Investment Companies Roundup
Kindly sponsored by Baillie Gifford
In this issue
- Performance data – appetite for risk was generally down in August, as the trade war and Brexit rumbled on; the oil price was down while gold performed well, as safe havens were sought. Golden Prospect Precious Metal led the sector in price return terms for the second month running in August (+15.2)% while Adamas Finance Asia was the biggest faller (-18.7);
- Money in and out – August is traditionally a quiet month for fundraising. Hipgnosis Songs led the way, raising £51.1m. Leaf Clean Energy led money out of the sector, returning £53.1m in July;
- Discounts/premiums – Doric Nimrod Air Three saw its premium widen while on the ‘getting cheaper’ front, a few funds sold off in thin summer trading;
- Major news stories – JPMorgan Brazil asked investors to support continuation; elsewhere, AEW Long Lease REIT changed its mind about being taken over.
More information about the funds mentioned in this report is available on our website.
August’s biggest movers in price terms are shown in the chart below.
- The gold price continues to power ahead, up 7.6% in August. This helped Golden Prospect’s NAV and share price.
- Apax Global Alpha reported strong financial results while Symphony International benefited from an uplift in the value of Minor Planet International.
- Brevan Howard (BH Global/BH Macro) has been profiting from the gyrations in currencies and markets.
- DP Aircraft’s NAV uplift largely reflects the move in the US dollar in recent months relative to sterling.
- Ecofin Global Utilities and Infrastructure has been performing well for a while, yet surprisingly still trades on a meaningful discount.
On the negative side:
- After a strong run, Latin American funds struggled in August. Brazil’s fires and an Argentine default weighed on BlackRock Latin American, Aberdeen Latin American Income, Hansa Trust and JPMorgan Brazil.
- Riverstone Energy announced a 26% drop in its NAV and its shares moved to trading on a 35% discount.
- Falls in the share prices of Royal Dutch Shell and Ashmore contributed to Aberdeen Standard Equity Income’s poor August
- Woodford Patient Capital wrote down the value of Industrial Heat. In thin summer trading, we also saw some significant discount widening, which is covered in the next section.
Discounts and premiums
More expensive relative to NAV:
- Doric Nimrod Air Three benefited from a favourable article in the Telegraph.
- LMS Capital completed the sale of Entuity.
- Miton UK Microcap’s discount is trending back to more usual levels for that trust as it steps up its buyback activity.
- Chenavari Toro’s share price rose after a 5% tender was undersubscribed – implying there are no frustrated sellers.
- Renewable energy funds are in demand, which we think might reflect the prospect of falling interest rates.
Cheaper relative to NAV:
- Macau Property Opportunities (MPO)’s share price has rebounded in September.
- We think that a few funds that don’t trade much including MPO, EPE Special Opportunities and CIP Merchant Capital sold off in thin summer trading.
- AEW UK Long Lease’s NAV rose for the reasons explained above. The shares weakened, however, after it abandoned plans to seek a bidder for the company/portfolio.
- Tritax Big Box reported a fall in its NAV. The trust has expanded rapidly and its latest acquisition may have been done at a full price.
The table below shows the top five movers in either direction (more or less expensive relative to NAV):
|wdt_ID||Fund||31 Aug (%)||31 Jul (%)|
|1||Doric Nimrod Air Three||31.00||17.40|
|3||Miton UK Microcap||-6.10||-13.90|
|4||Chenavari Toro Income||-16.50||-22.90|
|6||Macau Property Opportunities||-45.80||-34.70|
|7||EPE Special Opportunities||-37.60||-26.60|
|8||CIP Merchant Capital||-39.40||-28.50|
|9||AEW UK Long Lease||-23.20||-12.30|
|10||Tritax Big Box||-5.60||3.60|
Money coming in:
- August is traditionally a quiet month for fundraising and August 2019 was no exception. Apart from Hipgnosis Songs, which raised £51.1m through a placing (the original target was £72m) and Gore Street Energy Storage (which didn’t make the table but managed to expand with help from an injection of assets from Ireland’s National Treasury Management Agency), the funds raising money are the usual suspects issuing stock almost daily to meet demand.
- BB Healthcare, Finsbury Growth & Income, City of London, Allianz Technology and Baillie Gifford Shin Nippon all issued more than £5m worth.
Money going out:
- Leaf Clean Energy made a compulsory redemption of 66.5% of its shares in August.
- Edinburgh’s discount continued to widen despite it stepping up its buyback activity.
- NB Global Floating Rate Income regularly features in this table. Elsewhere, Pershing Square has embarked on a major buyback programme while JZ Capital made a tender offer for $30m worth of its own shares in August, which was well oversubscribed.
- Other funds shrinking in August included Edinburgh’s sister fund – Perpetual Income & Growth, Templeton Emerging, Witan, Chenavari Toro (through a tender offer), Miton UK Microcap and Biotech Growth.