Artemis fund managers Mark Niznik and William Tamworth have apologised after a poor start on Artemis UK Future Leaders (AFL), the former Invesco Perpetual UK Smaller Companies they took on from Invesco on 7 March last year. Annual results show net asset value rose 5.3% from their appointment to 31 January compared to 21.5% from the Deutsche Numis Smaller Companies plus AIM benchmark (excluding investment trusts). They said this was caused by an overweight to consumer stocks and underweight to miners and resources companies. The £102m investment trust currently stands on a 14% discount to net asset value with the shares up 3.6% over one year and down 25% over five years.
Fidelity Special Values (FSV) outperformed in the half year to 28 February with a 17.1% underlying investment return underpinning a 23.1% total return to shareholders that beat the FTSE All-Share’s 18.9%, despite the mid-sized and smaller companies in which the £1.3bn trust largely invests lagging the FTSE 100 blue chips. The interims show fund managers Alex Wright and Jonathan Winton profited from the rally in banks and defence stocks and frequent bids and avoided poor performers such as Diageo and London Stock Exchange Group.
Matthew Read, senior analyst at QuotedData, said: “These are a decent set of results for Fidelity Special Values, even if the headline NAV return modestly trailed the benchmark’s. The latter benefited from strong performance on large-caps, particularly commodity-heavy sectors such as mining and oil, where FSV has less exposure given its bias towards mid and smaller companies. The fact that it largely kept pace, despite mid caps lagging large caps significantly, shows the benefits of the manager’s contrarian approach where performance can come from a number of sources. In this instance, financials, defensives and selected resources holdings contributed strongly, avoiding weaker large-cap ‘quality’ names also helped.”
Oakley Capital Investments (OCI), the £800m investment company investing in Oakley Capital private equity funds, added 2.7% to net asset value (NAV) in the first quarter of the year with NAV per share rising 20p to 758p. However, the share price fell 18% on concerns over the impact of artificial intelligence on the software businesses in which it invests, which it refuted last month, and the broader stock market reaction to the war in the Middle East. The shares at 490p have seen their discount widen to 36%, prompting the company to repurchase £2.8m of shares under its £20m buyback programme. During the period OCI deployed £28m, including investments in Groupe Senef, a French cloud software provider, and Athena Racing, the British America’s Cup team and sailing franchise. It received £2m from exits and refinancings leaving it with £108m of cash and £72m in undrawn credit facilities.
Matthew Read, senior analyst at QuotedData, said: “OCI’s first-quarter update illustrates a familiar theme across the listed private equity space – good operational performance in the underlying portfolio is being masked by weak sentiment towards the sector. Encouragingly, around 70% of NAV growth came from earnings growth rather than multiple expansion and contributions came from a range of holdings. However, the -18% shareholder return shows how quickly sentiment has moved against the sector. With OCI’s discount now in the mid-30s, the £20m buyback programme is a good use of capital as repurchases will be highly NAV accretive at these sorts of discount levels.”
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