ARR : Aurora hit by range of stock specific problems
Aurora Investment Trust underperformed during the six months that ended on 31 August – the net asset value return was -2.5% vs. a 0.7% fall in the FTSE All-Share Index. The discount narrowed a little however (from 13.4% to 12.2%) and so the return to shareholders was -1.1%. The report draws attention to a range of factors that affected performance – the general underperformance of smaller stocks vs. larger ones, slowing growth in China and several stock specific problems including
– Asian Citrus, where a hurricane destroyed their banana crop;
– Gresham Computing, where contracts are taking longer than anticipated to get started
– IGas energy, impacted by falling oil prices and a lack of news flow
– Naibu, a sports shoe manufacturer that struggled to find employees for its new factory
– West China Cement, which is facing severe competition
– and BSD Crown (formerly Emblaze) which has lost the first round of a patent dispute with Apple but is now appealing
On the positive side, two stocks exposed to the US economy have done well – BTG (the largest holding in the fund) and Ashtead.
The Chairman reminds investors in his statement that the manager has three years from the date of the last AGM to make the portfolio more liquid so that it will be ready for a merger / takeover by another trust and the chance of a cash exit for those that want it.