Keystone Investment Trust (KIT) has announced that it proposes to buy back up to 1,200,000 of its own shares in the market. This is equivalent to 8.9% of the issued share capital as at the time of the announcement. KIT’s board says that it will do this when it deems this to be in the best interests of the Company. According to Morningstar, KIT is trading on a discount of 13.1%. Any shares repurchased will be held in treasury and can only be re-issued at a premium to NAV.
Buyback background – undervalued assets, undervalued company
The announcement says that KIT’s investment manager, James Goldstone, views the portfolio as consisting largely of companies whose shares remain undervalued by the market, but which can generate attractive returns from their current levels of operating performance, with potential upside should these companies achieve earnings growth and/or a market re-rating of their shares. The Board shares this view and, furthermore, notes that as the Company’s own shares trade at a significant discount to their NAV, share buy-backs offer the opportunity to purchase, at a discount, exposure to a portfolio of quality investments that are themselves undervalued.
About Keystone Investment Trust
Keystone Investment Trust’s objective is to provide shareholders with long-term growth of capital, mainly from UK investments. The portfolio is invested by the Manager so as to maximise exposure to the most attractive sectors and stocks within the UK stock market and, within the limits set out below, internationally. The Manager does not set out to manage the risk characteristics of the portfolio relative to the benchmark index and the investment process will result in potentially very significant over or underweight positions in individual sectors versus the benchmark. The Manager controls stock-specific and sector risk by ensuring that the portfolio is always appropriately diversified. In depth, continual analysis of the fundamentals of investee companies allows the portfolio manager to assess the financial risks associated with any particular stock. The portfolio is typically made up of 50 to 80 stocks. If a stock is not considered to be a good investment, then the Company will not own it, irrespective of its weight in the index.