Saba Capital has doubled its stake in Molten Ventures (GROW) to 10%. Shares in the £811m digital start-up fund, whose largest holding is in $75bn UK neobank Revolut, stand on a wide 37% discount giving the activist investor plenty to go for. Despite the valuation gap, GROW shares have shot up 67% in the past year, recently helped by taking £17.5m in gains from ICEYE, the €2.4bn (£2.1bn) Finnish satellite operator that is the largest holding in Seraphim Space (SSIT). Over five years they are down 47%, reflecting the impact of the 2022 growth crash.
Separately, Saba has also lifted its position in Schroder UK Mid Cap (SCP) to 19% from 18.3%, which will concern the board of the £242m investment trust given the events at Impax Environmental Markets (IEM) and Edinburgh Worldwide (EWI) where Saba owns stakes of 21% and 31%. Both are falling on their swords and offering 100% tender offers to enable shareholders to escape before Saba succeeds in taking control and is likely to seek to have itself appointed as fund manager with a different remit to the one shareholders chose. SCP, whose portfolio of mostly FTSE 250 stocks is run by Jean Roche at Schroders, stands on a narrow 3.8% discount to net asset value, which reflects the presence of Saba on the register and a rebound in an over-sold UK stock market that has sent its shares 23% higher in the past 12 months. Last March the board negotiated a cut in the management fee to Schroders and said it would hold a continuation vote in 2028.
Target Healthcare (THRL), the £626m care home operator, reports its best half-year return since launch in 2013 with a “healthy” 6.8% total accounting return for the six months to 31 December. Net tangible assets (NTA) per share rose 4% to 119.4p putting the shares at 102.2p on a 14.5% discount. Dividends increased by 2.5% to 3.016p per share, 113% covered by adjusted earnings. Almost half of the £86m proceeds from a sale of nine properties in September has been reinvested “at attractive net initial yields that will drive future earnings momentum”, said chair Alison Fyfe.
Richard Williams, senior analyst at QuotedData, said: “Amid all the macro and geopolitical uncertainty that has scuppered a long-awaited recovery in the real estate sector, THRL quietly goes about its business consistently delivering strong returns based on inflation-linked annual rental uplifts and favourable demographics in the care home sector. The company ticks every box that investors should be looking for in a REIT – including occupational tailwinds and contracted annual rental growth. Its discount to NAV looks far too wide to us.”
AEW UK REIT (AEWU), the top-performing UK generalist real estate investment trust over five years, says it is affected by National Car Parks falling into administration. NCP is the lead tenant of one of its properties, Tanner Row in York, which represented 4.5% of portfolio value at 31 December. NCP paid £733,000 in rent last year, 3.7% of the total received by AEWU and 78% of the rent from the property. The company is obtaining information from the administrator on NCP which continues to trade for the time being. AEWU says the site is expected to attract other operators as well as be suitable for alternative uses if NCP has to leave the property. Its shares added 0.3p to 105.7p and stand at a 2% discount to net asset value.
Tufton Assets (SHIP), an operator of tankers and bulkers, has no vessels in the Persian Gulf or the Gulf of Oman and its investment manager has requested its charterers to avoid the conflict zones in the US and Israel’s war against Iran. “While geopolitics continue to be very influential in the shipping markets, we remain cautiously optimistic about the outlook of our markets both in the near and mid-term. The reconfiguration of traditional trade routes due to conflicts, sanctions and tariff changes added significantly to tonne-mile shipping demand,” said the company in half-year results. These showed SHIP made an underlying dollar return of 9.5% in the six months to 31 December with net asset value (NAV) per share rising to $1.390, mostly driven by operating performance and rising charter-free values in a “strengthening shipping market”. Earnings cover for its 10 cents per share dividends is expected to be 1.6 times for the next 18 months. The company is gradually realising its assets but last month bought two Japanese handysize bulkers for $33m believing the projected returns justified the acquisition.
Aberdeen Equity Income (AEI) will issue 28.1m shares to buy £115m of net assets from Aberdeen stablemate Shires Income (SHRS) which has delisted as part of their merger announced in January. The 96% of Shires shareholders who chose to rollover into AEI will receive 0.739225 new AEI shares for each SHRS.
Ruffer (RICA) half-year results show the £922m defensive multi-asset fund made a 4.9% underlying returns in the six months to 31 December, ahead of its 4% hurdle of returning twice the Bank of England base rate. The main drivers of this were gold and precious metals and global equities, although credit and derivatives holdings and exposure to Japanese yen detracted from returns. Shareholders made 4.7% as the share price discount widened slightly from 3.4% to 3.6%. Dividends were held at 2.85p per share.
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