The Aurora Investment Trust (ARR) announced its annual results for the year ended 31 December 2023. Performance for the year was very positive, with a NAV total return of 36.3%, well ahead of the benchmark UK index return of 7.9%. The share price return was 28.5%. The portfolio saw strong performance across the board with no notable detractors in the major holdings above a 3% weight. Top contributors were Barratt Developments which contributed 6.9% (+53% in the year), Frasers Group which contributed 6% (+29% in the year) and Hotel Chocolat which contributed 4% (after a bid by Mars at a 175% premium).
Discussing the performance, CEO Gary Channon commented;
“A portfolio of undervalued businesses that are compounding their retained capital at high rates is something that time works wonders for. If intrinsic value keeps growing without an accompanying rise in share prices, the invisible elastic that connects them becomes stretched. That’s where we were when we wrote at the end of 2022, and in 2023 that force finally resulted in the price of the company’s portfolio holdings performing ahead of the growth in intrinsic value. That said, the elastic remains very stretched, with 130% upside in our view, and there is a cheap market for us to keep adding future value through.
“There are some emerging signs to suggest the persistent and increasing relative undervaluation of the UK has reached its zenith. We will make the most of the cheapness while it lasts, but no matter what the market conditions there are always industries and companies having short-term problems that create opportunities for the prepared and patient investor. Our approach has delivered long-term outperformance in all types of markets because ultimately it’s about investing in a business-like way, backing businesses we can understand and monitor, with superior and enduring economics, available at attractive prices and run by those we trust to look after our capital and deploy it intelligently whilst reporting to us honestly.”
ARR : Strong rebound for The Aurora Investment Trust