Gresham House
Specialist asset management
We take a private equity approach to investing in public markets
We take a private equity approach to investing in public markets
Public Equity investing
We take an active approach to engaging with our investee stakeholders – including management, shareholders, customers and suppliers. This enables us to capitalise on market inefficiencies and support a clear value creation plan aimed at meeting our investors’ needs.
We make investment decisions with a long-term time horizon. This means we think like business owners. As active managers, our decisions are informed by what we believe is right for our clients’ portfolios, as opposed to managing relative to a benchmark.
Key documents
Our Public Equity funds
What is Public Equity?
Public equity, also known simply as equity or stocks and shares, are terms that are often used interchangeably to describe ownership of a stake in a public company; that is to say one that is listed on a public market or exchange.
While similar, there some technical differences between these terms:
- Equity – is used to describe the total ownership stake in a company. For example, if a company had 1,000,000 shares and you owned 10,000 of those shares you would then have a 1% holding or equity stake in that company.
- Shares – is the term used to describe the unit of ownership in a company.
- Stocks – is a more generic term used to describe ownership in more than one company. For example, if you had shares in AstraZeneca or HSBC you could say that you held stock in these companies.
A public limited company or ‘plc’, as they are known in the UK, is a company whose shares are listed on a public market or exchange such as the London Stock Exchange or the LSE.
What are equity investments?
Equity investments allow investors to acquire an ownership interest in a company. By holding equity in a company, the investor becomes a shareholder and gains a stake in the company’s assets, profits, and – depending on the size of the interest – in the decision-making processes.
Equity investments offer investors the potential for long-term capital appreciation, making them an attractive option for investors seeking growth and/or income opportunities. As companies grow and generate higher profits, their share prices may rise, leading to capital gains for investors. The longer the investment horizon, the greater the potential for capital appreciation.
Alongside capital growth, equity investors may also receive dividends, which represent a share of the company’s profits distributed to shareholders. Dividends are typically paid out periodically, providing investors with a steady stream of income.
Companies with a track record of consistent profitability and strong cash flows are more likely to pay dividends. Dividend payments can be reinvested or used as a source of income.
Characteristics of public equity:
Public equity, or publicly traded company shares, have several characteristics including:
Size – refers to the market value of a company and is measured by market capitalisation or ‘market cap’ which is calculated by multiplying the number of shares in issue for a company by its share price. Companies are typically grouped by market cap.
Style – there are three styles of equity; value, growth and blend (sometimes known as neutral). A value stock is one where the company’s share price is being traded, or bought and sold, at below its intrinsic value. Value stocks tend to be larger, more well-established companies and they become undervalued for a range of reasons. If the company’s financials are robust then some investors will see a low share price as a good buying opportunity.
Value stocks are usually considered lower risk and have lower levels of volatility because they are larger and more well-established. They often pay dividends too.
Growth stocks by contrast are where investors see the potential for a company to grow its earnings significantly and therefore outperform against the wider market or the sector in which it operates.
Growth stocks are sometimes viewed as higher risk and can experience higher levels of volatility. Growth stocks usually do not pay out dividends, instead looking to reinvest earnings to drive further growth.
Volatility – volatility is a measure of how much a market price or company price moves, either up or down, over a particular period. Volatility can differ depending on company, sector or market circumstances.
Liquidity – buying and selling of public shares can take place at any time, allowing investors with equity investments to liquidate their investments into cash with little notice depending on the size of transaction.
What is an example of public equity?
Public equities range from very large, well-known companies to much smaller companies operating in niche sectors or areas. Well known public equity companies in the UK include HSBC, AstraZeneca, JD Sports, Next and EasyJet.
