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  • 31 Oct 18

The Trump effect

Two years after the shock election of Donald Trump and with the US mid-term elections approaching on 6 November, we thought it a good time to strip out all the noise and bluster and assess what the Trump administration has really meant for US markets and the trusts that invest in them. We can identify two key policy moves Trump has achieved as President: tax reforms and trade tariffs. Each has significant ramifications for certain sectors and trusts, some good and some bad. The long-term effects are still in the balance, with the midterms a crucial fork in the road. Since Trump was inaugurated as president, the landscape of the US market has arguably transformed, with greater optimism around the near-term prospects for equities and greater pessimism around international relations. We take a look at how trusts have positioned themselves vis-à-vis these trends. “I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting.” Arguably the most significant piece of Trumpian legislation for the economy and the stock market was his wide-ranging tax reform introduced at the end of December 2017. This included cutting n the corporate tax rate from 35% to 21% and a dramatic change to the current model of taxation, in particular the taxation of US corporations’ foreign subsidiaries.

Companies: IBT USA BRNA ATT JAM JUS GVP GVP

  • 18 Sep 18

Gabelli Value Plus+ Trust - Overview

The Gabelli Value Plus+ Trust is a differentiated US equity portfolio with a high active share and a wide-ranging all-cap approach focused on identifying undervalued companies, including those with a strategic value to trade buyers. The trust was launched in 2015 during a difficult period for a value approach, but over the long run the strategy has performed well, returning 16% a year compared to the 12% of the US market. The aim is to produce real returns of 10% a year, and the focus is on bottom up analysis with no attention being paid to the indices – the trust’s portfolio has an active share of 94% to the S&P500, with a bias to small and mid-size companies where the managers believe they can add more value and which are more often the subject of takeover bids. The trust also invests a portion of its funds (currently around 10%) into companies that are the subject of takeover offers, which gives it low-risk returns not dependent on market movements. The trust focuses on total return rather than generating an income, so distributions are not guaranteed. Thanks to the value style being out of favour the discount has widened this year, although the trust traded on a premium the last time value rallied, following the election of Trump in late 2016.

Companies: Gabelli Value Plus + Trust
  • 29 Jan 18

Gabelli Value Plus+ Trust

The Gabelli Value Plus+ Trust is a differentiated US equity portfolio with a very high active share and a wide-ranging all-cap approach focused on identifying companies wihch the managers believe are undervalued, including an element of exposure to companies which are the target of mergers and acquisitions. Gabelli is a well known name in the United States, managing assets in excess of $40bn and the trust taps into the ‘Private Market Value (PMV) with a Catalyst’ investment strategy, developed by founder Mario Gabelli in the 1970s, which is now taught as part of the value investing course at Columbia Business School. Whilst there is no guarantee that this can be replicated in future the strategy has delivered significant outperformance relative to the wider US market over the long term, delivering ‘up’ years in 35 out of 40 between 1977 and 2016. Launched in February 2015, the Gabelli Value Plus+ Trust (GVP) had kept pace with the notoriously slippery S&P 500 index until the start of 2017 – outperforming it by a small margin – but fell behind last year as the index, and in particular mega-caps toward which the trust is underweight, raced ahead. However GVP’s managers don’t benchmark themselves against an index and, instead, aim for absolute returns typically to the tune of inflation plus 10%. The strategy which the trust mirrors tends to generate its relative outperformance in falling markets and has since inception – typically – lagged behind during quarters where the market has risen strongly, whilst outperforming the market when it has been in negative territory. Whilst it may underperform should mega caps rally again - having relatively low exposure to the largest US stocks - the managers believe the trust stands to benefit from increased M&A activity in the US, as companies onshore their money in the wake of President Trump’s tax changes, and from a positive outlook for domestically focused US stocks – which are a core focus for the trust.

