Menhaden’s results for the year ended 31 December 2020 have been published. In NAV terms, the company made reasonable progress, with a total return of 13.2%. However, a widening discount left shareholders with a return of 3.0%. There is no dividend. The board has opted to drop the comparison with the MSCI World Total Return Index from the investment objective, opting instead to aim to beat inflation (RPI) +3%.
With the discount around 25%, the board has reiterated its opinion that share buybacks are not always in the interests of shareholders, as this would reduce the size of the company and increase the ongoing charges ratio. Instead, the focus is on marketing and distribution. However, the board says that it keeps the possibility of share buybacks under continuous review.
Quoted equities represented 78.8% of total NAV at 31 December 2020, and delivered a total return of 17.9% during the period. Positions in Charter Communications and Alphabet contributed the bulk of the uplift in NAV.
[We have criticised Menhaden in the past for its portfolio’s tenuous adherence to environmental themes. We are not swayed by the current portfolio.]
The environmental rationale for the position in Charter Communications is that “The Internet of Things (IoT) has the potential to drive significant energy efficiency savings across residential and commercial buildings“. Alphabet qualifies because it “remains one of the largest corporate buyers of renewable power worldwide, with agreements covering 5.5GW of wind and solar capacity, and we are pleased to see that it now aims to run on carbon-free energy everywhere, at all times, by 2030.”
MHN : Menhaden let down by wide discount