely face an M&A bid from a major defence contractor (like BAE or Lockheed) looking to “vertically integrate” their supply chain.

10. Risks

• The Debt Hurdle: The only thing holding back the full re-rating today is the finalisation of the $85M debt package. It is currently in final due diligence, and a major shareholder has already pledged a $25M first tranche.

• Operating Leverage: Because mining costs are relatively fixed (energy and labour) and depreciation very low (since the brownfield site Mine was bought for just £5.4m and the replacement cost of the equipment it acquired was £300m) almost all increases in metals prices flow straight to the bottom line. Rachel gets her taxes too. This makes the NPV highly sensitive.

Verdict: Based on the 2026/2027 replenishment needs, Tungsten West is currently undervalued by at least 60% relative to its £1.3bn NPV.

11. Comparatives

• Almonty (ASX:ALM) $5.56bn - 4,600 tonnes of WO3 (Producing South Korea) P/NPV 0.74X

• Tungsten Mining (ASX: TGN) A$335m - 0 tonnes of WO3 (Working on Prefeasibility): P/NPV 0.28X

• Tungsten West (LON: TUN) £442m - 3,300 of WO3 (Under Construction); P/NPV 0.3X based on the broker guess (or P/NPV 0.1X at current prices)

• Guardian (LON: GMET) £369m - 0 tonnes of WO3 (Working on its Prefeasibility): P/NPV 0.18X

• Fireweed (TSX: FWZ) C$755m: P/NPV 0.54X

  • The “Hunger”: Producers like Almonty are now being treated like utility companies (essential for national security).

  • The “Snack” for TUN and TGN: Smaller players like Tungsten West and Tungsten Mining are primary targets for acquisition.

12. TUN: Phase 1 to Phase 2:

12a. From “Fines” to “Full Plant” (The Q1 2027 Jump)

TUN isn’t just expanding in 2027; it is completing its primary evolution.

• 3Q26 (Phase 1): They start “Fines Gravity Processing.” This is low-volume, high-margin production using existing material and easy-access ore.

• 1Q27 (Full Commissioning): This is the big one. They will commission the brand-new crushing, screening, and ore-sorting facilities.

• The Result: This takes them from “testing the waters” to a steady-state production target of 3,320 tonnes of tungsten concentrate per year.

12b. The “Ore Sorting” Multiplier

The secret weapon for 2027 is their new XRT Ore Sorters.

• In previous failed iterations of the Hemerdon mine, they tried to process everything.

• In 2027, the new sorters will scan the rocks and kick out the waste before it hits the expensive processing plant.

• Expansion Potential: This technology allows them to effectively “high-grade” the mill. By 2027, they can increase the metal output without necessarily increasing the mine footprint, simply by being more efficient at what they feed into the plant.

12c. The “Self-Performing” Production Boost

TUN just terminated its contract with Hargreaves and bought £22.3 million of their own Komatsu equipment (delivery started in April 2026).

• By 2027, they will be “self-performing” the mining.

• Why this matters for expansion: Controlling their own fleet means they aren’t at the mercy of a contractor’s schedule. If the tungsten price stays near $45,000/t in 2027, they can simply run their own fleet 24/7 to maximise the throughput of that 3,320-tonne capacity.

12d. Beyond 2027: The “40-Year” Scale

While 2027 is about hitting that ~3,300-tonne steady state, the recent FS25 (Feasibility Study) notes:

• The current plan is for an 11-year primary mine life.

• However, the resource is large enough to support up to 40 years of mining with further expansion.

• If the 2027 replenishment crisis turns into a permanent “Cold War” style demand, TUN has the modular design in place to add a second processing circuit by 2028/2029. Production could rise to 6,500 tonnes of WO3 - exceeding that of Almonty.

13. Conclusion

Months away, and yes risks remain, although these are now fewer and the imperative for Tungsten and Tin balances the risk/reward nicely.

