Majedie results make grim reading – Over the year ended 30 September 2019, Majedie Investments’s NAV total return was -9.9%. Shareholders fared a bit better than this, with a -3.5% return but both numbers look fairly bad against returns for the All Share and MSCI World of +2.7% and +7.3% respectively. The dividend was upped by 3.6% to 11.4p.
The chairman says that the capital loss reflects a write down in the carrying value of Majedie Asset Management to £40.8m and underperformance of the MAM UK Equity Segregated Portfolio, the MAM UK Income Fund and the MAM Tortoise Fund. The MAM Global Funds and MAM US Equity Fund out-performed their respective benchmarks.
The asset management company valuation hit is a product of lower management fees, poor performance, outflows of funds under management and lower market multiples for similar businesses. Remarkably, despite the poor performance, the business has just had a fillip in the form of the award of the management contract for Edinburgh Investment Trust. Many of its shareholders seem puzzled by the move, however, which might mean that it isn’t permanent.
A bias to UK domestic stocks is blamed for the underperformance of the UK equity portfolios and the equity exposure of the trust overall.
We couldn’t let this pass “In response to the company’s shares trading at a wide discount throughout much of the year, we bought back 383,517 shares at a total cost of GBP0.9m at an average discount of 18.8% to net asset value. The board will continue to monitor the discount and take appropriate action, although we are aware that discounts have widened across the sector.” In the global sector, Majedie is trading on a 17.5% discount, the next widest (AVI Global) is on an 8.6% discount and the average (ex MAJE) is -0.9%.
MAJE : Majedie results make grim reading