Generating good long-term investment returns is often predicated on long term thinking. Impax Environmental Markets’ investment objective is unequivocally aligned to this. The team seek to exploit their informational edge in small and mid-cap stocks in the energy, water, waste & resource recovery, and food and agriculture sectors. By being specialists in niche areas, Impax often find themselves very familiar with the investment universe and already fully invested, at a point that a “new” investment theme arrives on the horizon for mainstream managers. As such IEM offers exposures that are unlikely to be found in a material way in any generalist global funds or trusts One such company, held at launch and in the portfolio today is Tomra. Tomra is now the dominant supplier of machinery to tackle the “war on plastics”. Reverse Vending Machines (RVMs) are probably the only way for countries to achieve EU targets for 90% recycling under the EU Plastics Strategy. Tomra’s R&D efforts have meant that they are now world leaders in robotic vision and sensing equipment, which has seen them expand their end markets significantly. Tomra is a good illustration of an Impax owned stock. As at 31st Dec 2006 Impax was the 16th biggest investor in the company, at a point when 34.9% of the company was held by “foreign” (ie non-Norwegian) entities. As at 31st Dec 2017, Impax was the tenth biggest investor and 77.3% of the company was owned by “foreign” entities. IEM has been a strong performer for much of the last five years. The NAV has performed relative to the MSCI ACWI, but also relative to global generalist peers in the investment trust and open-ended sectors. Until January this year, the trust was outperforming both the benchmark and peer groups. However, during 2018 IEM has struggled thanks to a combination of small-cap underperformance (especially a lack of large cap tech), being overweight industrials and no healthcare, as well as being underweight $US. The portfolio has also experienced weakness in the lighting and water utilities sectors which have contributed to the benchmark headwinds. IEM recently adjusted its gearing arrangements, replacing a flexible revolving credit facility with a fixed rate loan. It now has a five-year fixed rate loan of £15m and US$20m, with interest rates on the loans of 2.910% and 4.504% per annum respectively. The current level of net gearing is 4%, according to Morningstar. IEM’s discount continues to narrow. Having bought back 10m shares over the first half of 2017, the board have not had to enter the market since then. The discount has narrowed in considerably of its own accord, and the shares now trade at a premium to NAV of 2.3%.