Defence imperative and replenishment is one factor. Fusion Power another. The “Space Race” another - is also in my opinion a permanent floor for the price. Even if the Iran conflict cools down and we all sing Cwmbaya, the demand for Starlink-style constellations and Mars-bound rockets ensures that every gram of tungsten mined in the West has a buyer waiting before it even leaves the ground.

Tungsten is a future metal with a multitude of uses. It’s also a historic metal that steered two World Wars.

With Tin also in short supply in 2026 and a core part of the drive for electrification domestic/Western supply also holds great attraction too.

Regards

The Oak Bloke.

Disclaimers:

This is not advice, make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”

Dear reader,

Chrysalis Investments provided an update and an NAV as at 31/03/26. It made interesting reading.

Quite different to the portfolio as it stood as at 31/12/24.

Fewer shares too. £115.5m of shares have been bought back and 480,973,805 shares remaining. CHRY have now paused buy backs and intend to make tender offers instead. CHRY with a market cap of £393m and with both Klarna and Wise listed so with £54.6m of listed/cash/net liabilities as at the 31/3/26 valuation but where rebounds in listed companies take that offset to over £62m as at 8th May 2026.

That means as at 8/5/26 buying CHRY at 81p is £331m net of that £62m buys Starling at 10% a premium to its £278.9m valuation, with Smart, WeFox, BrandTech, Secret Escapes, Deep Instinct thrown in 100% for free.

Or it’s a 30% discount from Starling’s valuation at the end of 2025.

#1 STARLING

Starling was reduced by a whopping 14% or -£61.3m in 1Q26 due to peer compression. These might have been some or all of the peers used. Did these compress by 14%? Yes. But all have bounced to some extent since then.

None of the above are experiencing the much higher growth and EBITDA margins that Starling’s Engine business is experiencing, with four customers and growing, delivering an estimated £20m revenue in FY26 (ending 31/3/26) and estimated £30m revenue in FY27. Engine delivered £2.3m revenue in FY24 which grew to £8.7m in FY25. Assuming a 30% EBITDA margin you can quite easily get to £100m growing to £200m valuation at 20X EV/EBITDA.

Based on projections of Fintech growth and evidence that Engine can reduce cost to serve by 75% versus incumbent banks then is the Engine component worth several billion based on projections? Not yet proven but it appears to be on the cusp of demonstrably proving this out.

So a £0.2bn valuation takes no account of future customers and potential, that’s just valuing the likely ARR of existing customers (at only 20X)

A 30% EBITDA margin might be quite conservative. After all, Starling deliberately have avoided a “best of breed” approach pulling in third parties for aspects and instead offers a suite of software called “The Engine difference” that provides Banking & Ledger but payments, API tools, CRM, marketing, monitoring all in one rather than bolting together multiple systems - as is typically the case. When you work with partners 30% is a typical partner margin. When you’ve built the software the margin is theoretically 100%, less maintenance costs and amortisation. Certainly, variable costs are not 70% of revenue so profits can leverage as revenue grows.

Starling Bank

So what about the bank? CHRY own 11.76% of Starling so £374.7m implies a £3.19bn valuation for Starling. That’s a 20%-25% discount to the £3.5bn-£4bn valuation mooted for its proposed IPO….. if rumours are true. It’s also less than the past trajectory of valuation.

Starling remains one of the most recommended Banks in the UK and gets 4.7 on Trustpilot.

Starling launched new products in 1Q26 including its third AI customer solution - Starling Assistant - which is the UK’s first agentic AI tool to help consumers manage day-to-day finances and a “Making Tax Digital” tool for its SME base.

They have launched their Accountants/Book-Keepers partner programme and launch portal access for those very soon.

In April, Starling rolled out its largest ever brand campaign across multiple formats, including TV, out-of-home, video-on-demand and social media. The campaign is expected to run for two months and is part of a customer activation drive, following its brand refresh in September 2025 and its new “Good with Money” message.

