Atlantis Japan Growth Fund (AJG) aims to realise long-term capital growth through investment in a diversified portfolio of listed Japanese equities. It has a bias towards growth stocks and focuses on companies that have the potential to benefit from changing trends within Japan’s domestic economy. AJG has an all-cap strategy but in recent years it has focused on small-cap stocks. Performance, which is benchmarked against the TOPIX index, has been strong. AJG’s NAV has outperformed over the last one, three, five and 10 years. The fund has also outperformed the UK market over all these periods. Under a new dividend policy, shareholders receive a quarterly dividend of 1% of NAV (4% pa).
Companies: Atlantis Japan Growth Fund
Atlantis Japan Growth Fund’s (AJG) lead adviser since May 2016 is Taeko Setaishi of Atlantis Investment Research Corporation; during her tenure AJG has outperformed the benchmark Tokyo Price Index (TOPIX) in both NAV and share price terms. Over time, AJG’s board has simplified the company’s structure. Recently it announced it will no longer offer a six-monthly redemption facility; instead it will pay a quarterly dividend based on the fund’s NAV, which will be paid out of revenue and capital. The board believes that this could broaden AJG’s appeal for investors seeking Japanese equity exposure.
Atlantis Japan Growth Fund (AJG) is advised by Atlantis Investment Research Corporation (AIRC). Lead adviser Taeko Setaishi says that although consensus Japanese corporate earnings growth is being revised downwards, she is still able to identify primarily smaller-cap companies with promising growth prospects that are trading on attractive valuations. As an example, Setaishi highlights changing dynamics within the Japanese economy, which are generating growth in the widely diverse services sector. AJG’s portfolio is trading on higher valuation multiples than the TOPIX index, but has meaningfully higher forecast earnings growth and a superior return on equity, which have contributed to the fund’s medium- and long-term outperformance versus the benchmark.
Atlantis Japan Growth Fund (AJG) is advised by Atlantis Investment Research Corporation (AIRC). Lead portfolio adviser Taeko Setaishi aims to generate long-term capital growth from a portfolio of primarily smaller-capitalisation Japanese equities. AIRC’s philosophy is that over the long term, a company’s share price performance is driven by its earnings growth, especially for smaller companies. Setaishi notes that Japanese equities have experienced negative investor fund flows in 2018, which has had a large impact on the Japanese stock market. However, while overall economic growth in the country remains modest, the adviser is continuing to find companies with attractive fundamentals that are trading on reasonable valuations, particularly in small and mid-caps. While recent performance has been more challenging, AJG has outperformed its benchmark TOPIX index over the last one, three, five and 10 years.
Atlantis Japan Growth Fund (AJG) aims to generate long-term capital growth from a diversified portfolio of primarily mid- and small-cap Japanese equities. In 2016, in response to shareholder concerns, which included the trust’s investment performance, the board appointed deputy fund adviser Taeko Setaishi to the position of lead fund adviser. Since then, AJG’s performance has improved. The trust has outperformed its TOPIX benchmark over one, three, five and 10 years, and is the best-performing fund, out of four, in the AIC Japanese Smaller Companies sector over one year. Given the improving economic backdrop in Japan and relatively attractive company valuations, Setaishi is positive on the outlook for Japanese equities and she continues to find interesting growth opportunities across a variety of sectors.
With strong performance from most emerging markets, smaller companies and technology, 2017 will be remembered as the year that rewarded those investors willing to take some risk with their investments. Despite initial worries about political risk stemming from Brexit and upcoming European elections, equity markets in general soared. For the first time in recorded history the S&P 500 made gains in every month of the calendar year, the MSCI Emerging Markets Index ended the year up 30.55% (in sterling terms), while the Japanese Topix Index returned 22.23%.
Companies: IBT SMT JEO EMF SDP FAS BGS AJG
We believe that the Federal Reserve is being forced to withdraw liquidity as the US economy is now at or near full employment. Going forward, either the US economic expansion is likely to falter or interest rates in the US will rise further. We believe that stock selection rather than index returns will be key in driving returns in the next phase of the bull market we are witnessing and favour mid and smaller companies worldwide. We recommend the Atlantis Japan Growth Fund (AJG), now advised by Taeko Setaishi, who has a strong long-term performance record. The annual subscription right programme and share redemption facility that AJG has, should gradually help increase liquidity and allow the fund to grow over time while controlling the discount.
