Washington lobbyists who could boost your Capitol
THE American government has always been a big beast – stretching its tentacles far and wide and spending fortunes in the process. Recently, however, the beast has grown a lot bigger. In 2000, US government spending totalled $1.8trillion (£1.4trillion). By last year, that figure had ballooned to more than $6trillion, with forecasters suggesting that $8trillion is in sight by the end of this decade.
Soaring expenditure has been particularly prevalent since Covid-19, when governments worldwide became increasingly involved in our daily lives – and decided that they liked meddling.
From technology to transport and drugs to housing developments, political influence is growing.
And, while America is known as the land of the free, its government is certainly not immune from enthusiastic interventions.
The trend may be unwelcome for free market advocates, but it is highly beneficial to US-based government relations firm Public Policy Holding Company (PPHC).
The group has grown considerably since listing on Aim in December 2021, and should continue to make progress, as chief executive Stewart Hall has decades of experience, a proven track record and a clear strategy for the future.
Results for 2023 showed a 24 per cent increase in revenues to $135million, with profits up 10 per cent to $34million, from organic growth and recent acquisitions.
The figures are part of a trend of steady growth since Hall founded PPHC in 2014 and brokers anticipate more of the same, with sales and profits forecast to increase this year and beyond.
The company pays a generous dividend, too. It was 14.3 cents (11.4p) in 2023, with 14.6 cents pencilled in for the current year.
Yet PPHC shares have fallen from £1.35 when they listed to £1.18 today. The decline is unmerited and the stock should make strong gains, with analysts suggesting the price should double over the next couple of years.
PPHC has more than 1,200 customers, from multinationals such as Google’s parent company Alphabet and carmaker Ford to trade bodies involved in healthcare and energy. Several non-profit organisations are on the roster, too, including state schools and housing groups.
Customers may vary widely but they all want to ensure that their voice is heard where it counts, be that in Washington DC, at individual state level or among the general public.
A drugs group wanted help promoting an anti-overdose product to address America’s opioid crisis, renewable energy firms wanted to stop government from imposing taxes on solar power, Boston’s international airport needed money to upgrade outdated infrastructure.
In each case, PPHC’s job is to understand what businesses need, whether they have a case and, if so, make that case persuasively with policymakers or government workers.
The group’s work is highly rated, customers are loyal and 85 per cent of revenues come from monthly or annual retainers.
That provides an element of predictability to the business, supplemented by individual projects, new clients coming on board and crossselling across different parts of the group.
Acquisitions play a key role, too. PPHC operates almost entirely in America but Hall and his team are keen to expand overseas, particularly here and in continental Europe. Talks are under way and at least one deal is expected in the coming months.
As the business grows and develops, Hall is keenly aware of the need to retain his best employees.
Government relations is a people-based business so, if top staff walk, customers often walk with them. Half of PPHC’s 350strong workforce are shareholders in the company and, when acquisitions are made, stock is always part of the deal.
The approach seems to work, creating a culture where staff feel motivated and determined to succeed.
Traded on: Aim Ticker: PPHC Contact: pphcompany.com or 001 202 688 002
MIDAS VERDICT: Government lobbying is often associated with shady practices but the industry is highly regulated in America, growing fast and likely to continue in that vein, whoever ends up in the White House come the US elections in November. PPHC is well-regarded, management are ambitious and the shares are under-rated. At £1.18, they are a buy.