Raman Bhatia - Starling CEO - commented on LinkedIn that the impact of this marketing campaign had seen an “…incredible increase in new customers, up over 100% compared to this time last year.“

Starling now has in excess of £500m of surplus capital on its balance sheet which represents significant strategic optionality.

We will soon know the results to 31/3/26, but we do know that the bank delivered £223m PBT in FY25 and £301m in FY24.

#2 Klarna

Klarna is a global digital bank and flexible payments provider. With active users growing 28% a year processing 3.4 million transactions per day, Klarna’s AI-powered payments and commerce network empowers people to pay smarter, with a mission to be available everywhere, for everything.

Its expansion newsflow in 2026 is relentless and impressive……

Oh ho, Oak Bloke, so why the drop in valuation? After all Eagle-Eyed readers will have spotted a more than -£100m drop in CHRY’s valuation between 4Q25 and 1Q26.

Hmm, yeah.

1. Provision for Credit Losses up 60% to $794m. That’s because you have to book the expected credit loss on day 1 but only recognise the revenue over the lifetime of the loan. Given their Fair Financing GMV grew 165% in 2025 that “loss” is overstated. Actual losses are 0.44% while the provision is 0.65%.

2. Other Income: This was FX losses and Hedging losses - no reflection of the operating business.

3. Stripping out the $450m effect you get to a far stronger result. That’s without arguing that 10% higher $414m sales and marketing is investment into brand and 10% higher $486m Tech and Product Development should be capitalised not expensed.

Of course some would say the low valuation is the result of legal action being taken that investors were misled by the IPO.

Broker guesses nearly uniformly dismiss this and none say sell, only buy or hold. Consensus guesses are for a +57% target price of $22.82.

#3 Wefox

A £55.9m valuation for what is today a profitable business - tracking ahead of budget. Considering it was on the brink back in 2023 that’s a turnaround based on exiting the Spanish, Polish, German and Italian markets and focusing on Dutch, Austrian and Swiss markets slashing its workforce by 90%.

Its largest business unit is TAF which isn’t based in Wales but instead is a Dutch-based Managing General Agent (MGA) specialising in life and disability insurance. Its operations are being expanded to the Austrian and Swiss markets in 2026 - and this is the funding round referred to by CHRY until end of 2027.

The fox, it appears, may yet outfox its detractors and deliver success to CHRY.

#4 Brandtech

The Brandtech Group is a marketing technology group valued at $4bn based on its last funding round in early 2026. It was ahead of the game with generative AI for marketing.

It was EBITDA profitable, and has been for a few years. Revenue is estimated at $1bn dotted around a number of companies that are kept separate and private. Jellyfish is one of their larger ones. A 73% GP margin. Delicious.

Like SFOR it has been disrupted, and the mark down is probably in large part a mark-to-market with SFOR - its listed rival.

Yet SFOR is double today its 20p low point of late 2025, and reported reasonable numbers albeit down year on year.

Similarly, Brandtech’s companies are adapting and winning. Don’t write this off.

#5 Smart Pension

Smart signed a multi-phase technology partnership agreement with Hargreaves Lansdown’s Workplace business and has a robust pipeline of potential clients.

Following continued growth in contributions, and the integrations of certain acquisitions through 2025, SPMT surpassed £10 billion of AUM as of mid-April 2026. This compares to approximately £2.1 billion of AUM at the end of 2021, implying a 5x increase over the last four years.

The UK pensions market continues to consolidate. In April, it was announced that Standard Life had bought Aegon UK for £2 billion, which includes the Aegon Master Trust, one of the biggest in the market. Cushon was also recently acquired by WTW.

Smart has Integration with nearly all UK payroll software, and in this interview Retirement saving is really a technology problem.

#6 Deep Instinct

This is valued as a distressed asset. Might be worth considering it at zero.

The success of giants like Crowdstrike (and failure?!) and Palo Alto has left this little Brit company struggling for air. AI is blamed for disrupting its business model.

