ScotGems reports losses in year-end results – ScotGems plc has announced their results for the year ended 31 December 2018. The company’s objective is to invest in diverse, small cap companies for long term results. The company reportedly was 72.3% invested by 31 December 2018. Since its inception in June 2017, the share price has fallen by 7.5% and the NAV by 6.9%. This is comparatively worse than the MSCI world index benchmark’s 2.6% loss in price since June 2017. NAV per share declined 2.3% to 93.10p from 95.77p in December 2017. During the 2018 year, the discount on the stock has narrowed from 2.9% to 0.6%, and the board is not currently interested in buying back shares. ScotGems’ portfolio contains 22 companies, with most of them likely to receive more investment from ScotGems at more attractive valuations.
The chairman of ScotGems plc mentioned a few things following the release of results. “I recognise that we have recorded a modest loss in the period since launch, however may I remind shareholders that it is our intention to create a long-term portfolio of between 20 and 30 companies the market capitalisation of which is less than $2.5 billion at the time of investment. In that sense the short-term performance figures, in my view, are a poor guide to the long-term potential of these investments. The investment managers have set out below a detailed description of the existing portfolio as well as describing their philosophy in selecting the particular companies in which ScotGems invests.”
“It was a tough year for emerging market equities. Share prices of businesses operating in countries with shaky institutions and large external imbalances were hit the most. Our opportunity set in markets such as Turkey and Argentina is limited in any case. Lack of robust political and judicial institutions often mean that crony capitalism (crony capitalism is an economic system characterised by close, mutually advantageous relationships between business leaders and government officials) thrives in these countries at the expense of honest self-made private entrepreneurs. Unfortunately, share prices in countries like India and Taiwan, where we have traditionally found many well stewarded private companies, still remain expensive.”
SGEM : ScotGems reports losses in year-end results