Keystone Positive Change (KPC) has announced its annual results. Over the year to 30 September 2023, the company’s net asset value per share total return was 7.0% compared to a total return of 11.0% for the comparative Index (in sterling terms). The share price total return for the same period was 6.0% as the discount widened from 13.2% to 14.0%.
The manager notes that while the underperformance is disappointing, the company continues to focus on the long term and believes a period of five years is the appropriate time horizon to judge the performance. They note that although many companies in the portfolio demonstrated strong operating performance over the period, this was not always reflected in their share prices. Over the past twelve months, the median revenue growth of portfolio holdings was 14.3%, compared to 11.3% for the benchmark. More importantly, they believe companies in the portfolio are well-positioned to deliver attractive levels of growth in the future.
Regarding the outlook, the manager Kate Fox commented:
“In the past year, members of the Positive Change team have been on investment trips to the US, China, India and Europe. We have a rich research pipeline that spans: AI in healthcare; genomics; energy transition; circular economy; and sustainable agriculture. We believe those areas will present exciting investment opportunities over the coming years and decades.
“Over the past twelve months, many of the portfolio companies have demonstrated strong revenue and profit growth. However, share prices have yet to appreciate in tandem, as rising interest rates have put growth stocks out of favour with the market. Once global interest rates are on a more stable trajectory, long-term investment returns should be driven primarily by profit and cash flow growth. The transition towards a more sustainable and inclusive future will present large growth opportunities for purpose-driven companies. By investing in a subset of them with outstanding management teams and the potential to build durable competitive advantages, we continue to believe that the Company can generate attractive long-term investment returns for its shareholders and contribute towards a better future.”
KPC : Long term potential for Keystone Positive Change