MIDAS SHARE TIPS UPDATE: Gresham House and Foresight look for ways to make a profit in sustainable forests
When Tony Dalwood took over as CEO of Gresham house in 2014 it was a sleepy, loss-making company with no clear direction or future. But Dalwood had a plan: transform the company into a specialist in sustainable investments, from renewable energy to battery storage and forest land.
Dalwood has achieved his ambition and then some. Midas recommended Gresham House in July 2020 when the shares were £6.28 and the company had built up a sizeable portfolio of assets including wind farms, waste recycling facilities and millions of trees.
The company has grown significantly since then and last week unveiled a £470 million, £11.05 per share takeover offer from US private equity firm Searchlight Capital.
Increase profits: sustainable forests emphasize the appeal of environmentally friendly companies to savvy investors
The deal has been recommended by Dalwood and his board of directors, while major investors have also given their approval, earning Searchlight shareholder acceptances with 33 percent of the shares.
Midas verdict: Gresham House is thriving and has a vibrant future, but shares were hit by continued market slump and traded as low as £6.82 when Searchlight dived. Dalwood negotiated hard to ensure a decent price and those who bought three years ago should leave 75 percent richer as a result. While it’s sad to lose another strong publicly traded company, investors have to accept the deal.
Traded on: GOAL Ticker: GHE Contact: greshamhouse.com or 020 3837 6270
Millions of trees are planted
Not only does Gresham House show that foreign companies see value in UK assets, it also highlights the appeal of eco-friendly companies to savvy investors.
Far-sighted sustainable forestry could hardly be greener if it tried. The company went public in November 2021 and raised £130 million to buy forests and land where it could plant new trees.
Today, the group owns nearly 30,000 hectares, half of which is already covered by established forests.
The rest are in various stages of development, but should be converted into full-fledged forests in the coming years. The company has already planted 1.5 million trees and expects to grow another 7.5 million by 2025.
Forests have several advantages. Trees absorb carbon dioxide, which reduces greenhouse gas emissions. Forests encourage wildlife, from birds and bees to plants and flowers. And forests are pleasant to walk through, both for locals and visitors.
Commercial foresters in the 1970s and 1980s were widely criticized for planting miles of pine trees without paying attention to what it looked like or the natural habitat around it.
Managers Richard Kelly and Robert Guest are determined to do things differently. Their forests contain a range of species, they are carefully designed and local communities are consulted before planting.
But Foresight Sustainable Forestry is not just about saving the planet. The group has a strong commercial core, aimed at increasing the value of its assets and thus the long-term growth of the share price. To date, asset valuations are up more than 10 per cent since 2021 to £186.6 million or £1.09 per share. However, the share price lags by £1 – the same as at IPO.
Midas verdict: Midas recommended Foresight Sustainable Forestry when it was listed and the stock did well until it was hit by stock market discontent, as did Gresham House. But the stock should bounce back. Forestry assets are in high demand, their eco-credentials are hard to surpass and the long-term prospects are good. Existing shareholders must stay with the stock. New investors may also find the current levels attractive.
Traded on: Main market Ticker: FSF Contact: fsfc.foresightgroup.eu or 020 3667 8100