MIDAS SHARE TIPS: Invest in sustainable forestry and futuristic indoor farms and see your profits grow with environmentally friendly Gresham House

By JOANNE HART, FINANCIAL MAIL ON SUNDAY

Updated:

Around 13 per cent of the United Kingdom – almost 8 million acres – is covered in woodland. A third of that belongs to the public sector but the rest is in private hands, frequently used to build products ranging from fences to furniture to entire homes. 

The timber industry is big business, valued at more than £8.5billion and employing thousands of people in forest management and processing plants. 

For many people, cutting down trees is associated with environmental devastation, particularly in the Amazon rainforest. 

Growth industry: Gresham House invests in vertical farms, where salad greens can be grown under artificial light

Growth industry: Gresham House invests in vertical farms, where salad greens can be grown under artificial light

But sustainable forestry, with owners planting new trees as they cut down old ones, is a different business altogether. Trees capture carbon so they reduce greenhouse gases simply by existing. And there is a concerted effort across the UK to add to our stock of sustainable woodland. 

Gresham House is part of this drive. An AIM-listed investment company, the firm owns 320,000 acres of forest land across Scotland, Wales, Ireland and the North of England. Last year, the group planted more than four million trees and captured 1.5million tons of carbon along the way. 

Gresham House is not just about planting trees. Run by highly successful investment veteran Tony Dalwood, the group aims to generate substantial returns for shareholders while making Britain greener. 

Dalwood took over Gresham House in 2015, when it was a tiny business, with just a couple of properties to its name. 

Founded in 1857, the company had an illustrious past but, by the time Dalwood came on the scene, its market value was just £12million. 

Today, Gresham House is valued on the stock market at almost £200million and it has been transformed into a fund management business with a focus on sustainable investments. At £6.28, the shares should deliver robust, long-term value. 

Dalwood's ambition is to double the size of the business by 2025 and he has a well-defined strategy to achieve that goal. He is also backed by a team with more than 80 years' combined experience. 

Gresham operates a wide range of funds. Some of these invest in conventional listed businesses and some invest in private equity or venture capital firms, each time with a focus on companies that are socially responsible and environmentally aware. 

However, Gresham's green focus comes into its own with so-called real asset funds, which invest in areas such as forestry, sustainable housing and renewable energy. 

The company is the largest forest asset manager in Britain and its wind farms and solar parks generate almost 415,000MWh annually, enough energy to power more than 110,000 homes. Gresham is a leading player in the battery storage sector, too, which allows renewable energy to be stored and released when it is needed, rather than when it is produced. 

The group also invests in waste recycling and vertical farms, where salad greens are grown indoors or even underground, using artificial light and very little water. 

Gresham's farms are in Derbyshire, allowing UK consumers to eat more locally grown fresh produce all year round. Gresham's environmental bias has served it well. Last week, a trading update for the first half of the year showed it is managing almost £3.3billion of assets, a near 17 per cent increase since last December. 

The increase is particularly noteworthy given that many investors have pulled in their horns over recent months. 

Gresham House has not been immune to the coronavirus pandemic. Many of its funds have lost money this year. But Dalwood has not furloughed any staff, employees have successfully transitioned to working from home and the company has won plenty of new business. 

The outlook is encouraging, too. Dalwood is keen to expand the business organically and by acquisition, and discussions are ongoing here and abroad. 

Even though growth is the main focus, Gresham understands the importance of dividends. Dalwood paid out 4.5p a share last year and a decent increase is expected for 2020 and beyond.

Midas verdict: Gresham House has made impressive progress since Dalwood took the helm but the best is yet to come. Interest in the environment has surged in recent months and that trend is likely to persist well after lockdowns ease. For long-term investors, Gresham shares offer an opportunity to make money and do good at the same time. At £6.28, the stock is a buy. 

Traded on: AIM Ticker: GHE Contact: greshamhouse.com or 020 3837 6270 

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