Investment Companies Roundup
Kindly sponsored by Baillie Gifford
Over October, we published notes on Pacific Horizon, Seneca Global Income & Growth, Premier Global Infrastructure, Polar Capital Global Financials, Ecofin Global Utilities and Infrastructure, Aberdeen Standard European Logistics Income and Herald. Additionally, as part of our enhanced coverage of the property sector, we launched a sector overview report.
In this issue
- Performance data – Equity markets were broadly down over October and the US dollar lost value following a third interest rate cut of the year. Gold continued to benefit under this backdrop as investors sought safe-haven exposure. Riverstone Energy was the worst performing fund (counting those with market capitalisations above £15m) in price terms, shedding 25.5%, while Menhaden (environmental) and Sanditon (UK absolute return) were the only funds to return more than 10% in either total return NAV or share price terms;
- Money in and out – Over £1bn of new money entered the sector over October, mainly through share placings. There was one new issue in the shape of the life-sciences fund, RTW Venture (the sixth flotation of the year), though it raised just $15m of the $350m it was targeting;
- Discounts/premiums – Middlefield Canadian Income is benefiting from a favourable view towards Canadian equities while JZ Capital Partners’s discount has been widening for over a year. JZ’s shares fell sharply after it delayed the release of interim results;
- Major news stories – Schroder Investment Management took over as manager of Woodford Patient Capital while unquoted investments outperformed for International Biotechnology Trust over its most recent annual results period.
October’s biggest movers in price and NAV terms are shown in the charts below.
Looking first at the positive moves:
- NAV performance was muted, reflective of a mediocre month for many areas of the equity market.
- Income-focused strategies performed best, led by debt funds including Blackstone/GSO Loan Financing, Chenavari Toro Income, GCP Asset Backed Income and Axiom European Financial Debt.
- Price returns were led by the environmental-sector company, Menhaden, and the UK-focused absolute return fund, Sanditon. Menhaden has been performing well through the year while Sanditon rallied after its board received indications significant shareholders would vote against a continuation motion at the AGM to be held in 2020. A voluntary liquidation will now be proposed.
- CATCo Reinsurance Opportunities is returning capital through a managed wind-down.
On the negative side:
- Exploration, production and mid-stream-focused Riverstone Energy reported a $275.8m unrealised loss for the third quarter, with its Hammerhead holding (previously the fund’s largest holding) performing particularly poorly.
- JZ Capital Partners’s price fell sharply after it delayed the release of interim results, on concerns it would have to substantially write down the value of its real-estate portfolio.
- The unlisted assets investor, Adamas Finance Asia continues to fall after making a dilutive equity issue.
- Woodford Patient Capital shares were down by over 30% at one point, before rallying on the news that Schroder was taking over the management contract.
- The Mediterranean-focused luxury residential and resort property company, Dolphin Capital Investors, is in the process of full-divesting its portfolio. Its shares have been on a downtrend trend for several years.
Discounts and premiums
More expensive relative to NAV:
- CATCo Reinsurance Opportunities’s discount has been narrowing from a peak of nearly 65% earlier in the year as it returns capital.
- The narrowing in Menhaden’s discount was price led, though it was not enough to change its position as the cheapest fund relative to NAV in its sector.
- Middlefield Canadian Income is benefiting from a favourable view towards Canadian equities.
- Wind-focused Greencoat Renewables’s premium has been increasing throughout the year-to-date, reflecting the wider trend in the renewable energy infrastructure sector.
Cheaper relative to NAV:
- JZ Capital Partners’s discount has been widening for over a year and news of a potential write down in its property portfolio knocked the shares.
- Riverstone Energy’s wide discount reflects poor sentiment towards the energy sector and losses in its portfolio.
- Shares in Leaf Clean Energy surged close to 50% following the month-end after Amsterdam-based Res Privata NV bought a 30% stake.
- Shares in SQN Asset Finance Income were down after it reported NAV growth below its historic performance and target.
The table below shows the top five movers in either direction (more or less expensive relative to NAV):
|wdt_ID||Company||31 Oct (%)||30 Sep (%)|
|1||CATCo Reinsurance Opportunities||-28.80||-40.10|
|4||Middlefield Canadian Income||-8.70||-15.40|
|6||JZ Capital Partners||-56.80||-42.30|
|8||Leaf Clean Energy||-16.20||-4.70|
|9||Adamas Finance Asia||-73.30||-64.30|
|10||SQN Asset Finance Income||-22.30||-13.70|
Money coming in:
- Over £1bn of new money entered the sector over October, mainly through share placings.
