Andrews Sykes

06 May 2015
By Maynard Paton

Quick update on Andrews Sykes (ASY).

Event: Final results published 06 May

Summary: Results better than I had expected. A dismal first half was followed by a less dismal second half and the outlook for 2015 appears relatively promising. Accounts still showcase solid financials and I’m pleased ASY’s 90% owner continues to share the wealth through sizeable dividends. The yield is 7.9% at 300p.  I continue to hold.

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4 February 2015
By Maynard Paton

You may have gathered by now that I do like my companies to have hefty insider ownership.

My theory is simple: I’m convinced directors are more likely to run their businesses successfully — and are therefore more likely to deliver satisfactory returns to outside investors such as you and me — if they boast significant shareholdings themselves.

I’m certainly hoping that’s going to be the case at Andrews Sykes (ASY), where the chairman and his family own 90% — yes 90%! — of the company.

Such shareholder dominance will of course mean this £127m hire business won’t be for everyone. Indeed, the tycoon in charge has adopted a very haphazard dividend policy and does not believe in standard boardroom governance. He is also very old at 94.

Nonetheless, a closer look ASY’s accounts reveals exactly why he wants to own so much of this company. Super margins, immense cash flow and lofty returns on capital in particular mark ASY out as a top-quality operator — and drew me in during May 2013 at an average of 233p.

So far at least, the threat of being ‘done over’ by a boardroom fiefdom has not emerged.

Instead, I have enjoyed a satisfactory return, with the shares rising to 300p — plus a sizeable 29.7p dividend for 2013 representing a lovely 12.7% income on my purchase price.

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