By Matteo Anelli, Senior reporter, Trustnet, 17 April 2024:
Investors who are bullish on Scottish Mortgage’s unlisted companies could broaden their horizons and consider the Schiehallion trust instead, which is “the purest version of Baillie Gifford’s private equity holdings”, according to Peel Hunt analysts..
“We look across to Schiehallion for multiple reasons,” the analysts continued. “If the view held by outside parties is that the private company holdings are undervalued, then Schiehallion is the purest version of Baillie Gifford’s private equity holdings, and it’s on a 35% discount to end-February 2024 NAV.
“In the case of Scottish Mortgage, Elliott’s arrival has caught the market’s attention, but investors are left questioning what else there might be to target, given the recent commitment to a £1bn buyback programme and the narrowing of the discount to 5%.”..
Private equity investment trusts in general are trading at historically wide discounts due to investor skittishness in recent years..
Finally, QuotedData’s head of investment company research James Carthew recently highlighted Oakley Capital Investments and abrdn Private Equity Opportunities in the private equity space.
The former strategy has been able to generate “robust earnings growth”, a 4% NAV growth and an 18% total shareholder return in 2023. Macroeconomic uncertainty is creating opportunities for Oakley Capital, which “has been busy deploying cash into new investments at what it feels are attractive valuations,” Carthew said.
In January, abrdn Private Equity Opportunities announced a net asset value total return of 5.4% and share price total return of 11.7% in its annual results for the year ending 30 September 2023. These performance disclosures helped to narrow the trust’s discount from 45% last October to the current 28.9%.
“This resilience came in spite of a slowdown in activity in European private equity markets in 2023, dampened by a residual fear of rising interest rates and geopolitical tensions,” Carthew said. “However, as interest rates come down, the market could bounce back quickly.”
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