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QuotedData’s investment companies roundup – October 2019

Investment Companies Roundup

Kindly sponsored by Baillie Gifford

 New research

Over September, we published notes on India Capital Growth, Jupiter Emerging & Frontier, International Biotechnology Trust, JPMorgan Russian Securities, Civitas Social Housing, Montanaro European Smaller Companies and JLEN Environmental Assets. We also launched a monthly real estate roundup, beginning with reviews of August and September.

 In this issue

  • Performance data – Appetite for risk increased to a degree over September. Gold gave back some of its gains while long-term government bond yields increased in the UK and US (pushing prices lower). After leading the sector in price returns last month (see QuotedData’s investment companies roundup – September 2019), Golden Prospect Precious Metal‘s price and NAV shed 10.1% while Woodford Patient Capital was the worst performer in NAV terms. CATCo Reinsurance Opportunities‘s price was up nearly 30%;
  • Money in and out – JPMorgan raised £148.9m for its new Global Core Real Assets trust. targeting the infrastructure, transport and real estate sectors;
  • Discounts/premiums – Lindsell Train benefitted from the flows into UK stocks, reversing the sustained narrowing in its premium over recent months;
  • Major news stories – We had inaugural results from Ashoka India Equity and US Solar.

 Performance data

September’s biggest movers in price and NAV terms are shown in the charts below.

Looking first at the positive moves:

  • CATCo Reinsurance Opportunities has been returning capital to shareholders as part of a wind down, following extreme hurricane claims.
  • Asian country specialist funds, including Baillie Gifford Japan, Fidelity Japan and Weiss Korea Opportunity, had good months on the back of easing trade tensions and monetary stimulus.
  • Ashoka India’s price increase reflected much-improved sentiment towards Indian assets after the government announced a cut in corporation tax.
  • UK equity funds, led by Aberdeen Standard Equity Income, Schroder UK Mid Cap, Aurora, and Perpetual Income & Growth make a rare appearance, as no-deal Brexit concerns abated somewhat.
  • BMO Commercial Property also benefited from this sentiment while Triple Point Social Housing’s share increase reflects a tempering in concerns over the Regulator of Social Housing’s take on the lease-based business model. UK stocks have since sold-off heavily in early October, following poor economic data.

On the negative side:

  • Woodford Patient Capital was the worst performer in NAV terms after it wrote down values for some of its holdings.
  • Golden Prospect Precious Metal sold-off after a very strong run over the past few months. The gold price was down 3.1% in September.
  • Biotech Growth’s shares followed the NAV down. They are up about 7% over the year-to-date.
  • Riverstone Energy followed commodity prices lower over the second half of the month.

 Discounts and premiums

More expensive relative to NAV:

  • Leaf Clean Energy’s move was price led. Its NAV was revised up enormously in late-May following a positive court case ruling.
  • CATCo’s discount narrowed after peaking at around 50% – the shares traded at a 20+% premium as recently as December 2017.
  • Woodford Patient Capital’s discount narrowed as the shares ticked up in spite of write downs to some holdings.
  • Lindsell Train benefitted from the flows into UK stocks – the shares traded at a 100% premium to NAV as recently as June.
  • EPE Special Opportunities benefitted from a strong set of results.

Cheaper relative to NAV:

  • Shares in the private equity companies, Oakley Capital and Merian Chrysalis, were down, perhaps reflecting concerns over the economic cycle and the amount of ‘dry powder’ the industry is holding, increasing valuations. Merian has since come back somewhat, following a £175m placing.
  • The widening in Riverstone Energy’s discount was price-led, reflecting sentiment towards the sector.
  • Doric Nimrod Air Three’s share price has been quite volatile recently, much more so than its sister funds. It might be that a large shareholder is looking to exit.

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

wdt_ID Fund 30 Sep (%) 30 Aug (%)
1 Leaf Clean Energy -4.70 -21.10
2 CATCo Reinsurance Opportunities -35.90 -50.30
3 Woodford Patient Capital -31.20 -45.40
4 Lindsell Train 28.40 18.40
5 EPE Special Opportunities -28.10 -37.60
6 Oakley Capital -28.60 -15.00
7 RDL Realisation 39.30 52.80
8 Riverstone Energy -43.10 -32.70
9 Merian Chrysalis 11.60 21.80
10 Doric Nimrod Air Three 20.90 31.00

 Money in/out

Money coming in:

  • JPMorgan raised £148.9m for its new Global Core Real Assets trust, targeting the infrastructure, transport and real estate sectors. It represents the fifth sector-IPO of the year and is aiming for total annual returns in the 7-9% range.
  • Elsewhere, fundraising picked up following the summer recess. Merian Chrysalis led the way with a £175m placing.
  • The infrastructure debt fund, Sequoia Economic Infrastructure, raised £138.8m through a placing of its own, lifting the shares on the back of some of the firmest trading volumes the shares have seen.
  • Target Healthcare REIT also came to market with a placing, raising £80m.

Money going out:

  • Edinburgh Investment led the way in buying shares back, leading to its discount narrowing. The discount had been widening since April.
  • Pershing Square’s buybacks helped narrow its discount in what was generally a subdued month for growth stocks.
  • The other funds to shrink in size by returning more than £10m were TwentyFour Income, NB Global, Perpetual Income & Growth and CATCo.

A number of funds announced their full year dividends in September, 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 BMO Real Estate Investments 30 Jun 2019 5 Nil n/a 0.89x
2 Aberdeen Frontier Markets 30 Jun 2019 $2.0 Nil $-1.30 Nil
3 AEW UK Long Lease 30 Jun 2019 5.5 69.2 5.26 0.96x
4 Ashoka India Equity 30 Jun 2019 N/A N/A -0.41 N/A
5 Bluefield Solar 30 Jun 2019 8.3 11.8 11.01 1.33x
6 City of London 30 Jun 2019 18.6 5.1 19.8 1.06x
7 Crystal Amber 30 Jun 2019 5 Nil 0.05 0.01x
8 FastForward Innovations 31 Mar 2019 N/A N/A 0.93 N/A
9 GCP Student Living 30 Jun 2019 6.15 3.4 5.23 0.85x
10 Genesis Emerging Markets 30 Jun 2019 $19.0 Nil $19.00 1.0x


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.

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October Investment Companies Roundup

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