AVI Japan Opportunity – The sun has risen

2023 been a noteworthy year for Japan, defined by strong share price returns (at least in yen terms) and progress in its path to improving corporate governance. The Tokyo Stock Exchange has implemented a series of new efforts to name and shame the worst governance offenders (such as pressuring companies to keep their P/B ratio over one). These efforts appear to have already borne fruit, with Japanese equities outperforming even the US in local currency terms. AVI Japan Opportunities Trust (AJOT

A maturing portfolio of activist positions

Since its IPO in late 2018, AJOT has convincingly outperformed over one, three and five years. During this period the team has established a track record of successful, constructive, activism that is very much aligned with Japan’s regulatory evolution. The team views the 2023 reforms by METI and the TSE as adding meaningful momentum to the Government’s ambitions regarding corporate governance and shareholder returns. In 2024 the team is expecting a number of investees to publish new medium term

AVI Japan Opportunity

AJOT has delivered a strong year of performance…

AVI Japan Opportunity – Good governance, better returns

The team behind AVI Japan Opportunity (AJOT) continues to champion the tenets of good corporate governance and shareholder alignment. On this front, it recently made some positive progress at NC Holdings AGM. The benefits that it can accrue through improved corporate governance complement an attractive-valued Japanese equity market, which is increasingly attracting the attention of foreign investors. The missing piece of the puzzle is the weakness of the Yen. If that changes, AJOT could really s

AVI Japan Opportunity – Good governance, better returns

The team behind AVI Japan Opportunity (AJOT) continues to champion what they believe are the tenets of good corporate governance and shareholder alignment. On this front, it recently made some positive progress at NC Holdings AGM. The benefits that it can accrue through improved corporate governance complement what they see as an attractively-valued Japanese equity market, which appears to be increasingly attracting the attention of foreign investors. The missing piece of the puzzle is the weakn

AVI Japan Opportunity

AJOT has delivered strong returns to date from a unique and original strategy…

Constructivist

Asset Value Investors, AJOTs manager, is bullish. Their constructivist approach is promoting change and there is the potential for one or two take privates in 2023. In addition, 2022s undiscriminating correction in the value of growth assets has created opportunities. The team has capitalised on this by leveraging the fund (c9% of NAV) to initiate new positions (e.g. Nihon Kohden, 7.5% NAV). The team has stated a willingness to further increase the funds leverage to finance additional investment

AVI Japan Opportunity - Maintaining its firepower

AVI Japan Opportunity Trust (AJOT) is delivering returns well ahead of comparable indices and competing funds. Perhaps encouraged by these good returns, AJOT’s shares have been tending to trade close to NAV. In light of this, the board, following consultation with major shareholders, was able to dispense with the 2022 exit opportunity (a two-yearly exit opportunity at a price close to NAV has been a feature of the fund since launch). That means that AJOT’s managers still have considerable fire

AVI Japan Opportunity - Maintaining its firepower

Over the period since it launched, AVI Japan Opportunity Trust (AJOT) has delivered returns well ahead of comparable indices and competing funds. Perhaps encouraged by these good returns, AJOT’s shares have been tending to trade close to NAV. In light of this, the board, following consultation with major shareholders, felt able to dispense with the 2022 exit opportunity (a two-yearly exit opportunity at a price close to NAV has been a feature of the fund sincelaunch). That means that AJOT’s ma

Ingredients for success

This year has been full of surprises, and not many of them good ones. Inflation figures surpassing expectations and the Russian invasion of Ukraine have been key drivers of tumultuous markets. Prior to 2022 investors were well rewarded for simply following trends, and the volatility this year is perhaps a painful reminder of the necessity for good portfolio diversification. Diversification of asset classes is important, but so is diversification within asset classes. Simply buying growth or buyi

AVI Japan Opportunity

Despite its focus on high-quality Japanese small caps, AVI Japan Opportunity (AJOT) is primarily a strategy looking to unlock shareholder value through active engagement, with its market-cap exposure a reflection of where the best opportunities are for positive engagement outcomes. Importantly, however, each of AJOT’s holdings has the ability to stand on its own feet, with the high-quality business models of the holdings granting the prospect of positive returns even in the absence of the team’s

Morning Note – 22 April 2024

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Benefits of scale set to materialise

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

LIBERUM: Speedy Hire: Weakness in FY 24 but recovery in FY 25

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

Jupiter Green

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

H&T Group (HAT): Core franchise build, short-term retail noise

In our 15 March 2023 initiation, 'Pawnbroking royalty, with strong, profitable growth', and subsequent notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities. These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%. Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2

Morning Note – 29 February 2024

Redde

Proposed share-for-share merger with Northgate