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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"RDCP grew enterprise value 25% to $500m in 2023 through strategic acquisitions in manufacturing, healthcare, and engineering while maintaining perfect investment record. Despite challenging macro conditions with peak rates and inflation, the firm demonstrated portfolio resilience and shifted focus to sustainable growth targeting $1bn enterprise value by 2025 through disciplined capital deployment and eventual US expansion."
RDCP Group delivered a 25% increase in enterprise value to $500m in 2023 despite their most challenging year yet, maintaining perfect records of annual AUM growth and never losing money on an investment. The firm completed six acquisitions including Pexion Group (precision engineering), Majestic Windows Group (manufacturing), and Coton Care (healthcare), while exiting the volatile construction sector. With 12 portfolio companies generating £175m revenue and £24m EBITDA across 1,900 employees, RDCP demonstrated resilience through rising insolvencies, 5.25% base rates, and peak inflation. Key lessons included bringing functions in-house, focusing on reversible decisions, and emphasizing sustainable growth over growth at all costs. The manager targets $1bn enterprise value by 2025, requiring EBITDA growth to £52m, through sustainable AUM growth, cash generation, downside mitigation, and eventual US expansion. UK equities remain attractively valued both globally and historically, supporting the long-term investment thesis in a market offering superior risk-adjusted returns.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolio of 12 companies, specific position sizing discussions, named acquisitions with detailed rationales, and unwavering commitment to $1bn target despite challenges. Manager demonstrates strong conviction through specific strategic decisions and maintains perfect investment record.
Growth Outlook
The manager acknowledges 2023 as their most challenging year with UK corporate insolvencies at all-time highs, but expresses optimism about UK equities being cheap and expects rates/inflation to decline in 2024. Mixed outlook with cautious optimism.
Risk Appetite
RDCP completed six acquisitions in 2023 showing continued deployment, but shifted from growth at all costs to sustainable growth with emphasis on cash generation and downside mitigation. Moderately risk-on but more selective.
Capital Deployment
RDCP completed six acquisitions in 2023 representing significant capital deployment, but also exited construction positions. Net deployment was positive with enterprise value growing 25%, indicating moderate to strong deployment activity.
Forward Guidance
Manager remains committed to aggressive $1bn enterprise value target by 2025 requiring significant EBITDA growth, but emphasizes sustainable approach and is actively planning US expansion. Bullish on deployment but measured.
Language Signal
Language is balanced with significant discussion of challenges, lessons learned, and risk management, but also mentions opportunities in cheap UK equities and resilient portfolio performance. Slightly more cautious than bullish overall.
Perceived Risk
Manager explicitly discusses 2023 as most challenging year with all-time high insolvencies, peak rates at 5.25%, and inflation concerns. Detailed discussion of construction sector volatility and economic headwinds shows meaningful risk awareness.
Opportunity Density
Manager sees selective opportunities with six acquisitions completed, identifies two additional manufacturing targets, and views cheap UK equities as attractive. Opportunity set described as requiring selectivity but still productive for deployment.
Time Horizon
RDCP explicitly states they are not an exit-driven firm and believe substantial returns come from holding investments long-term. Five-year targets mentioned for Pexion growth, permanent capital structure, and emphasis on compounding demonstrates very long-term orientation.
