Investingin Caledonia

We are long-term stewards of our shareholders’ capital including the Cayzer family who have entrusted us with theirs for generations. 

Looking after multi-generational capital shapes everything we do. We need to make returns but do so whilst limiting the risk of losing capital.

We target absolute returns of inflation plus 3% to 6% and this influences the level of risk we’re prepared to take.

Our approach to investing is straight forward.  We invest in high-quality businesses, and we hold them for the long term.  Our maxim, ‘Time well invested’, captures the essence of our approach perfectly.  

Our in-house investment team is fully aligned with shareholders.  We do not manage anyone else’s money, and there is no fund raising.  Performance is measured against NAV per share growth over time and rewarded in Caledonia shares.   So their incentives are directly tied to long-term value creation.

Our permanent balance sheet underpins our investment philosophy. We invest across three distinct pools — Private Capital, Public Companies and Funds — giving shareholders access to a carefully diversified portfolio that is designed to compound value steadily over time.

We are organised across three main strategies providing access to private and public companies across different sectors and geographies.

We are looking for the same 3 key ingredients, which are:

• Attractive markets to operate in 
• Resilient business with strong fundamentals and return characteristics
• Well managed and aligned with shareholders  

Our focus is on these well-established businesses that can deliver consistent returns over the long term.

We believe long-term ownership leads to better outcomes for both companies and shareholders. Our structure, through our permanent balance sheet, allows us to invest with patience, support management teams through business cycles, and avoid short-term pressure. This mindset is deeply rooted in our heritage, our culture of ‘Time well invested’ and which we believe is one of our competitive strengths.

Caledonia is a publicly listed investment trust, and like many trusts, our shares may trade at a discount to our NAV reflecting normal market dynamics. The daily share price is set by supply and demand in the market, whereas the NAV represents the value of our underlying portfolio.

A discount can arise for a variety of reasons, including broader market conditions, the long-term nature of some of our investments, and general sentiment toward investment trusts. A number of our holdings are in private companies or funds, which are valued semi-annually or quarterly. This can sometimes result in a difference between how the market prices our shares and the value of the portfolio.

The Board monitors the discount closely and takes steps, that we can control, including maintaining a disciplined approach to capital allocation, communicating clearly with shareholders, and using share buybacks when they are considered to be in the best interests of shareholders.

A discount does not reflect a change in our investment strategy or long-term outlook, and Caledonia remains focused on delivering sustainable long-term returns for shareholders.

We believe the share price discount fundamentally undervalues the quality of our portfolio, track record and prospects. We continue to focus on actions that we can control, including:

• Building on our track record of investing in quality companies and funds with track records of success, delivering long-term real returns
• Repurchasing shares when appropriate ensuring appropriate allocation to capital to investments and dividends
• Continuing to evolve our Investor Relations and Communications to ensure the Caledonia investment proposition is understood and rated

Our shares are listed on the London Stock Exchange and can be bought or sold through any UK stockbroker, investment platform or financial adviser. The ticker is CLDN.

Private Capital assets are valued semi-annually using International Private Equity and Venture Capital valuation guidelines and use earnings multiples and reference to comparable market transactions. These valuations are reviewed by the board and our auditors semi-annually and audited annually.

Fund investments are valued using the most recent NAV provided by the fund manager, typically received three to six months after the relevant valuation date. Where required, the valuation is adjusted to reflect cashflows between the valuation date and the reporting date. These funds are audited by reputable, independent audit firms. In addition, we assess the valuation methodologies adopted by our fund managers and consider market movements since the most recent NAV provided by the fund manager, to ensure the valuations are reasonable and appropriate.

Caledonia’s portfolio includes both listed and private companies, so its value can be affected by movements in markets, economic conditions and currency fluctuations. Private investments, in particular, carry valuation and liquidity risks because they are less frequently priced and can take longer to realise than listed investments.

As with all investment trusts, returns will vary over time and cannot be guaranteed, however, our diversified portfolio and disciplined approach to risk aims to manage these factors.

We publish detailed information in our annual report and interim accounts, along with monthly factsheets, regular news updates and Spotlight events on the three pools. You can find all of these on our website.

If your query or feedback is investor related, in the first instance please email investorrelations@caledonia.com or call +44 20 7802 8080 and ask to speak to one of the IR team.