By Tom Aylott, Reporter, Trustnet, 19 April 2023:
The RIT Capital Partners trust has sunk to a 20.1% discount following recent criticism from analysts, but some are saying that this has opened an attractive window to buy.
Trouble began in January after Alan Brierley, director of investment company research at Investec scrutinised its “ominously” high private equity exposure.
He said that these high-risk assets, which had shot up from a 24% exposure to 45% over the past two years, contradicted the trust’s aim of preserving capital and had “radically transformed” its risk profile…
However, Ewan Lovett-Turner, director of Numis, said that fears about the trust were overstated and investors should in fact take advantage of its discounted price…
Concerns about its private equity exposure have largely passed according to Lovett-Turner, who said that the recent sale of Infinity (which resulted in a 30% uplift) and upcoming fundraising for Webull, will be a relief to worried investors.
Likewise, the imminent sale of two companies in its top 10 direct holdings should reconcile some of the private equity fears that have surrounded the trust in recent months.
However, Lovett-Turner said that improved communication by management of RIT Capital Partners to shareholders was needed to recover sentiment…
Nevertheless, James Carthew, co-founder of QuotedData, said that recent negative sentiment had been driven by the sensationalism of short-term fears, when it would be more accurate to judge the trust on its long-term performance.
Over the past decade, it outperformed its peer group by 43.9 percentage points, with returns climbing 93.1% over the period.
Carthew: “We believe this [recent criticism] is unjustified and presents a rare opportunity to buy a unique trust with an impressive long-term track record.
“The current discount represents a rare opportunity to invest in this unique trust at a meaningful discount to the value of its underlying assets.”
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