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  • 05 Jun 19

USA! USA. USA?

2018 saw the first negative calendar year for the S&P 500 and the Dow Jones since 2008 and, despite a subsequent rally, sentiment remains divided between those who believe the US market has more room to run, and those who think the longest bull market in history will soon come screeching to a halt. Instinctively, it feels like a correction must be due and, indeed, a recent survey of Kepler Trust Intelligence readers showed the majority feel that there are choppy waters ahead. Among those who felt that the outlook was negative, the concern raised most often was the impact of any escalation in the ‘trade-war’ talk between China and the United States, while the national ‘black dog’ that is Britain’s constant companion – Brexit – continues to weigh on investor spirits closer to home. However, there are many other indicators which suggest the bull market could continue, making this a difficult time for investors wondering which way to jump. Against this confusing backdrop we look at three different scenarios for the US over the next year, and identify a number of trusts which are positioned well for each.

Companies: USA ATT GVP JUSC BRNA IBT JAM TPOU

  • 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 10 research reports from 2 professional analysts.

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# Shares
98.3m
Daily Liquidity
(0.00%)
Pension Liability
£0m
Enterprise Value
£123.7m
Market Cap
£122.4m
Latest PE (hist)
221.18
Div Yield
0.45

Latest News/RNS

(more news)
Date Source Announcement
01Aug19 16:19 RNS Total Voting Rights
01Aug19 07:00 RNS Directorate Change
01Aug19 07:00 RNS Letter to shareholders
31Jul19 13:53 RNS Result of AGM
31Jul19 11:00 RNS Proposed Tender Offer and Continuation Vote
09Jul19 17:04 RNS Transaction in Own Shares
04Jul19 16:27 RNS Transaction in Own Shares
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  • 21 Aug 19

LIBERUM: NewRiver* - Not all Retail is the same

NewRiver’s current valuation does not reflect its significant differentiation to Retail peers. In our view, the 38% share price decline since April is overdone.

Companies: Newriver Reit
  • 20 Aug 19

LIBERUM: Non-Standard Finance - EPS +13%, DPS +17%, trading in-line

One stable cash-generating business, one growing at 40% and the big one growing at 22%. The company is working towards lower borrowing costs and higher returns at its biggest business as it moderates growth and benefits as recently-opened branches mature.

Companies: Non-Standard Finance
  • 23 Aug 19

LIBERUM: Plus500* - Anticipated regulation of Australia

The Australian regulator has acted swiftly, with a package of measures not dissimilar to those adopted by ESMA and now national laws across Europe. The reduction in company revenues appears to be close to 7.5%, with 25% of Australian revenues protected by the wholesale designation and the remainder dropping by 2/3.

Companies: Plus500
  • 14 Aug 19

Cenkos: Duke Royalty Ltd - Revenues and profits coming through

Duke's FY19E pre-close update highlights a step change in YoY financial performance, anticipated by our FY19E forecasts. The royalties from all 12 partners are beginning to come through, met with a stabilising cost base, producing operationally geared profit growth. As royalties from partners annualise over FY20E, we see another large profit uplift ahead.

Companies: Duke Royalty
  • 16 Aug 19

Cenkos: Equals Group Plc - Adding the fuel for accelerated growth

As Equals broadens its retail and corporate offer beyond its retail FX legacy, the company is transitioning into a global, multi-product, highly profitable e-banking specialist with an integrated supply chain. To drive sales of its promising corporate expense platform, pursue attractively priced payments acquisitions and meet increased collateral requirements, the company is raising £16m (gross) in new equity inclusive of a £2m open offer. We believe these steps will lead to accelerated growth, particularly in FY21E, towards revenues of c£60m.

Companies: Equals Group
  • 05 Aug 19

Results don’t need to be appealed

Burford has announced its interim results for 1H’19 and has produced another excellent set of figures. After stripping out third-party interests, revenue was up 40% to $287m and earnings grew 36% to $225m. Litigation investment was again the star, with income also increasing 36% to $265m. While this saw some benefit from the recent Petersen transaction, there were strong results beyond that with the rest of the portfolio producing a first-half RoIC of 78%. These brought total recoveries to $1.16bn from 99 investments, with a cumulative RoIC of 98% (from 85% to 31 December 2018) and IRR of 32% (from 30%).

Companies: Burford Capital
  • 23 Jul 19

Quarterly Research Outlook - Summer 2019

In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.

Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF

  • 21 Aug 19

LIBERUM: Orchard Funding Group* - Trading update in-line, acquisition no longer preferred

Orchard has announced a trading update for the full year (July YE) with lending volumes for FY19 of £73.1m and an ending loan book of £32.3m. This is in-line with our forecasts for the year and we make no change to our revenue assumptions.

Companies: Orchard Funding Group
  • 20 Aug 19

LIBERUM: CLS Holdings* - Benefitting from European diversity

CLS offers European office exposure at a UK valuation discount. A better-than-expected H1 leads us to increase our FY NAV forecasts by 3%, and DPS by 4%. We are more cautious on near-term macro conditions in H2, but supply is constrained in CLS’s locations, and the fundamentals of its business model are strong.

Companies: CLS
  • 22 Jul 19

Another step change in value

Ahead of RockRose’s readmission to trading at 8am on Wednesday 24th July, we update our model for RockRose’s most recent acquisition resulting in a significant value uplift to our RENAV, which increases from 1820p to 3679p. We reiterate our BUY recommendation and expect the shares to come back significantly higher than the 815p pre suspension price.

Companies: Rockrose Energy
  • 08 Aug 19

Asian presence under review

Aviva posted figures in line with estimates. Operating EPS grew by 2% to 27.3p and the interim dividend was increased by 3% to 9.5p/share. Cash remittance to the Group remained high at £1,582m, benefiting from the timing of dividend payments from a number of business units. The insurer announced that it is reviewing its strategy in Asia. A possible sale of its operations is not excluded. No major changes are expected in our model.

Companies: Aviva
  • 20 Aug 19

Target Healthcare REIT - Continuing positive returns in Q4

Target’s portfolio of high-quality purpose-built care homes continues to grow and perform well with RPI-driven rental growth, increased property valuations, continuing acquisitions of operational homes and progress with pre-let forward-funded developments. Due diligence on potential further acquisition opportunities continues, in aggregate sufficient to fully deploy remaining debt capital resources.

Companies: Target Healthcare Reit
  • 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

  • 11 Jul 19

Diversification and scale for online success

The global online gaming market generated c £40bn of gross gaming revenues (GGR) in 2018 and newly regulating markets (the US) are expected to contribute to 7% CAGR to 2023 (according to H2 Gambling Capital (H2GC)). However, while regulated markets have provided significant opportunities for operators to date, government intervention remains a constant threat and legislation is tightening. Some mature markets (notably the UK) have been raising taxes and implementing regulatory burdens, which increases the cost of business. In our view, success will depend on a combination of scale, diversification, proprietary technology and a strong balance sheet. Many of the 12 operators in this report should benefit from these dynamics and sector valuations remain attractive, at 12.6x P/E, 8.2x EV/EBITDA and 6.0% dividend yield for FY19.

Companies: 888 ACX BETSB ORPH GVC JPJ OPAP PTEC RNK WMH

  • 05 Jul 19

Small Cap Feast

ReAssure Group plc - The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market. 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 he IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m· IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas which have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raise TBC, expected mid-July 2019

Companies: SRT CHH VELA CREO ASH MIRA ECO AQX ARCM DRV