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Miton Global Opportunities flat after rollercoaster year

Miton Global Opportunities has released results for the year ended 30 April 2016. The net asset value per share rose to 182.4p, a total return of 0.4% – there is no dividend. The manager says the company’s shares ended the financial year standing at an all-time high, moving from 162.75p to 164.25p during the year. This modest progress disguised what turned out to be a rollercoaster year for markets.

Winners came from a wide variety of investments. Taliesin is exploiting the disparity in valuations between the value of rental and privately owned apartments in the German capital. Locals tend to be tenants rather than owner occupiers hence there is a prevalence of landlord unfriendly polices. Taliesin is converting its apartments into private sector assets and disposing of them at a significant premium to carrying value which reflects the much lower value as rental properties. Chelverton Growth Trust’s shares appreciated by a heady 60% following the takeover of its largest holding which was financial platform, Parmenion. Chelverton invests in very small companies with a market value not exceeding GBP50 million. Its success has come from identifying early stage businesses which, in their view, have potential to grow significantly. Property specialist Alpha Real still trades at a 32% discount which fails to reflect the true value of its portfolio. Nevertheless this discount narrowed from extreme levels during the reporting period helped by the shares being enthusiastically recommended by the Investors Chronicle. In the past they have not been fans of the listed funds of the hedge fund sector however they were convinced that the managers of Boussard & Gavaudan would take whatever actions were necessary to narrow the discount that their trust languished on. They have had some success on that front however solid investment performance generated the bulk of a useful 20% return during the year. Rights and Issues Investment Trust has also traded on a deep discount for many years despite being one of the better UK smaller company trusts. Unfortunately its impenetrable capital structure deterred the majority of potential investors. The board’s decision to reconstruct the trust, which will in future have only one class of share and a discount control mechanism, triggered a rerating. Finally Phaunos Timber’s new management performed sterling work in disposing of poor quality plantations and refocusing on assets which can generate both capital growth and cash flow.

The key detractors from performance came from our exposure to Asia and Resources. The most notable declines came from Geiger Counter and Macau Property Opportunities. They have recently added to both positions. Geiger Counter owns a portfolio of uranium producers. The metal initially declined in value as the result of the nuclear accident in Fukushima in 2011. More recently sentiment has suffered as the mining industry moved into a bear phase as concerns grew regarding the sustainability of demand for basic resources from China. Nevertheless uranium’s open market price bottomed at around its current spot price as far back as 2014. Little new supply is planned as this would be uneconomic at current prices. The amount now extracted is now substantially below what is needed annually by the nuclear power industry. This shortfall will increase as more mines are exhausted and new reactors come online. The crackdown on corruption on the Chinese mainland has led to a decline in the number of visitors to Macau as public officials do not want to be seen there in such a climate. Therefore sentiment towards Macau Property Opportunities, a trust that owns residential property, is unsurprisingly poor. The casino industry in the former Portuguese colony is moving towards the Las Vegas model where a greater proportion of profits come from conventions and entertainment rather than gambling. To this end six new casinos are either close to completion or have just opened. In aggregate these will require 35,000 additional staff placing the local housing market under pressure. The other notable loser was Juridica, a trust that invests in civil legal cases. The company suffered a reverse in court which led to investors questioning its valuation policy, as a result the board placed the company into orderly realisation. They suspect that value remains in Juridica shares but the situation was too opaque to justify adding to their holding.

MIGO : Miton Global Opportunties flat after rollercoaster year

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