Whitman AIM IHT Portfolio

Whitman Asset Management (‘Whitman’) was founded in 2018 by a group of experienced smaller company investors. Whitman is largely employee owned, and as the AIM IHT portfolio represents a significant proportion of the firm’s assets under management, the manager’s interests should be aligned with those of investors.

The portfolio is managed by a team of three, led by Sean O’Flanagan who has smaller companies investing experience including managing AIM IHT portfolios at Canaccord and Charles Stanley.

The Whitman AIM IHT Portfolio was launched in September 2018, and currently manages £74 million. It targets more mature AIM-quoted companies with the potential for sustainable earnings growth, in the manager’s view.

• Portfolio of 20-30 stocks
• Focus on larger AIM-quoted companies with sustainable earnings 
• Minimum investment of £20,000 – exclusive to Wealth Club
• Apply in an ISA: top up or make a new subscription online using the link below. To transfer existing ISAs, please download, print and complete the ISA Transfer Form and post it to us
• Apply outside an ISA: please contact us for details
  

The manager

Whitman is a boutique investment manager focused on UK smaller companies with £175 million in assets under management (June 2024). Whitman is privately owned, with its shares held by employees and a small number of experienced external investors.

Unusually, for a firm and portfolio of this size, Whitman benefits from a dedicated dealer, potentially allowing the manager to take advantage of opportunities unavailable to others and better manage risk within the portfolio.

The company was founded in 2018 by a group of experienced small-cap investment professionals, including Christopher Pease. Christopher retired in June 2023 but continues to act as a consultant to the portfolio and the service’s mandate remains unchanged. His successor, Sean O’Flanagan, has over 25 years of experience investing in UK-quoted smaller companies, including as lead portfolio manager for the Charles Stanley AIM IHT service for 10 years, growing assets from £27 million to over £500 million. 

Sean manages Whitman’s £74 million AIM IHT Portfolio alongside Fund Manager Joshua Northrop (formerly of Hargreave Hale), supported by Investment Manager George Henderson, both have been with the service since inception. The same team also manages the £24.8 million WS Whitman UK Small Cap Growth Fund (June 2024). 

Your shares will be held by Third Platform Services Limited (TPS) as nominee, or by a custodian appointed by TPS.

Investment strategy

The Whitman AIM Portfolio typically holds between 20 and 30 stocks.

It has a bias towards larger and more mature AIM companies (minimum market cap £100 million), which have a strong balance sheet and are leaders within their field. Typically, these companies will pay dividends and should be capable of delivering sustainable growth. Dividends are variable and not guaranteed.

Whitman meets company management before investing. At the core of the investment strategy is identifying an experienced management team with a track record of building significant shareholder value and a personal stake in the company. 

Current portfolio overview

The Whitman AIM IHT portfolio contains 27 stocks (June 2024). The average market capitalisation is £608.7 million and there are no stocks worth under £100 million. 

The charts below show the portfolio sector breakdown for the top 10 sectors, which together account for c.75% of the portfolio, and market cap value distribution.

Sector breakdown (%)

Market capitalisation breakdown (%)

Examples of portfolio companies

Keystone Law Group

Keystone Law Group (“Keystone”) is a challenger law firm which looks to offer lawyers more flexibility.

It recruits senior lawyers from mid-market firms who can bring an existing client book with them. Each lawyer is self-employed and can earn up to 60% of billable hours and 15% for client introductions, a higher rate than typically offered at a traditional firm. In return, Keystone provides a full suite of resources, including a central office of junior lawyers to assist with case work, a cross-referral facility, and a bespoke IT platform. 

In the 12 months to January 2024, the Group recorded revenues of £87.9 million, a 15.1% increase on the previous year. Furthermore, adjusted profit before tax increased 22.9% to £11.3 million, facilitated by sustained client demand across all practice areas and the addition of c.35 new partners. 

The business has a market cap of £214.2 million (June 2024). 

Victorian Plumbing

Victorian Plumbing is the UK’s largest retailer of bathrooms and bathroom accessories. Specialising in online sales, it acts as a one-stop shop for B2C and trade customers, offering more than 32,000 products from 130 brands. 

