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QuotedData’s investment companies roundup – January 2020

Investment Companies Roundup

Kindly sponsored by Baillie Gifford

 Table of contents 

 New research 

Here is a list of research we published over December:

An update note on BlackRock Throgmorton (THRG)

“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.”

An initiation note on Vietnam Holdings (VNH)

“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).”

An overview of the industrial property market

“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 CompaniesSchroder 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 storiesOctopus Renewables raised a whopping £350m and Schroder AsiaPacific discussed the ongoing situation in Hong Kong.

 Performance data

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 CompaniesSchroder 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
2 RTW Venture 18.10 -0.40
3 Electra Private Equity -24.30 -41.80
4 LXI REIT 18.50 6.70
5 Oakley Capital -14.30 -24.40
6 Lindsell Train 11.20 31.60
7 Doric Nimrod Air Three 1.20 20.40
8 LMS Capital -46.40 -31.10
9 Crystal Amber -31.50 -17.00
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:

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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.

 Income 

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

 Events

Here is a selection of upcoming events:

Master Investor – the UKs largest private investor show – 28 March 2020

 The legal bit

This note was prepared by Marten & Co (which is authorised and regulated by the Financial Conduct Authority).

This note is for information purposes only and is not intended to encourage the reader to deal in the security or securities mentioned within it.

Marten & Co is not authorised to give advice to retail clients. The note does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

This note has been compiled from publicly available information. This note is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of this note is prohibited.

Accuracy of Content: Whilst Marten & Co uses reasonable efforts to obtain information from sources which we believe to be reliable and to ensure that the information in this note is up to date and accurate, we make no representation or warranty that the information contained in this note is accurate, reliable or complete. The information contained in this note is provided by Marten & Co for personal use and information purposes generally. You are solely liable for any use you may make of this information. The information is inherently subject to change without notice and may become outdated. You, therefore, should verify any information obtained from this note before you use it.

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No information contained in this note shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

Investment Performance Information: Please remember that past performance is not necessarily a guide to the future and that the value of shares and the income from them can go down as well as up. Exchange rates may also cause the value of underlying overseas investments to go down as well as up. Marten & Co may write on companies that use gearing in a number of forms that can increase volatility and, in some cases, to a complete loss of an investment.

January Investment Companies Roundup

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