Personal Group Holdings plc (LON:PGH) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of Premier Miton UK Multi Cap Income Fund.
DirectorsTalk asked: Personal Group reported a 22% increase in adjusted EBITDA and another record period for insurance sales. Could you just talk us through some progress and what you particularly like about the business?
Gervais noted: As with a lot of financials, it’s a little bit complicated. It basically helps employers provide insurance and other healthcare products by buying in bulk and offering them to companies’ employees at more attractive prices.
The reason companies like it is because it helps them to retain their staff because at a time of difficult budgets, we’re all under pricing pressure, having more competitive products is more attractive.
The key feature for this company and why we like it so much, is the new CEO who was appointed three years ago, Paula Constant. She’s done a terrific job. She’s really invigorated the culture of the business in terms of customer service, they’ve improved it. They’ve been taking market share.
Most particularly, the share price, notwithstanding a very undervalued valuation, generates lots of income. The income growth over the last three years and the share price appreciation, according to Bloomberg is up something like 170%. That’s obviously well ahead of most of the UK stock market.
So, what’s been interesting is actually even now, after all of that share price appreciation, it still yields, according to Bloomberg, at something like a 6% yield prospectively. The UK stock market is yielding, as an average, just over 3% so it’s still very overlooked. It’s just this week extended its partnership with Simplyhealth to increase that.
We tend to have quite a large weighting in the financial sector within the Multi Cap Income Fund: we’ve got 23 holdings, about 31% of the portfolio in this area. There’s some mainstream stocks in there, but there’s lots of these kind of stocks which have produced more income growth and have hopefully better prospects than the mainstream stocks.
