AVI Global Trust (AGT) has published its annual results so it’s a good time to show this video I recorded last month with the investment trust’s fund manager Joe Bauernfreund and senior investment analyst Ross McGarry.
The point of the webinar was to highlight how AGT and its portfolio of overlooked holding and investment companies can help investors diversify from the dominant artificial intelligence (AI) theme.
The question is: When markets are focused on the same handful of AI and mega-cap stocks, where can investors still find genuine value?
In the one-hour programme, Bauernfreund, chief executive of AGT’s fund manager Asset Value Investors, and McGarry answer that question by explaining how AVI looks for companies:
- where there is a clear gap between share price and intrinsic value;
- strong underlying businesses;
- and a realistic catalyst that could help close that discount.
They explore three holdings in the portfolio, starting with Exor, the Dutch holding company of the Italian Agnelli family whose businesses include Ferrari, Stellantis and CNH Industrial.
They then shift focus to South Korea where AGT is 21% invested and has a stake in beauty and cosmetics group Amorepacific and also sportswear manufacturer Youngone Corporation to highlight how corporate governance reform and changing shareholder rights are creating the catalysts for hidden value in these stocks to be unlocked.
The webinar also covers Japan, where AGT is 26% invested, activism, the risk of value traps, “double discounts” and why AVI believes active ownership can make a difference.
Both Japan and South Korea were strong performers for AGT in the year to 30 September, generating 17% and 44% returns in sterling. However, disappointments with investment companies Vivendi, which owns a stake in Universal Music Group, and Chrysalis (CHRY), the winding down backer of Starling bank and others, meant it was a “challenging and frustrating” period with the trust restricted to a 1.7% investment return.
Nevertheless, Bauernfreund was confident these positions offered a lot of upside and would come good. Elsewhere, there was a lot to be “excited about” in a concentrated portfolio that should deliver better returns once AI stops sucking capital from other parts of the stock market.
The period since the broadcast has provided some hope of a “rotation” away from AI as stocks such as chip maker Nvidia have fallen heavily, with the Democrat wins in the US midterms last week adding to the downward pressure, though there has been a bounce back this week.
