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QuotedData’s investment companies roundup – November 2019

Investment Companies Roundup

Kindly sponsored by Baillie Gifford

 New research

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.

 Performance data

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
2 Menhaden -19.60 -28.00
3 Sanditon Investment -5.10 -13.10
4 Middlefield Canadian Income -8.70 -15.40
5 Greencoat Renewables 17.40 10.70
6 JZ Capital Partners -56.80 -42.30
7 Riverstone Energy -57.70 -43.10
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 in/out

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.

 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.

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November Investment Companies Roundup

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