EOT is positioned for growth in a difficult environment. Managed by Alexander Darwall of Devon Equity, EOT takes quality risk combining quality investees with a concentrated portfolio. Risk is managed via careful attention to investee’s products, end-markets (including the market structure), management and balance sheets. In contrast to most professional managers, Darwall takes advantage of the investment trust structure to embrace concentration risk preferring not to dilute his stock selections. Trading on an 14.0% discount to NAV, EOT is trading in line with its 12 month average discount (13.8%) but below its historic rating (a premium to NAV). Given EOT’s history of outperforming as the market recovers, our view is that as the market refocuses on its potential its rating will follow.
