North Atlantic Smaller Companies Investment Trust (NASCIT) has reported its full-year results for the 12 months to 31 January 2025, delivering a 6.5% rise in adjusted NAV – broadly in line with the return of the MSCI UK Small Cap Index – and a 24.9% increase in revenue return per share, despite an ongoing challenging environment for UK small caps.
The trust posted a total return of £41.9m, compared to just £2.1m in 2024, and has declared a significantly increased dividend of 88.0p (2024: 68.5p). Net assets stood at £713.5m, with an adjusted NAV per share of 5,740p, up from 5,391p a year earlier. However, the shares continued to trade at a wide discount of 34.7% to adjusted NAV, only marginally narrower than last year’s 31.6%.
Chairman Sir Charles Wake acknowledged that the trust lagged the S&P 500 (sterling-adjusted), but commented that it had provided modest outperformance of appropriate UK indices where most of its quoted portfolio resides. He flagged structural challenges in the UK market, including redemptions from open-ended funds, political uncertainty and weakening investor confidence. The board has proposed a 10-for-1 share split to help improve liquidity, to be voted on at the upcoming AGM.
Share buybacks remain a focus, with 241,575 shares repurchased during the year at a substantial discount to NAV. The board will once again seek approval for a Rule 9 waiver to continue repurchases without triggering a mandatory offer from Chief Executive Christopher Mills and associated parties.
In his investment report, Mills highlighted strong contributions from UK holdings such as Hargreaves Services, Paypoint, Pinewood Technologies, and TP ICAP, with the trust’s largest holding, Polar Capital, also performing well. Among the few disappointments were Assetco and Frenkel Topping, though the latter reported record new fund inflows.
Unquoted holdings such as Source Bioscience and Crest Foods performed well, with Crest securing several long-term contracts post-acquisition. No new unquoted investments were made during the year, though the manager hinted that activity may resume as economic visibility improves.
The trust holds substantial cash reserves, which Mills now plans to deploy cautiously in response to sharp falls in UK equities and rising global uncertainty, particularly following the re-election of President Trump and renewed threats of tariffs.
[QD comment MR: NASCIT continues to chart a contrarian course, leaning into undervalued UK small caps. Its large cash reserves will allow it to increase its allocation to the UK as the manager sees fit as well as to fund repurchases to take advantage of the trust’s hefty discount to NAV. If the UK does see a resurgence, NASCIT shareholders could benefit two-fold – both from a rerating of NASCIT’s underlying holdings and a potential narrowing of its NAV which a surge in performance could trigger. There is no obvious catalyst on the horizon but the upcoming share split could help improve liquidity and broaden its appeal while shareholders wait.]
