A Small Cap Rocket

Randall and Quilter VectorVest UK chart

Bermuda-based Randall & Quilter Investment Holdings (RQIH.L) is a specialist non-life insurance acquirer, service provider and underwriting manager. RQIH generates profits and capital extractions from expert management of legacy non-life insurance acquisitions/reinsurances, including in Lloyds, and generates commission income from its licensed (and rated) carriers in the US and EU/UK, writing niche and profitable programme business, largely on behalf of highly rated reinsurers. RQIH was founded by Ken Randall and Alan Quilter in 1991.

On January 8th 2018, RQIH announced a board restructure and said it continued to make “excellent progress, with Group simplification proceeding well, and a strong new business pipeline.” On January 15th 2018, RQIH announced the sale of its insurance services and captive management operations to digital solutions provider Davis Group. The proceed of around £18.6m will be used to help finance the group’s growing legacy transaction pipeline, especially in the US and Lloyd’s, and to generate commission income from the use of Accredited and Malta’s direct licenses. Chairman Ken Randall said: “The sale of our insurance services and captive management operations is a significant milestone in the group’s decision to simplify its operations and focus on our core areas of legacy acquisitions and the writing of quality programme business, which is mostly reinsured to highly rated reinsurers.” Separately broker Numis reiterated a buy rating and 195p target for RQIH in Feb 2018.

The sequence of moves to simplify and streamline group operations was flagged at the start of January by several key VectorVest metrics. These include RV (Relative Value) – an indicator of long-term price appreciation potential and where RQIH scores 1.57, which again is excellent on a scale of 0.00 to 2.00. RQIH also scores an excellent GRT (Earnings Growth Rate) of 34%, and while the RS (Relative Safety) metric only registers a fair rating of 0.98 (scale of 0.00 to 2.00), trading at 151p the stock is still considerably undervalued against a current VectorVest valuation of 228p per share.

 

The chart of RQIH.L is shown below using weekly candles over the past two years using my normal notation. The valuation is shown by the green line study above the price while earnings per share is shown by the blue line study in the window below the price. The share has charted an ascending triangle since November 2016 and looks highly probable to break upwards from this bullish formation soon.

Summary: Hot on the heels of niche finance group STM last week, VectorVest presents yet another sector play. First established in 1991, RQIH is undergoing a transformation through operational streamlining and refocusing into core areas. With a solid long-term track record, broker support and a bullish charting configuration currently playing out, VectorVest believes the stock will continue to push higher and achieve the current 228p price target by Q3 2018.

David Paul

March 20th 2018

 

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