Over the year to the end of October 2013 DNDL managed to deliver a 38.1% total return on net assets which, after some discount widening, translated into a 33.8% for shareholders. this compares to a 47.8% return on the FTSE Small cap. ex investment companies index. Underperformance is attributed by the Board and the manager to strong returns from riskier companies that DNDL would not normally hold. In fact the manager’s report says that 70% of DNDL’s underperformance came from not being invested in just three stocks and, interestingly, they also say “despite knowing what has subsequently happened to their share prices we still do not believe that it would have been appropriate for us to have had holdings in them over the course of the year”. While a number of successful investments are mentioned in the results statement, the manager only highlights one holding that disappointed, Chemring : CHG a defence stock that was adversely affected by cuts to US spending in that area that in turn exposed problems with CHG’s management of working capital.
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