- There was one new issue in the shape of the life-sciences fund, RTW Venture (the sixth flotation of the year), though it raised just $15m of the $350m it was targeting. Woodford Patient Capital’s struggles in biotech may have worked against the new fund.
- 3i Infrastructure and Renewables Infrastructure Group raised over £220m, reflecting ongoing bullishness towards their strategies
- Globalworth Real Estate Investments also raised more than £220m. The company is a dominant player in Poland and Romania’s commercial property sectors.
- Elsewhere, International Public Partnerships, Supermarket Income REIT and SDCL Energy Efficiency Income were the other funds to raise more than £100m.
Money going out:
- Scottish Mortgage bought back over £70m worth of shares, helping its discount narrow by 0.9% (to 1.3%) by end-October.
- NB Global Floating Rate Income features regularly in this table.
- Pershing Square’s buyback programme has been extended by a further $100m.
- Elsewhere, Edinburgh Investment features for a third month in succession as some commentators draw parallels between Mark Barnett’s portfolios and Neil Woodford’s. Edinburgh’s discount began to narrow last month and this continued in October.
A number of funds announced their full year dividends in October, 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 Standard Asia Focus||31 Jul 2019||19.00||11.8||21.35||1.12x|
|2||Baillie Gifford Japan||31 Aug 2019||3.50||483.3||5.18||1.48x|
|3||Blackrock Greater Europe||31 Aug 2019||5.90||1.7||4.87||0.83x|
|4||CQS Natural Resources Growth and Income||30 Jun 2019||5.60||Nil||2.67||0.48x|
|5||CQS New City High Yield||30 Jun 2019||4.50||0.7||4.49||1.01x|
|6||Gabelli Merger Plus+||30 Jun 2019||48.00||37.1||7.00||0.14x|
|7||Henderson Euro||31 Jul 2019||31.00||1.6||29.00||0.94x|
|8||International Biotechnology||31 Aug 2019||28.00||3.7||-5.58||0.20x|
|9||JPMorgan Emerging Markets||30 Jun 2019||14.00||12||14.85||1.06x|
|10||JPMorgan Global Emerging Markets Income||31 Jul 2019||5.10||2||5.92||1.16x|
Have you checked out the Events section of our website? Here is a selection of what’s coming up.
- Pacific Horizon AGM 2019, 12 November 2019
- Mid Wynd International AGM 2019, 12 November 2019
- Henderson EuroTrust AGM 2019, 13 November 2019
- JPMorgan Global Growth & Income AGM 2019, 12 November 2019
- JPMorgan Emerging Markets AGM 2019, 13 November 2019
- Investing in the Age of Longevity, 13 November 2019
- New Star Investment Trust AGM 2019, 14 November 2019
- Jupiter European Opportunities AGM 2019, 14 November 2019
- Picton Property AGM 2019, 14 November 2019
- Cameron Investors merger meeting 2, 18 November 2019
- Standard Life UK Smaller Companies presentation, 20 November 2019
- Investment Company AGM 2019, 21 November 2019
- Crystal Amber AGM 2019, 22 November 2019
- Money Week Wealth Summit, 22 November 2019
- TR European AGM 2019, 25 November 2019
- JPEL Private Equity AGM 2019, 25 November 2019
- Jupiter US Smaller Companies AGM 2019, 26 November 2019
- Personal Finance Society Annual Conference, 28 November 2019
- JPMorgan Global Emerging Markets Income AGM 2019, 28 November 2019
- JPMorgan Smaller Companies AGM 2019, 2 December 2019
- Aberdeen Standard Asia Focus AGM 2019, 4 December 2019
- Ruffer Investment Company AGM 2019, 5 December 2019
- VinaCapital Vietnam Opportunity Fund Limited AGM 2019, 5 December 2019
- Henderson International Income AGM 2019, 5 December 2019
- BlackRock Greater European AGM 2019, 5 December 2019
- Baillie Gifford Japan AGM 2019, 5 December 2019
- Aberdeen Frontier Markets AGM 2019, 10 December 2019
- International Biotechnology AGM 2019, 11 December 2019
- Asia Dragon AGM 2019, 12 December 2019
- Fidelity Special Values AGM 2019, 12 December 2019
- CQS New City High Yield Fund Ltd AGM 2019, 13 December 2019
- Scottish Oriental Smaller Companies AGM 2019, 18 December 2019
- Master Investor – the UKs largest private investor show, 28 March 2020
The legal bit
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