By:Elliot Gulliver-Needham, Investment Reporter, City A.M., 25 March 2024:
After a year of abysmal performance, the board of Baillie Gifford’s Shin Nippon trust have pledged to commit to a major tender offer if its problem persists.
In the trust’s 2023 results today, the investment trust revealed that the trust’s share price had declined by 20.5 per cent, while net asset value declined by 14.9 per cent, compared to a benchmark rise of 6.3 per cent.
The company’s problem of long-term underperformance has been ongoing. Shin Nippon has seen a 30.9 per cent share price drop over the last five years, compared to a growth of 12.9 per cent across all Japanese small company investment trusts.
Therefore, the trust said today it would launch a programme to buy back 15 per cent of the trust’s shares for a high price if it continued to underperform its benchmark over the next three years.
This is not a new move for the trust: 4.4m shares had already been bought back throughout 2023, with 3.4m additional shares bought back so far in 2024.
James Carthew, head of investment companies at QuotedData asked whether the move was “too little, too late”.
“After five years of underperformance, will shareholders be prepared to be patient for another three?” Carthew said.
Shin Nippon credited the poor performance over the last year to a range of problems, such as its focus on high-growth companies and sectoral underweights towards energy, industrials, financials and materials, which all performed strongly last year.
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