Edison Investment Research is terminating coverage on Atlantis Japan Growth Fund (AJG). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
Atlantis Japan Growth Fund (AJGF) is an actively managed growthoriented fund entirely invested in Japanese equities. Given this mandate the portfolio has tended to have a bias to small and medium-sized companies. The fund’s objective is to generate long-term capital appreciation. Since the fund was launched in 1996, day-to-day investment decisions have been advised by Ed Merner, who has long experience as a Japanese equity adviser and manager. AJGF has outperformed both Topix and MSCI Japan Smaller Companies indices over one, three and five years.
Atlantis Japan Growth Fund (AJGF) is an actively managed growth oriented fund entirely invested in Japanese equities. Given this mandate the portfolio has tended to have a bias to small and medium-sized companies. The fund’s objective is to generate long-term capital appreciation. Since the fund was launched in 1996, day-to-day investment decisions have been advised by Ed Merner, who has long experience as a Japanese equity adviser and manager. AJGF has outperformed both Topix and MSCI Japan Smaller Companies indices over one, three and five years.
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Litigation Capital Management has announced FY20 results with gross profit up 7% to A$21.7m and PBT of A$9.2m, slightly behind expectations albeit the Group had already flagged that delays to 3 cases during the year would result in resolutions in FY21, thereby impacting FY20 results. That said, excellent strategic progress through the year and good news flow as well as increasing scale suggests more value to come. Reiterate buy
Companies: Litigation Capital Management Ltd.
To achieve YoY revenue growth over H1/20A despite the challenges of Covid-19 and its impact on the travel sector is testament to Equals' resilience and increasing focus on B2B and International payments services. While weaker gross profit and EBITDA margins have impacted profitability in H1/20, we see potential for an earnings recovery in H2/20 given cost reduction measures currently being undertaken. This should lead Equals to cash breakeven in Q4/20 and FCF positive by early FY21.
Companies: Equals Group Plc
FY20A results largely reflect a period prior to the Covid-19 lockdown, yet show Duke entering a more challenging FY21E with momentum. Yesterday's trading update demonstrated another notable rise in quarterly cash receipts for Q2/21, as royalty partner trading continues to improve. As some partners' forbearance measures will expire this month, Q3/21 receipts should continue this upwardly momentum. This opens the door to a return to cash dividends at some future point. Today, Duke also confirms it is now seeking new royalty partners, alongside follow-ons.
Companies: Duke Royalty
Interim results demonstrate YoY growth and a resilient outcome that has exceeded management's expectations from the start of the Covid-19 pandemic. This is testament to the degree of recurring revenue generated across the business. FY21 trading looks to be more challenging, as notably lower new insurance sales post-lockdown will translate into lower premium income. A number of organic opportunities are being worked on to fill the shortfall. Rising UK redundancies and their impact on policyholder retentions creates great uncertainty, hence our forecasts remain withdrawn and recommendation remains Under Review.
Companies: Personal Group Holdings Plc
Sigma Capital (“Sigma”) has partnered with global alternatives manager EQT to deliver and manage a £1bn GDV private-rented sector (“PRS”) housing fund focused on Greater London. EQT will invest £300m equity, complemented by debt (including a Homes England facility), to build 3,000 homes in 5 years. Sigma will generate fee income as development manager, a recurring fee income stream from managing completed assets, as well as participation in returns via a minority co-investment (£16m) and a profit share. We estimate that the fee income alone is worth £45m to Sigma in the first five years: 50% of the current market cap. Crucially, this is a step up in AuM bringing a high quality long-term recurring earnings stream. We will reforecast following interim results (expected tomorrow) to provide full context.
Companies: Sigma Capital Group Plc
In June, faced with the task of replacing its longstanding portfolio manager, Alistair Mundy, Temple Bar Investment Trust’s (TMPL’s) board reiterated its commitment to a value style of investing. The board has now opted to hand the management contract to Nick Purves and Ian Lance of RWC Partners, two managers with considerable experience of managing income portfolios using a value-style approach. Value investing, where managers buy stocks that are valued more cheaply than market averages – based on measures such as price/earnings, price/book and yield – is deeply out of favour. The RWC team says that value stocks have never looked more unloved in the 30- odd years that they have been managing money. In their view, this makes it imperative that TMPL investors keep faith with the strategy and it also means this is an attractive entry point for new investors. One important change, however, is a cut to TMPL’s dividend to a level that the RWC team believes will be more sustainable.