Companies: Gabelli Value Plus + Trust
  • 29 Jan 18

What lies beneath

In a report early last year, we analysed the argument surrounding whether value investing (a style that has significantly underperformed relative to growth investing) was about to make a sustained comeback. Simply put, value investing involves buying shares in companies that the managers believe are ‘cheap’ relative to the wider market and their own histories. Many value managers, however, will only buy ‘cheap’ stocks where they have pinpointed a potential catalyst they believe will lead to share prices increasing (by analysing metrics such as cashflow, leverage, balance sheets and external factors) in order to avoid ‘value traps’ - stocks that are still in a period of decline or worse, are heading for total collapse. Growth investing, again put simply, means buying companies that are displaying above average earnings growth. Most growth managers will follow a GARP (growth at a reasonable price) approach, which means they don’t mind paying higher than average valuations for a stock if they believe future earnings growth is undervalued by the wider market. In recent times especially, value investing has become synonymous with more cyclical stocks such as mining, energy and banks, while growth investing has meant a focus on more defensive companies (with futures which aren’t dependent on economic growth) such as utilities, telecoms, tobacco and other consumer goods stocks. Those who predicting that value stocks were on the verge of a new era of outperformance were proved wrong (or too early), as they generally underperformed growth over the course of 2017. However, in our report last year (and with the proviso that the past is no guide to future returns), we found that had been a correlation between the relative performance of value versus growth stocks and the trajectory of UK government bond (or gilt) yields, with value generally underperforming when yields fell (or when bond prices rose) and outperforming when yields rose (or when bond prices fell). Government bonds have delivered almost unprecedented risk-adjusted returns over the past three decades due to factors such as credit boom prior to the global financial crisis and ultra-low interest rates over the past 10 years. However, many believed bond yields would rise last year (as they did in 2016) as inflation picked up in the UK following Brexit-induced weakness in sterling, coupled with Donald Trump’s commitment to economic stimulus. However, despite these two strong forces at work, 10-year gilt yields fell from their peak of 1.54% in late January 2017 to 1.26% by the end of the year (representing a fall of c.20%). We don’t claim to be experts in global fixed income markets, but the commonly-held view among those who do, is that bond yields will rise over the coming years (though as we mentioned last year, many have incorrectly called the collapse of the bond market for a number of years now…). While this might not be repeated, and again like last year, our analysis shows that value stocks have historically outperformed growth when bond yields have risen. However, as we highlight in this report, it is surprising how little exposure the ‘average’ UK investor has to “value” as a style, with the large majority of inflows into equity funds heading towards funds with a clear “growth” or “quality” bias. As such, if this long-anticipated revival in value investing does indeed occur – most investors look likely to miss out, or worse, be hit by capital losses.

Companies: AGT WTR ASL TMPL GVP

Research, Charts & Company Announcements

Research Tree provides access to ongoing research coverage, media content and regulatory news on Gabelli Value Plus + Trust. We currently have 9 research reports from 2 professional analysts.

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Range Today
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52 Week
116/134p
Daily Volume
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# Shares
98.3m
Daily Liquidity
(0.23%)
Pension Liability
£0m
Enterprise Value
£123.7m
Market Cap
£124.8m
Latest PE (hist)
221.18
Div Yield
0.45

Latest News/RNS

(more news)
Date Source Announcement
09Jul19 17:04 RNS Transaction in Own Shares
04Jul19 16:27 RNS Transaction in Own Shares
04Jul19 07:00 RNS Transaction in Own Shares
02Jul19 17:06 RNS Transaction in Own Shares
02Jul19 16:55 RNS Holding(s) in Company
02Jul19 15:23 RNS Submission of Document
02Jul19 12:56 RNS Transaction in Own Shares
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  • 12 Jul 19

LIBERUM: Burford Capital* - ROIC lessons

Burford is off 22% relative since the recent peak. Much has been written about returns, in some cases valuing the business excluding the big wins, but including all losses, which makes no sense, or putting the core business on 10x and its opex on 15x (same), or entirely ignoring the extra returns from the sovereign wealth fund deal (same).

Companies: Burford Capital
  • 09 Jul 19

Petersen appeals to investors

Burford has made a double announcement about the Petersen case. Argentina had appealed to the US Supreme Court over the decision about where the case will be heard. The Court has declined to hear the appeal, so proceedings will take place in the US. Burford has also sold another 10% of its entitlement in the case for $100m; implying a market price of $1bn, ca.25% above the value implied by the smaller July 2018 transaction. Additional disclosure is that the sale took place to 11 institutional investors, with 40 having participated in the market now. This adds credibility to the valuation generated by the transactions to date.

Companies: Burford Capital
  • 10 Jul 19

Cenkos: Equals Group Plc - Signs are there for an excellent year

Equals Group (formerly FairFX) has released a H1/19E trading update highlighting recent operational achievements and strong, broad-based turnover growth. We see this as clear evidence that prior investments in customer experience and extending the product range have produced returns, which are set to continue. We expect further share price appreciation to follow given today's encouraging signs on FY19E trading, with our forecast 52% EPS growth coming at an attractive PEG of just 0.37.

Companies: FairFX Group
  • 10 Jul 19

LIBERUM: Alpha FX* - H1'19 trading ahead / FY19e EPS estimate +9%

Alpha FX has grown H1'19 revenues by 60% year-on-year despite the subdued macro backdrop for UK plc. This highlights their market share gains in the core UK and increasingly European corporate FX markets and the initial contributions from the Institutional business, Alpha Pay and the first overseas office initiative.