#7 SecretEscapes

Secret became debt free in 2025 selling their Czech brand Slevomat to a PE firm and has cash reserves of £40m.

They processed £0.5bn of holidays in 2025 but at a low margin. So no excitement but profitable and stable.

Conclusion

I once wrote an OB graphic that appears to have stood the test of time. You’re no further forward two years later mutters a detractor.

Hmm, is that true?

If I add the 1Q26 £m NAV values we see an impressive Starling performance, solid Smart Pension and what appears disappointment elsewhere.

It’s when you redraw this on a pence per share basis (taking account for the buy backs) that you realise that performance is far more solid than today’s NAV vs Market Cap would indicate.

CHRY’s market cap roughly equals Starling and get all the rest (including listed companies) in the price for free.

Regards

The Oak Bloke.

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as "blue chip"

Dear reader,

Having redeployed some cash recently I thought I’d redeploy some more.

First though I needed to work out how much imaginary cash I had.

Picks for 2026

This began as £32,000 and has grown to £43,924 as at Friday 8th May. Eagle-eyed readers will know I’ve bought and sold a number of holdings and rebought (“resurrected”) a number of ideas too. So the far right column represents reinvested cash. These movements are fully documented in past articles.

A 37.3% result so far.

£3,232 cash left to deploy.

25 for 25 picks

The remaining 2025 picks were doubled down on with MKA, SEIT, AVAP and PRTC all leaned in on. Much cash was used up.

Incidentally, MKA was a great move, at 33p, now 45p, while SEIT, AVAP and PRTC are now in profit - just. More to come.

£3,577 cash left to deploy.

2024 picks

These came 3rd behind Mr Scott and Mr Arby. They’ve continued to perform delivering 25.3% over 2 years and 5 months. Considering that 3 out of 20 went to zero or nearly zero (Saietta, I(X), Belluscura) I’m pretty happy with that result.

I have £6,109 Cash to re-deploy.

I’m assuming AUGM is realised even though if you held on the cash may still be owed to you.

2026 Commentary

2026 picks #1 RGL

Regional REIT at a 88.9p buy is tempting. That’s a 56.6% discount to NAV. The CBRE reports “Tight grade A vacancy in core markets, as well as an increased focus on cost, will shift many large occupiers’ requirements towards good quality space in more peripheral locations”.

I’m going to double the position to £2000, averaging down.

2026 picks #2 Fulcrum

The financing of the pilot plant via the £8.5m funding package in the past week is a major positive, in my opinion. FMET is a £11.4m market cap with 147.4m shares in issue.

This moves the cyanide-free metals recovery technology to a new milestone and Teck Hughes Tailings Project towards becoming a bankable asset. FMET has a partnership with Bechtel Engineering which is one of the world’s largest engineering firms, who are part of the pilot plant scoping.

The finance package comprises 2 x £0.5m subscriptions, 2 x £2.5m convertibles and 1 x £2.5m ATM.

1. The convertible loans would convert at a 30% premium, 11.4p.

2. The ATM - at the market - means FMET can issue shares at the prevailing daily share price to raise a further £2.5m (less costs)

3. Repayments begin after 2 months and are 10 x monthly installments (of £0.25m).

4. Warrants of 13.1p would bring in £0.625m.

Detractors would point to the “overhang” but logically we are talking about up to 40% dilution for over £9m of funding. It’s a good deal.

The Pilot plant will be located in Timmins which is proximate to both Teck Hughes and Sylvanite projects and feeds from both will be used to prove the resource.

If the Pilot Plant is successful there are already expressions of interest to take this full scale. Even prior to completion, of the Pilot there is potentially grant support from the Ontario Government. So 40% dilution assumes all loans are converted to equity, and assumes the second round of funding is taken and the ATM is fully utilised (I’ve assumed at just 8p).

The ground itself is ripe with a range of metals, and the operation could generate $137 of metals per tonne of ore and 6,000 tonnes of ore per week would be $9m less operating costs.

