The American government has always been a big beast; she stretched her tentacles wide and spent fortunes in the process. Lately, however, the beast has gotten a lot bigger. In 2000, US government spending totaled $1.8 trillion (£1.4 trillion). By last year, that figure had risen to more than $6 trillion, with forecasters suggesting $8 trillion is in sight by the end of this decade.
Rising spending has been especially salient since Covid-19, when governments around the world became increasingly involved in our daily lives – and decided they wanted to get involved.
From technology to transportation and drugs to housing developments, political influence is growing.
And although America is known as the land of the free, the US government is certainly not immune to enthusiastic interventions.
This trend may be unwelcome to free market advocates, but it is highly beneficial to the US-based government relations firm Public Policy Holding Company (PPHC).
Point of interest: From technology to transport and from drugs to housing developments: political influence is growing
The group has grown significantly since listing on Aim in December 2021, and should continue to make progress as CEO Stewart Hall has decades of experience, a proven track record and a clear strategy for the future.
The 2023 results showed a 24 percent increase in revenue to $135 million, while profits rose 10 percent to $34 million, due to organic growth and recent acquisitions.
The figures are part of a trend of steady growth since Hall founded PPHC in 2014 and brokers expect more of the same, with sales and profits expected to rise this year and beyond.
The company also pays a generous dividend. In 2023 it was 14.3 cents (11.4 pence), while 14.6 cents was planned for the current year.
Yet PPHC shares have fallen from £1.35 when they listed to £1.18 today. The decline is undeserved and the stock should post strong gains, with analysts suggesting the price should double in the coming years.
PPHC has more than 1,200 customers, from multinationals such as Google’s parent company Alphabet and car manufacturer Ford to trade organizations involved in healthcare and energy. Several non-profit organizations are also on the list, including state schools and housing associations.
Customers can vary widely, but they all want to make sure their voice is heard where it counts, whether that’s in Washington DC, at the individual state level or among the general public.
A drug group wanted help promoting an anti-overdose product to address America’s opioid crisis, renewable energy companies wanted to stop the government from imposing taxes on solar energy, and Boston International Airport needed money to modernize outdated infrastructure.
In each case, PPHC’s job is to understand what companies need, whether they have a case and, if so, to make that case persuasively to policymakers or government officials.
The group’s work is highly regarded, its customers are loyal and 85 percent of its revenue comes from monthly or annual commissions.
This provides an element of predictability for the business, supplemented by individual projects, new customers on board and cross-selling within different parts of the group.
Acquisitions also play an important role. PPHC operates almost entirely in America, but Hall and his team are keen to expand overseas, particularly here and in mainland Europe. Talks are ongoing and at least one deal is expected in the coming months.
As the company grows and develops, Hall is acutely aware of the need to retain its best employees.
Government relations is a people business, so when top staff walks along, the customers often walk along with them. Half of PPHC’s 350 employees are shareholders of the company and in acquisitions, shares are always part of the deal.
The approach seems to be working and is creating a culture where staff feel motivated and determined to succeed.
Midas judgment: Government lobbying is often associated with shady practices, but the industry in America is highly regulated, growing rapidly and likely to continue in that vein no matter who ends up in the White House in November’s US elections. PPHC is well regarded, management is ambitious and the shares are undervalued. At £1.18 they are a buy.
Traded on: Goal ticker: PPHC Contact: pphcompany.com or 001 202 688 002
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