It joined AIM in June 2021 with a market capitalisation of £850 million, the largest new issue at the time. However, as a result of high inflationary costs, operating profits fell and its market cap declined to £118.2 million in 2022. 

Recent news has been more positive, with revenues holding steady and adjusted profit before tax up 40% to £11.5 million in the most recent half-year results (March 2024). A greater proportion of own-brand sales helped reduce shipping costs and support gross margins. 

Furthermore, in May 2024, the Group acquired rival online retailer Victoria Plum for £22.5 million, representing c.0.5x of estimated annual revenues. While the acquisition is initially expected to be loss-making, a cost-reduction programme is expected to return the business to break even in the second half of 2024.

Whitman invested in the last quarter of 2023. The business has a market cap of £302.3 million (June 2024).

Alliance Pharmaceuticals 

As is to be expected, not all investments are successful. Alliance Pharmaceuticals is an example. 

Alliance is an international healthcare group which owns the marketing rights to around 80 different brands. Whitman believed the predictability of product demand combined with a well-oiled operational model could mitigate investment risks.

However, in September 2022, the UK competition regulator started court proceedings to disqualify seven executives after a Times investigation exposed price rises on an anti-nausea drug used by chemotherapy patients. Unsurprisingly, the shares reacted badly. Given the potential fines and disqualification of Alliance’s management team, Whitman sold the position.

Performance

The Whitman AIM IHT portfolio service was launched in August 2018. The chart below shows the performance over five years compared against a peer group of other AIM ISA portfolios available via Wealth Club. Like other IHT portfolios, this is a discretionary managed service, so each portfolio is likely to be different.

Five-year cumulative performance to 30 June 2024

Access to your investment

Investments in this portfolio are for the long term. However, if your circumstances change, you can sell some or all of your shares, although sometimes this can take a while depending on market conditions and liquidity. Any amount you withdraw will no longer be IHT free. Withdrawals may result in a Capital Gains Tax liability unless held in an ISA.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. Those considering AIM Inheritance Tax Portfolios should be comfortable with the significant risks of investing on AIM.

AIM IHT portfolios should only form part of a balanced portfolio. Your capital is at risk and you should not invest money you cannot afford to lose. If a service is managed by a small investment team, it could create key person risk. The fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. 

AIM stocks can be hard to sell, particularly at the smaller end of the market, and can be illiquid. AIM shares can be very volatile especially if the market falls sharply. The difference between the buying and selling price (spread) of AIM shares is often wider than the spread for shares listed on the main market. 

Eligibility for BPR, based on current rules, is assessed at the date of death and will depend on the companies in the portfolio remaining qualifying. Broadly speaking, you will need to have held a BPR qualifying stock for at least two years and still hold it on death to qualify. Tax rules can change and benefits depend on circumstances.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

In recent months, there have been widely reported rumours that the government might change or abolish IHT. It is currently unknown if and when any decision might be announced.

Charges (ISA)

A summary of the main charges and savings for an investment within an ISA is shown below. If you wish to invest outside an ISA, please see the provider's documents. The investment may have additional charges and expenses: please see the provider documents for more details. If you would like a full breakdown or a personal illustration, please let us know.

Our view

Whitman is a comparatively young investment manager, but its investment team has decades of experience as smaller company specialists. A dedicated dealing resource is particularly notable in a small asset manager – and could add value in the relatively illiquid AIM market. 

The retirement of founder Christopher Pease marked a significant change for the investment team. Nonetheless, Whitman appointed seasoned AIM IHT investor Sean O’Flanagan as his successor. Sean has over 25 years of investment experience within UK equities, 16 of which were spent managing AIM IHT portfolios for Charles Stanley and Canaccord. Christopher’s decision to continue to serve the team in a consulting role may provide further reassurance to investors. 

The manager is largely employee owned, and with the AIM IHT portfolio accounting for a significant proportion of the firm’s assets under management, the manager’s interests should be aligned with those of investors.

The manager focuses on more mature growth companies, which may help manage volatility. However, all AIM investments should be considered higher risk and the portfolio has struggled this year as the wider AIM market has fallen dramatically and growth investments have fallen out of favour. 

The fee structure is competitive. The minimum of £20,000 could make it a contender for this year’s ISA subscription.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.