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QuotedData’s investment companies roundup – August 2019

Investment Companies Roundup

 New research

Over July, we published notes on CQS New City High YieldBlackRock ThrogmortonStrategic Equity CapitalSeneca Global Income & GrowthCG Asset ManagementStandard Life Investments Property Income and Aberdeen New Dawn. You can read all these notes by clicking on the links above or by visiting

 In this issue

  • Performance data – appetite for risk was generally present through July, with US stocks and the dollar performing well; Tech companies largely had good months. The downward move in sterling to near post-referendum lows and a decline in UK long-term government bond yields reflected the growing threat of a no-deal brexit scenario. Golden Prospect Precious Metal led the sector in price return terms in July (+26.4)% while Lindsell Train was the biggest faller (-28.7%);
  • Money in and out – It was a very quiet month for fundraising, leading up to the August holiday season. There were no new issues; net inflows totalled £96.4m (+£354m last month). Aberdeen Standard European Logistics led the way, raising £46.3m while Third Point Offshore USD led money out of the sector, returning £40.8m in July;
  • Discounts/premiums – Syncona’s premium widened (price led) as it comes off an excellent year, delivering an NAV return of 37.9%. Elsewhere, Merian Chrysalis climbed to its highest premium since its launch in late 2018. Merian’s approach to investing into unquoteds has been well-received;
  • Major news stories – Woodford Patient Capital’s board held discussions with third-party managers regarding the fund’s management contract while results from Intu Properties reflected wider retail woes.

More information about the funds mentioned in this report is available on our website.

 Performance data

July’s biggest movers in price terms are shown in the chart below.

Looking first at the positive moves:

  • Golden Prospect Precious Metal‘s strong showing probably reflected its predominant weighting to gold companies – gold is enjoying somewhat of a renaissance (we looked at this recently).
  • CATCo Reinsurance Opportunities is returning capital to shareholders as part of a wind down of the fund, following extreme hurricane claims.
  • A good month for tech stocks, helped by above consensus results from Alphabet and Microsoft, amongst others, boosted Polar Capital Technology and Allianz Technology.
  • JPMorgan Brazil and VietNam Holding carried the baton for emerging markets; Vietnam and Brazil have been amongst the most favoured EMs in 2019.

On the negative side:

  • Lindsell Train shed nearly 29% in price terms, as its premium to NAV continued to narrow after its warning on the risks of buying funds at rich premiums.
  • The market continued to sell Woodford Patient Capital; towards the end of the month, the fund’s board said it was considering replacing Woodford Investment Management as manager.
  • The small and mid-cap focused India Capital Growth led Indian strategies down, shedding 9.1% in price terms. Indian stocks had their worst July in 17 years as poor economic numbers outmuscled the momentum generated by Modi’s re-election.
  • UK property trusts, led by Standard Life Investment Property Income and Ground Rents Income, were affected by sentiment around the economy, including the growing risk of a no-deal Brexit.

 Discounts and premiums

More expensive relative to NAV:

  • Syncona has transformed its portfolio with life sciences now accounting for the bulk of its investments. We note though that Syncona’s NAV is out of date and that the actual premium may have been wider than 18.4%.
  • UIL, a high discount, ‘flexible investment’ fund, saw its shares rally in July. The fund is one of the last remaining split-capital trusts.
  • The market pushed up Merian Chrysalis after it announced interim results in June.

Cheaper relative to NAV:

  • Aside from Lindsell Train, other funds that became ‘cheaper’ include Hadrian’s Wall Secured Investments, the UK commercial loans investor; it was down 13.7% in price terms. The market’s reaction is believed to be a knock-on from provisions the fund made in May (the provision then was 1.9% of NAV) against two loans to companies producing wood pellets. Some of the reaction can also be ascribed to nervousness around the sector, following Funding Circle’s decision to wind up earlier in the year.
  • Leaf Clean Energy’s shares were down about 20%; the company’s hefty premium reflects buying activity leading up to and following a favourable ruling by the Delaware Supreme Court on a contractual damages claim. We note that Morningstar is yet to reflect the award  in its NAV estimate.

The table below shows the top five movers in either direction (more or less expensive relative to NAV):

wdt_ID Fund 31 Jul (%) 28 Jun (%)
1 Syncona 18.40 5.80
2 CATCo Reinsurance Opportunities -43.90 -54.00
3 Livermore Investments -41.10 -50.10
4 Merian Chrysalis 22.20 13.50
5 UIL -36.60 -45.40
6 Lindsell Train 25.80 82.40
7 Amedeo Air Four Plus -15.70 6.70
8 Leaf Clean Energy 425.70 445.90
9 Doric Nimrod Air Three 17.40 32.30
10 Hadrian's Wall Secured Investments -17.10 -4.00

 Money in/out

Money coming in:

  • Aberdeen Standard European Logistics led the way, raising £46.3m, as it looks to expand the asset base having fully deployed the funds it raised at launch in 2017.
  • Globalworth Real Estate Investments, which describes itself as the leading office investor in Central and Eastern Europe, raised £27.2m. The company has been actively expanding, having completed acquisitions for two buildings in Poland worth €113.2m in July.
  • The other funds to raise more than £10m were Smithson Investment, Augmentum Fintech, Capital Gearing, Personal Assets, JPMorgan Elect Managed Income, Gresham House Energy Storage, Henderson International Income and Finsbury Growth & Income.

Money going out:

  • Third Point Offshore USD led money out of the sector, returning £40.8m in July.
  • The NB Global Floating Rate funds have featured regularly over recent months.
  • Elsewhere, Alpha Real, Pershing Square and Perpetual Income & Growth led buyback activity.

A number of funds announced their full year dividends in July, which is shown below. Please refer to the attached document for a list of the notes around the numbers.

wdt_ID Fund Year ended Dividend (pence)* Change over year (%) Revenue / earnings (pence)* Cover
1 Aberforth Split Level Income 30 Jun 2019 4.16 4 5.14 1.24x
2 Adams PLC 31 Mar 2019 N/A N/A 0.31 N/A
3 Amedeo Air Four Plus 31 Mar 2019 2.06 N/A 1.31 0.64x
4 Artemis Alpha 30 Apr 2019 5.5 -13.39 6.44 1.17x
5 Better Capital – 2009 Cell 31 Mar 2019 N/A N/A -35.77 N/A
6 Better Capital – 2012 Cell 31 Mar 2019 N/A N/A -9.62 N/A
7 BMO Managed Portfolio Income 31 May 2019 5.95 4.4 7.32 1.11x
8 Cambium Global Timberland 30 Apr 2019 N/A N/A 18.80 N/A
9 Doric Nimrod Air One 31 Mar 2019 9 N/A 13.07 1.45x
10 Doric Nimrod Air Two 31 Mar 2018 18 N/A 15.46 0.86x

August Investment Companies Roundup

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