I’m going to double the position to £2,000, averaging down.

2026 picks #3 NEW IDEA - CA:SUNCOR

Using the final £1200 of Cash I’m going to pick a Canadian share that is an Oil Sands producer and refiner.

It is a C$110bn market cap that you can buy at 13.1X price/earnings, based on its 1Q26 result. (1.185bn shares)

I’ve been researching the oil reports of the EIA, the IEA and OPEC. Specifically looking at “middle distillates”. That is the precursor to Diesel.

These three project that demand will either grow or shrink modestly (the IEA) while supply will increase, either steadily (OPEC) or in a snap back.

I’m not convinced that this is the case. It’s not that simple.

Is the Supply response going to be “almost overnight”? Refineries are complex multi-billion affairs. Numerous Middle East targets have been hit with missiles and drones. Targets in Russia have been hit too, by the Ukrainians. It’s years of repairs not a couple of months. Estimates vary but 2.2 m/b of refined supply has probably been damaged/destroyed.

• Kirishinefteorgsintez - Russia - 3 out of 4 distillation units damaged May 2026.

• Ryazan - Russia - August 2025

• Volgograd - Russia - 20% of production - late 2025.

• Ras Tanura - KSA - March 26

• Jubail City - KSA - March 26

• Port of Fujairah - UAE - March 26

• Shah Gas Field - UAE - March 26

• Ras Laffan - Qatar - March 26

• Pearl GTL - Qatar - March 26

We aren’t talking about Crude Oil supply - we are talking about refined and cracked product - there appears to be a conflation of the “amount of oil affected”. It’s not that simple.

Demand Destruction of Diesel has not yet happened - fully. Demand destruction as a result of a supply shock means demand is not dented - it is restricted through higher prices. 20% higher prices is not higher prices.

Meanwhile actual Middle Distillate Refineries with new capacity worldwide for 2026 adds 0.55 million barrels of new supply:

• Dangote, Nigeria - 0.12 mb/d

• Dos Bocas, Brazil - 0.11 mb/d

• Duqm, Oman - 0.12 mb/d

• China (Various) - 0.2 mb/d

= 0.55 mb/d increase of supply. (So nowhere near enough to replace supply)

The Extra Tickle - Sulphur

Suncor stores Sulphur as a waste by-product. It’s not worth selling it….. or wasn’t.

Here’s an aerial view.

At 7,000 RNB so US$1k/tonne there are highly attractive economics and Suncor are melting down these yellow mountains to ship the Sulphur. It is an essential mineral for Fertiliser and for Sulphuric Acid - used in Mining and in many industrial processes.

Based on an estimated circa US$350 per tonne transport cost these cakes can be melted down and transported. So US$650/net EBITDA per tonne.

Based on 5m tonne capacity at Vancouver Port and 30% of that capacity can be used by Suncor, an estimate of 1.5m tonnes/year out of Vancouver is possible. So this adds about US$1bn EBITDA or C$1.4bn per year. So C$1bn additional profit.

They’ve vast quantities - the limiting factor is the transport by all accounts and they produce about 0.8m tonnes just through production. When Sulphur prices are low it’s not worth selling it, they just store it.

Based on current 1Q26 in CAD terms Suncor is a C$110bn marcap.

C$1.77bn net earnings 1Q26. (C$7bn annualised). So a P/E of 13.1X.

Produces 0.5 Mboepd of Diesel and Jet Fuel. 0.25 Mboepd of Bitumen.

Price of Oil Sand Crude for Diesel in 1Q26 C$102/bbl Diesel and C$79/bbl Bitumen.

NB SCO is the precursor crude for Diesel and Kerosene (Jet Fuel)

Their 2^nd business segment is refining.

After Refining (Suncor’s 2nd segment) they got C$182.85 in 1Q26 per BBL. (So C$80 per BBL value add)

Today Diesel/Jet Fuel is C$245 per BBL.

