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QuotedData’s investment companies roundup – June 2019

Investment Companies Roundup

 New research

Over May, we published notes on Shires IncomeStandard Life Private Equity and The North American Income Trust. You can read all these notes by clicking on the links above or by visiting www.quoteddata.com.

 In this issue

  • Performance data – it was notable that risk appetite was down in May as renewed US-China trade tensions weighed on China-focused funds particularly. The re-election of Narendra Modi as India’s Prime Minister brought momentum to a number of Indian funds
  • Money in and out – Aquila European Renewables Income and Riverstone Credit Opportunities Income successfully launched in May, raising €154.3m and £80.9m respectively. Greencoat UK Wind brought the most new money into the sector, raising £375m as it looks to grow beyond the 34 wind farms it currently invests in. Net inflows into the investment trust sector totalled more than £1bn, a marked increase on April
  • Discounts/premiums – As investors moved away from riskier assets, the median discount for the funds covered in the roundup (market caps above £15m) increased by 0.5% to (6.3%). The biggest outright move came from Leaf Clean Energy; its 275% price return followed a positive ruling by the Delaware Supreme Court, pushing its premium to 353.5%. Elsewhere, Riverstone Energy’s discount widened in a challenging month for commodities and resource trusts while the life sciences focused Syncona’s premium rating has been falling since Wellcome Trust charity surprisingly cut its stake in mid-March
  • Major news stories – Greencoat UK Wind raised £375m while Capital Gearing hit the 200x price return mark since Peter Spiller took the reins in 1982

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

 Performance data

May’s biggest movers in price terms are shown in the chart below, excluding Leaf Clean Energy, as it was up 275%.


Looking first at the positive moves:

  • Leaf Clean Energy’s share price surged following a positive ruling by the Delaware Supreme Court. The case relates to compensation the trust believes it is due in a contractual dispute case with Wind LLC
  • JPMorgan Indian and Ashoka India Equity Investment did well following the re-election of Prime Minister of Narendra Modi. Elsewhere in emerging markets, JPMorgan Russian Securities had another good month. It has been on a steady upward trajectory for the past two or so years, supported by relative value and corporates generally delivering good earnings growth
  • Ireland-focused Green REIT’s shares have been rallying after it put itself up for sale

On the negative side:

  • JPMorgan and Fidelity’s Chinese funds as rhetoric around the trade dispute between China and the US intensified. Weiss Korea Opportunity’s NAV was down 9.8% and its shares 7.7% as other export-oriented economies sold-off in response to global trade fears
  • It remains a difficult climate for companies exposed to energy with pricing subdued; Riverstone Energy is having a difficult 2019 and this continued in May with its shares shedding 12.2%.
  • European stocks were among the worst performers in May so the presence of growth-focused strategies, in the undperformers table, like TR European Growth, was likely. It was a similar story for European Investment Trust 
  • Finally, UK retail exposed Ediston Property Investment Company sold off after it reported first half results in May with NAV down

 Discounts and premiums

More expensive relative to NAV:

  • Leaf Clean Energy’s surge reflects investors’ view about how the aforementioned positive ruling will ultimately feed through to its NAV
  • EPE Special Opportunities’ shares have rallied following its annual results announcement in April; the main catalyst being a brightened outlook for Luceco (an LED lighting brand), its main holding
  • Lindsell Train has been an almost permanent feature on the ‘getting more expensive’ table this year

Cheaper relative to NAV:

  • Syncona’s premium rating has been falling since Wellcome Trust charity surprisingly cut its stake in mid-March
  • The emerging market small-cap investor ScotGems’ May price performance reflected the negative sentiment towards the wider EM universe over the month
  • Gore Street Energy Storage’s shares have been on downtrend following an NAV adjustment in late-March, relating to capacity concerns in the UK

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

wdt_ID Fund 31 May (%) 30 Apr (%)
1 Leaf Clean Energy 385.20 31.70
2 Globalworth Real Estate Investments 2.90 -6.90
3 Lindsell Train 91.90 79.80
4 EPE Special Opportunities -17.10 -25.40
5 Crystal Amber -2.80 -10.90
6 Riverstone Energy -27.70 -17.40
7 Ediston Property -11.90 -2.00
8 Syncona 21.60 31.40
9 ScotGems -10.90 -1.30
10 Gore Street Energy Storage -11.30 -2.10

 Money in/out

Money coming in:

  • There were two new issues in May: Aquila European Renewables Income and Riverstone Credit Opportunities Income raised €154.3m and £80.9m respectively
  • Tritax EuroBox and Impact Healthcare REIT raised over £100m each while Greencoat UK Wind led the way in outright terms, raising gross proceeds of £375m in a share issue
  • TwentyFour Income also took advantage of its shares premium to NAV rating to raise capital; the trust believes its opportunity set has expanded as credit spreads have widened, opening up the prospect capital gains should they narrow going forward. Elsewhere, Real Estate Credit Investments (£78.5m in May) heads up a long list of funds that are issuing additional shares to meet demand


Money going out:

  • NB Global Floating Rate Income was the biggest returner of cash once again after repurchasing shares worth £13.9m and £12.4m on their sterling and dollar lines
  • Third Point Offshore returned money as part of the share repurchase programme it announced last December. Biotech Growth and Templeton Emerging Markets were the other trusts to return more than £5m.

A number of funds announced their full year dividends in May, 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 Aberdeen Japan Mar 2019 5.40 3.85 6.83 1.26x
2 Biotech Growth Mar 2019 N/A N/A 1.00 N/A
3 BMO UK High Income Trust Mar 2019 3.69 3.36 3.77 1.02x
4 Caledonia Investments Mar 2019 59.30 4.04 61.90 1.04x
5 Capital Gearing Apr 2019 35.00 29.63 51.12 1.46x
6 Downing Strategic Micro-Cap Feb 2019 1.25 N/A 1.50 1.20x
7 HarbourVest Global Private Equity Jan 2019 N/A N/A 0.00 N/A
8 HICL Infrastructure Company Mar 2019 8.05 2.50 15.90 1.98x
9 JPMorgan Multi-Asset Feb 2019 4.00 N/A 3.54 0.89x
10 JZ Capital Partners Feb 2019 N/A N/A 0.00 N/A

June Investment Companies Roundup

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