NextEnergy Solar sees over 12% of shares vote for a wind-up and reports another valuation fall; Bill Ackman’s Pershing Square hedge fund reports strong half-year results, as does Sandy Nairn’s Global Opportunities Trust; while Pacific Assets fund manager David Gait resigns; plus updates from Biotech Growth, Primary Health Properties and TwentyFour Income Fund.
NextEnergy Solar Fund (NESF) says it will continue to engage with shareholders and address their concerns after yesterday’s annual general meeting saw 12.2% of votes cast in favour of winding up the £426m investment company trading on a 21% discount. Interim chair Paul Le Page said that represented around 7% of shareholders. In a first quarter trading update this morning the company says falling power price forecasts knocked another 3.6% off net asset value with NAV per share dropping to 91.7p at 30 June from 95.1p at 31 March. Read our full story here.
James Carthew, head of investment company research at QuotedData, said: “NextEnergy Solar is just the latest in a long line of renewables trusts to announce a fall in NAV that is largely due to projections of falling power prices. To be honest, this is confusing me as what we see in the real world is a relatively sudden and significant upsurge in the demand for power driven by AI. Talk to tech investors, data centre investors such as Pantheon Infrastructure (PINT), and investors in listed power companies such as Ecofin Global Utilities and Infrastructure (EGL) and the trend is going the other way. I wonder if the forecasters are somehow missing this.”
Pacific Assets’ (PAC) long-standing fund manager David Gait has resigned from Stewart Investors, which has appointed Jack Nelson as co-manager to support Douglas Ledingham who will be lead manager on the £420m sustainable investing Asia Pacific investment trust trading on a 10% discount. Nelson joined Stewart Investors in 2011 and has worked on All Cap and Leaders global emerging markets funds. Gait had managed Pacific Assets since 2010, having joined Stewart Investors in 1997. The board said no change in investment approach was expected following the change in manager.
Pershing Square Holdings (PSH) fund manager Bill Ackman reports a successful first half with an underlying investment return of 15.5% that beat the 6.2% from the S&P 500, having underperformed the AI-driven rally in the US index in the year to 31 March. The £7.6bn hedge fund has continued to outperform since 30 June with a total increase in this year’s net asset value (NAV) of 17.7% compared to the US benchmark’s 9.9%. In an unusually busy period of trading, Ackman took advantage of the market turbulence over President Trump’s tariff policies to make a new investment in Amazon, add to holdings in asset manager Brookfield and car rental firm Hertz, trim its large holding in music group UMG, take some profits in Hilton hotels and Chipotle Mexican Grill and exit Canadian Pacific Railway. His company Pershing Square Capital Management, the manager of PSH, also bought a 15% stake in real estate developer Howard Hughes Holding with Ackman returning to its board as executive chair with the ambition of turning it into a “modern-day Berkshire Hathaway”, a reference to Warren Buffett’s investment conglomerate which first began as an underperforming textile company. His letter to shareholders details his strategy for HHH. Turning to his outlook for the rest of the year, Ackman, a Trump supporter, is optimistic, anticipating a resolution of the wars in Ukraine and the Middle East, US interest rate cuts as “inflation appears to have moderated” with the government’s economic initiatives likely “to have a significant effect toward the end of the year”. “All of the above are occurring at a time when AI is starting to generate productivity gains while driving massive new investment. But a few words of caution. Markets are ebullient. Signs of speculative activity are everywhere,” he said, stressing the need for careful stock selection. PSH is the best-performing London-listed North America investment company over five years with a total shareholder return of 113.4% despite its shares trading 31% below NAV.
Global Opportunities Trust (GOT), the £95m defensive, value portfolio run by fund manager and executive chair Dr Sandy Nairn, achieved a 4% underlying investment return in the first half that beat the “fairly anaemic” 1% gain in the FTSE All-World index, though shareholders saw a 12.2% total return as the shares narrowed their wide discount from 23.5% to 18.2%. US markets trading at historic highs and President Trump attacking the Federal Reserve over interest rates policy “does not make for an appetising cocktail”, says Nairn who has just 13.3% allocated to North America compared to the 72% share that the US now accounts for in the World benchmark. This does not mean no investment opportunities will emerge, particularly given the current narrowness of markets and the focus on technology. In the first six months, for example, the company did invest in a number of small/mid cap European companies with attractive long-term valuations whilst still retaining its overall defensive posture. These include out of favour industrials such as Kalmar [a Finnish industrial company] and Danieli [an Italian industrials company]. At the same time, a number of UK holdings including Tesco and Imperial Tobacco performed well and were sold as a consequence.” Nairn and co-manager Alan Bartlett talked to QuotedData on our “In The Hot Seat” show in June.
Biotech Growth (BIOG) has received High Court confirmation of its capital reorganisation which has seen its share premium account and capital redemption reserved cancelled with the sums transferred to a distributable reserve which the underperforming fund on a 10% share price discount can use to buy back shares or return capital to shareholders.
Primary Health Properties (PHP) has received acceptances from 81.37% of Assura (AGR) shareholders to its cash and shares offer.
TwentyFour Income Fund (TFIF) publishes a circular for its three-yearly realisation opportunity but says shareholders in the 10%-yielding loan fund can currently get a better price selling their shares on the market at a 1.3% premium to net asset value compared to the 2% discount to NAV that the redemption window will offer.