Quick and Permanent Peace in Middle East might move back to C$185 (i.e. the 1Q26 level)

Escalation would mean C$300/bbl (The Demand Destruction Price)

Thing is I don’t think Peace will mean a snap back to C$185 ..... There’s a 2.2 mboepd shortage of Diesel - Ras Laffan attacks and KSA refineries AND Russia (The Ukrainians have damaged facilities too)

I’m adding £1200 at C$87.58

Therefore the final 100% committed OB picks for 26 position looks like this.

2025 Additions

Thor is back to where it began the year at 74p.

Gold isn’t. It’s up 9% YTD.

China’s central bank is using the price drop in gold to buy Gold in far more substantial quantities.

• THX is generating a staggering $3,600 margin in its latest 1Q26 results.

• At £468m the market cap is over 300% higher than when it was “added to the OB 25 for 25 in Thor!” at 17.5p.

• 80 Koz at a $3600 margin is £213m. So little over a 2X P/E.

• Deduct $154m cash and 6 koz of gold ($28m) and you are only really paying a net £333m.

• With the PFS of its 2nd mine at Douta, Senegal due 2H26 there’s potential for construction of a 2nd mining operation. The post tax NPV for Douta at $3,500 gold is $633m and an IRR of 61%, and a payback of 11 months. At today’s $4,700 gold the NPV rises to $1.15bn and 125% IRR.

• Segilola, Nigeria, meanwhile has had additional resource being added through a drill programme and an assessment to go from open pit to underground remains a further upside, as does district resources near mine.

• A 3rd project in Cote D’ivoire is earlier stage but a maiden drilling programme is ongoing.

• In 2026 THX remains tax free and in 2027 will move to 95% capital allowances so will remain substantially tax free.

The revised OB 25 for 25 therefore looks like this.

Conclusion

Phew. I don’t think I can think about the remaining 2024 cash. Working on the 2026 and 2025 cash has exhausted me!

2024 imaginary Cash remains on the sidelines.

For the 25 and 26 clusters meanwhile we move to a fully committed position. Time will tell whether those changes were wise moves… but so far so good!

Regards

The Oak Bloke

Disclaimers:

This is not advice - you make your own investment decisions.

Micro cap and Nano cap holdings including REITs might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”.

Dear reader

Before I speak of HG Trust move over Mr Kennedy and here’s an incredible rendition of Vivaldi. It can only put a smile on your face this weekend. We need it. A shorter bank holiday week never feels shorter, does it?

On with HGT.

You would have paid £3.55 per share earlier yesterday.

457,728,500 shares in issue means a £1.62bn marcap and net assets at 31/3/26 of £2.4bn.

£3.55 is a £1.73 per share discount on £5.28 per share of assets, so a 33% discount. Where £5.28 per share is based on a £3,077m net portfolio less £677m debt.

Where in 1Q26 there was -£289m of adverse valuation i.e. 63.8p per share was “wiped off” the valuation due to “multiple compression”. More on that in a bit.

Where that same portfolio generated 34p per share of earnings.

So an investment of £3.55 generates 34p in 3 months, and 26.5p is attributable to equity. That’s £1.04 of earnings per year. That’s nearly 30p of trading EBITDA in the £1 of HGT shares:

HOW?

Each £1 of HGT NAV is earning about 20p of trading earnings before interest tax depreciation and amortisation per year.

That’s calculated based on £154m x 4 (£616m) on a portfolio of £3077m, where 2400/3077 or £480m is attributable back to the NAV of HGT.

But since you are paying £1.62bn to earn £0.48bn EBITDA that’s 29.62%

NEARLY 30p in the pound!

Wait, what?

Weren’t we told AI was going to replace software? That software is doomed? If so then why is it instead generating record levels of trading profit? Why are profits far higher than prior years? Could it be that the detractors have it wrong? Deeply wrong. Wouldn’t be the first time would it?