Companies: Temple Bar Investment Trust
In line interim results to 30 June 2020 show the strength of this business amid a difficult environment. This is the first step in what should be an exciting growth trajectory toward a larger, scaled up business with high recurring revenues and ownership of the full supply chain in the personal injury and clinical negligence market for clients requiring long-term, risk-adjusted returns. We reiterate our TP of 50p, noting further upside potential as acquisitions are completed.
Companies: Frenkel Topping Group Plc
HSBC’s future should be clarified as soon as the US and China come back to the negotiation table. This will not happen before the US elections are over. In the meantime, HSBC will continue to be instrumentalised and its share price will remain under pressure.
Companies: HSBC Holdings Plc
Today's news & views, plus announcements from VOD, POLY, SMDS, BLND, BYG, WEIR, DC, SNR, SHI, INTU, IHR, CNC, ARE, INCE
Companies: INTU SHI INCE
The impressive full year 2019 results included some eye-catching numbers, including a record PBT of £40.1m (nearly 3x FY18 @ £14.3m), £620m of reserves acquired over 16 legacy deals, and $842m of (estimated) Contracted Premium in the Program business – on track to breach $1bn in FY20 as previously guided and $1.5bn-$2bn in 2022-2023.
Companies: Randall & Quilter Investment Holdings Ltd.
As anticipated, Record has confirmed a material uplift in AUME following the rebound in financial markets from April. We upgrade FY21E forecast EPS by +18%, with higher staff costs offsetting some of the benefit. We expect AUME growth to be more modest from herein. While no performance fees have been recognised over Q1/21 and will be harder to achieve due to Covid-19, any future recognition would have a materially positive impact on earnings. Covid has temporarily paused new client wins, but we expect further additions to come as conditions improve.
Companies: Record Plc
Mercia’s FY20 results reflect continued progress, delivering on management’s three-year strategy. AUM climbed 58% to £0.8bn, while FUM rose 73% to £658m. Following the acquisition of the NVM VCT fund management business, the company is operationally profitable on a monthly basis, with annual revenues exceeding operating costs for the first time in FY20. Net assets rose 12% to £141.5m, with the direct investment portfolio stalled at £87.5m reflecting the impact of COVID-19 fair value adjustments and a £15.7m net investment. The group remains well-placed for a downturn with £30m of unrestricted balance sheet cash and £320m of group cash. Post period end the group exited The Native Antigen Company, with £5.2m in cash (8.4x return, 65% IRR) expected. Despite the group’s progress, Mercia’s shares continue to trade at a material discount to NAV (0.60x), even before considering the embedded value of the third-party fund management business (> 4.5p at 3% of AUM).
Companies: Mercia Asset Management Plc
COVID-19 and a further cut to power price assumptions saw NAV per share fall to 309p in H120 (FY19: 337p). However, PPP performed well, bidding momentum has picked up recently and John Laing Group (JLG) expects ‘modest’ NAV growth in H2. New CEO Ben Loomes highlighted digital connectivity and energy transitions as potential future investment themes, and will set out further details in November. We cut our FY20 NAV per share forecast by 14% to 308p. The share price stands at an 8% discount to FY20e NAV per share.
Companies: John Laing Group Plc
Trident Royalties Plc (AIM: TRR) has, this morning, announced the acquisition of a 1.5% Net Smelter Royalty (NSR) over the resourcestage Lake Rebecca Gold Project located in the highly prospective Eastern Goldfields province in Western Australia. The royalty package is being acquired from a private seller for a total consideration of A$8.0 million (c. US$5.63 million), comprising of A$7.0 million in cash and A$1.0 million in new ordinary shares in Trident. The acquisition is Trident’s fifth overall and its third gold deal. As per strategic guidance the company is moving fast assembling a diversified portfolio with a paying cashflow stream from iron ore and copper production and several strategic gold royalties with the potential for near term revenues. The market is paying attention with TRR shares up 49.8% since its IPO on AIM in June this year. There is clearly more to come with c. US$7.5 million of uncommitted cash as well as the potential for debt funding and the ability to use equity as acquisition consideration. The Lake Rebecca Gold Project operated and wholly owned by Apollo Consolidated (ASX: AOP), is located 150km ENE of Kalgoorlie in the Eastern Goldfields Province of the Yilgarn Craton. The Project, envisaged as a simple open pit operation, is close to existing gold infrastructure namely Saracen Mineral Holdings Limited’s (ASX: SAR) Carosue Dam Operation whose processing plant is in the process of being upgraded to increase throughput to 3.2 Mtpa.
Companies: Trident Royalties Plc
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA