Investment Companies Roundup
Kindly sponsored by Baillie Gifford
Table of contents
Here is a list of research we published over December:
“BlackRock Throgmorton continues to lead its peer group in the UK smaller companies sector. Our recently published update note includes views from manager Dan Whitestone. He makes the point that there is always something to worry about, but by focusing on businesses that have control over their own destinies and shorting troubled companies, THRG can look past the noise and thrive regardless.”
“We have initiated coverage on Vietnam Holding. It has quietly undergone a major overhaul during the last two years, making it more shareholder-friendly and putting it on a stronger footing. VNH’s manager believes the country can become a top 20 global economy by 2050).”
“Although this is also covered in our monthly Real Estate roundup, we thought it worth highlighting this new note on the Industrial property market, which has been benefitting from the trend to online shopping.”
In this issue
- Performance – Investors closed the year sanguinely, reflected by firmer median market returns compared to NAV returns. A conclusive UK general election result provided a springboard for flows into UK strategies, principally benefitting Aberforth Split Level Income, Chelverton UK Dividend, Montanaro UK Smaller Companies, JPMorgan Smaller Companies, Schroder UK Mid Cap and Downing Strategic Micro-Cap;
- Discounts/premiums – The narrowing in Schroder UK Public Private’s discount was price-led, reflecting a change of manager and positive sentiment. Despite raising much less than expected when it launched last October, RTW Venture won over new admirers as biotech and life sciences continued their good recent run;
- Money in and out – The renewable infrastructure investment sector’s ability to raise considerable capital continues to show little sign of abating. Octopus Renewables was the story of the month following its £350m launch;
- Major news stories – Octopus Renewables raised a whopping £350m and Schroder AsiaPacific discussed the ongoing situation in Hong Kong.
Decemer’s biggest movers in NAV and price terms are shown in the charts below:
On the positive side:
- Investors closed the year sanguinely, reflected by firmer median market returns compared to NAV returns. A conclusive UK general election result provided a springboard for flows into UK strategies, principally benefitting Aberforth Split Level Income, Chelverton UK Dividend, Montanaro UK Smaller Companies, JPMorgan Smaller Companies, Schroder UK Mid Cap and Downing Strategic Micro-Cap;
- The market reacted to mounting tensions in US / Middle East relations and some dollar weakness by increasing its gold allocation, benefitting Golden Prospect Precious Metals;.
- Investors reacted warmly to Schroder taking up the reins at Schroder UK Public Private (formerly Woodford Patient Capital);
- The biotech sector is undergoing a resurgence, this benefitted Biotech Growth and the new life-sciences fund, RTW Venture;
- Infrastructure India’s shares more than doubled on positive results;
- Elsewhere, Brazil’s rally extended to the year-end, pushing up JPMorgan Brazil and BlackRock Latin American. Local Brazilians have been spearheading a rally reflective of the promise of better growth and relatively low interest rates.
On the negative side:
- While price performance was strong, Schroder UK Public Private’s NAV continued to decline;
- Majedie’s decline was on the back of the performance of its largest fund holding;
- The three Doric aircraft leasing funds suffered as Air France began retiring its A380 fleet;
- Adamas Finance Asia bought back shares to clear out a large seller;
- After a strong run in the middle of last year, Aberdeen New Thai was affected as Thai stocks had a mediocre month. Foreign investors withdrew capital under a backdrop of decelerating economic growth;
- Activist fund Crystal Amber had another poor month, in keeping with a turbulent year after the trust was caught up in Woodford Investment Management’s travails. Its stake has been sold but now Invesco are reducing too.
Discounts and premiums
The table below shows the top five movers in either direction (more or less expensive relative to NAV):
|wdt_ID||Company||31 Dec (%)||29 Nov (%)|
|1||Schroder UK Public Private||-28.90||-47.90|
|3||Electra Private Equity||-24.30||-41.80|
|7||Doric Nimrod Air Three||1.20||20.40|
|10||Doric Nimrod Air Two||-20.90||-7.10|
More expensive relative to NAV:
- The narrowing in Schroder UK Public Private’s discount was price-led, reflecting a change of manager and positive sentiment;
- Despite raising much less than expected when it launched last October, RTW Venture won over new admirers as biotech and life sciences continued their good recent run;
- Electra Private Equity’s shares soared after declaring a further special dividend – the company is in the process of a two-year managed wind-down;
- Oakley Capital’s re-rating came as it sold the server management company WebPros to CVS, making 6.7x on its investment.
Cheaper relative to NAV:
- Lindsell Train’s premium has narrowed remarkably over the past half-year (it had touched 100%), following its warning on the risks of making investments at rich premiums;
- We discussed the Doric funds and Crystal Amber in the ‘performance’ section;
- LMS Capital shares have been falling since its vote in late last November to replace Gresham House and internalise the management contract.
Money in and out
Fundraising highlights from the month:
Money coming in:
- The renewable infrastructure investment sector’s ability to raise considerable capital continues to show little sign of abating. Octopus Renewables was the story of the month following its £350m launch (it raised £100m more than its target), making it the second biggest launch of 2019 after Schiehallion but first in terms of new money raised (Schiehallion was a pre-existing fund);
- Greencoat Renewables was the other £100m+ raise while GCP Student Living, International Public Partnerships and SDCL Energy Efficiency Income were the other major raisers.
Money going out:
- Bill Ackman’s Pershing Square has been buying back shares, though its discount was largely unchanged through December;
- The NB Global funds feature regularly in this table. The other main returners were Biotech Growth, Oakley Capital and Edinburgh Investment Trust.
The following funds announced their full year dividends in December (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||Aberdeen Diversified Income and Growth||30 Sep 2019||5.40||3.8||5.70||1.06x|
|2||Blackrock Income and Growth||31 Oct 2019||7.20||4.3||7.40||1.03x|
|3||BMO Capital & Income||30 Sep 2019||11.40||4.1||13.10||1.15x|
|4||Ecofin Global Utilities and Infrastructure||30 Sep 2019||6.40||-||5.50||0.86x|
|5||Edinburgh Worldwide||31 Oct 2019||0.00||N/A||-0.20||N/A|
|6||Electra Private Equity||30 Sep 2019||396.00||-56.7||-15.50||N/A|
|7||Finsbury Growth & Income||30 Sep 2019||16.60||8.5||18.30||1.10x|
|8||GCP Infrastructure||30 Sep 2019||7.60||-||6.70||0.90x|
|9||JPMorgan Asian||30 Sep 2019||15.70||-||5.00||0.32x|
|10||JPMorgan Chinese||30 Sep 2019||2.50||-28.6||2.50||1.00X|
Here is a selection of upcoming events:
- JPMorgan Japanese AGM 2020, 17 January 2020
- JPMorgan Elect AGM 2020, 20 January 2020
- Edinburgh Worldwide AGM 2020, 22 January 2020
- Majedie AGM 2020, 22 January 2020
- Henderson Far East Income AGM 2020, 23 January 2020
- European / Baillie Gifford European AGM 2020, 23 January 2020
- Baring Emerging Europe AGM 2020, 23 January 2020
- Henderson European Focus AGM 2020, 31 January 2020
- JPMorgan Chinese AGM 2020, 3 February 2020
- BlackRock Frontiers AGM 2020, 4 February 2020
- PME Africa EGM 2020. 4 February 2020
- JPMorgan Indian, 5 February 2020
- BMO Capital & Income AGM 2020, 11 February 2020
- Keystone AGM 2020, 11 February 2020
- JPMorgan Asian AGM 2020, 13 February 2020
- GCP Infrastructure AGM 2020, 13 February 2020
- Aberdeen Diversified Income And Growth AGM 2020, 26 February 2020
- Polar Capital Global Healthcare AGM 2020, 26 February 2020
- Finsbury Growth & Income AGM 2020, 28 February 2020
- Ecofin Global Utilities And Infrastructure AGM 2020, 6 March 2020
Master Investor – the UKs largest private investor show – 28 March 2020
The legal bit
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