Trading profit is at record levels - but is it just a one off? Even if you take the lowest results over the past six years - during lockdown - you still get a trust earning an EV/EBITDA of 16X. Ignore that as a one off (we were all tending to our gardens and clapping for the NHS heroes Thursday at 6pm, out clapping our neighbours clanging a saucepan perhaps) and the average is an EV/EBITDA of less than 8X.

Based on 1Q26 it’s just over 5X. (£154m x 4)/£3077 = ~5.1X

What’s a fair price for HGT? Consider that 5.1X is a third of its peers.

Microsoft 19.5X, ActiveOps 46X, Sage 14.6X, Intuit 14.6X, ADP 14.3X

That’s just focusing on the “Trading” result since 2020.

MULTIPLES

The second column is the gain and loss each quarter through multiple compression (and expansion). Valuations are made vs public markets (mark to market) and the likes of Xero, Sage, Oracle, etc. (Probably). The -£284m in 1Q26 was a contraction of valuations from 25.2X to 24X.

That’s despite an observation that the correlation is quite weak and only 20%-40% of the public market movement flows to HgT valuations. HGT use mark to market even if it’s a poor predictor.

So when did HGT sell holdings at 24X? Once in 1Q26, once in 2024, and they dropped their pants with a low ball 22X exit with CogitalGroup. That’s 3 out of 19 times the portfolio’s current multiple valuation of 24X or less was the ACTUAL exit price valuation.

I was curious about Cogital. Evidence of AI erosion of profits? But no. The 22X CogitalGroup was a massive “buy-and-build” project and it was a partial sale at an attractive valuation to bring in a partner who could handle the complexity where the incoming partner gets a tickle - gets room for multiple growth and the payday for them and for HGT (partial sale remember) comes once the integration is completed.

So 16 out of 19 times the EV/EBITDA was higher than 24X, and quite a bit higher. Arguably based on real world sales the portfolio is undervalued by about £800m compared with the average exit multiple.

£2.4bn NAV should be £3.2bn. So £3.55 per share “should” be £4.80 based on exits.

Rule of 50

Based on the Q1 2026 results released on May 7, 2026, HgCapital Trust (HgT) is comfortably clearing the “Rule of 40” hurdle across its portfolio.

What is the Rule of 40?

The standard SaaS formula is Revenue Growth % + Profit Margin %.

The combination of both “should” be over 40. HGT scored 50 in 1Q26:

• LTM Revenue Growth: 16%

• EBITDA Margin: 34%

• Total Score: 50

• Comparison Scores: Microsoft 62, Intuit 48, ActiveOps 33, Sage 32, ADP 32

Context

An aggregate score of 50 is considered elite for a portfolio of this scale (£2.4bn Net Assets). It indicates that the underlying businesses (which include 49 vertical software and service companies) are not sacrificing profits for growth.

Key Performance Drivers

• The “Trading” Cushion: While valuation multiples in the broader software market (tracked by the IGV Index) contracted sharply, HgT’s underlying portfolio trading remained robust. Trading performance added +5% to the NAV, which acted as a partial shock absorber against the -9% hit from the nonsense multiple contraction.

• EBITDA Outpacing Revenue: EBITDA growth of 19% is slightly ahead of revenue growth (16%), suggesting that the portfolio companies are successfully finding operational efficiencies (improving margins) even in “challenging conditions.”

• Resilience vs. AI Fears: Chairman Jim Strang explicitly addressed the “AI disruption” fears that have caused public software stocks to sell off. He argued that Hg’s focus on vertical software (proprietary datasets with 100% accuracy requirements, like tax or legal software) makes them beneficiaries of AI rather than victims of replacement.

Commitments

Commitments to follow on funding 2026 to 2031 represent 88% of HGT’s NAV and is portrayed by detractors as some sort of negative. But HGT’s parent (fund manager) Hg invests around 10X more in a year than just the funds of HGT. It taps into clients money and there is no obligation to fund follow ons (although obviously that affects the % of ownership, and potentially miss the opportunity etc)