Companies: Alpha Fx Group
  • 12 Jul 19

LIBERUM: Miton Group* - Net outflows experienced but market movement strong

Miton’s Q2 AuM update shows £4.7bn under management, 2.7% up from the last disclosed number at the end of March. Over the quarter, Miton has experienced net outflows of £87m, while performance recovered strongly, adding £211m to AUM.

Companies: Miton Group
  • 16 Jul 19

Small Cap Feast

Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited the IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m. Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raising EUR135m with market cap on admission of EUR309.6m, expected 17 July 2019. Roxi Music UK music streaming service plans London IPO as it goes up against Spotify. They have appointed investment bank Arden Partners for an initial public offering (IPO) on the London Stock Exchange later this year.

Companies: CALL BIRD ABC KDR EMAN BST SCE ZEG SAG FUL

  • 12 Jul 19

In line AuM, positive performance mitigates flows

AuM grew in Q2 with solid investment performance mitigating a modest net outflow (£87m). Year to date, we have seen continuing political uncertainty which has impacted net sales across the UK Smaller Companies sector, Miton has not been immune. We expect flows to return with sentiment, and make no material changes to our earnings forecasts. We continue to see a 60p/share intrinsic value, after taking into account a significant quantum of “free cash” on the balance sheet.

Companies: Miton Group
  • 02 Jul 19

Where’s the Value?

Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.

Companies: OPM ALU ANCR BLV CONN CRC FDL GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM

  • 15 Jul 19

LIBERUM: AEW UK REIT* - Industrial gains

AEW UK REIT delivered strong NAV returns in FY2019 despite retail headwinds in Q1. Operational progress was demonstrated by reduced vacancy and full cover of the 8.4% dividend.

Companies: AEW UK Reit
  • 12 Jul 19

Forecast updates & customer analysis

Last week’s pre-close statement provided several updates, with the two main items being that H2 trading was in line with the Board’s expectations and there will be a five-month extension to the large contract that was lost in March.

Companies: Redde
  • 12 Jul 19

Positive AGM statement; strong interest at Hudson Quarter

Palace Capital has released a positive statement in advance of its AGM later today, reporting a strong start to its upcoming Hudson Quarter development in York. With the project on track to complete in early 2021, we see significant scope for value-accretive growth in coming years which we now reflect through the introduction of FY22e forecasts showing material YoY adj. EPS growth of 21.2%, a dividend cover of 1.09x, EPRA NAV of 448p and LTV of 33%. At a 31% discount to FY19 NAV and 6.7% yield, we reiterate our Buy.

Companies: Palace Capital
  • 11 Jul 19

Net inflows surge, record quarter drives AuM +11%

Inflows have surged in Q1 hitting a new quarterly record at +£725m, confirming AuM at £14.1bn (+11.4% qoq). Outperformance complemented this: adding a further £717m equating to+5.7% (as %opening AuM) vs the +2.7% posted by the FTSE All-Share. We do not make any changes to our earnings forecasts, having already upgraded by 6-7% at the Finals for £14.0bn AuM as at 25/6. Trading at a 13x FY20e PER falling to 12x, we find the valuation undemanding given the strong AuM growth momentum.

Companies: Liontrust Asset Management
  • 15 Jul 19

Palace Capital - A wealth of asset management opportunities

Palace Capital recently reported FY19 results and announced plans to convert to REIT status, approved by shareholders at the AGM. The results showed further growth in recurring earnings and positive like-for-like valuation growth but they also reflected the deferral of some letting activity to pursue refurbishment and redevelopment opportunities. Our revised forecasts now include the impact of the Hudson Quarter development in York, which we expect to be a key driver of returns over the next two years.

Companies: Palace Capital
  • 16 Jul 19

Pre-close nudges forecasts up

CLIG unaudited pre-close statement confirms its Funds under Management (FuM) on 30 June 2019 was US$5,389m (see our note of 8 July 2019, which increased our forecast 3.6%).

Companies: City Of London Investment Group
  • 02 Jul 19

THE MONTHLY July 2019

When advisers first start looking at business relief (BR) products, there is much to take in: the rules governing such products; the investment strategies being used; and what the investment risk is. It is easy to lose sight of the fact that, for non-AIM products, the investment is being made directly into a company or partnership, rather than a fund. It is, therefore, essential that governance is part of the diligence process.

Companies: AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY KOOV LWRF MCL MUR NSF OXB PCA PHP RE/ REDX RMDL STX SIXH TRX TON SHED VAL VTA W7L