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  • 11 Feb 20
Choose your own adventure

Napoleon insisted he would rather have his generals be lucky than good. Increasingly, especially when investing in the US stock market, many investors opt for a passive fund, presumably viewing markets through the same prism that managers are really only ever lucky, as opposed to good. Yet many still choose active funds for a variety of reasons: a preferred investment style (or factor bias), or an alignment between the investor and the manager on the macroeconomic outlook are chief among them. For these investors, forming a view on when different styles are likely to perform, and on which macroeconomic environment we are likely to see is crucial. In this article we look at how different factor indices in North America have performed in different economic and market scenarios. We then examine which US-focussed trusts have offered the closest correlation to these factor indices in the recent past. Understanding the impact that broader economic trends have had on the performance of factors – and, by extension, on trusts that seem to operate in close alignment with those factors – can help us to understand and contextualise historic performance. It may also give us some insights on how to position for any anticipated future environment, although there can be no guarantee that historic patterns will repeat.

Companies: GVP BRNA PCT JAM

  • 06 Nov 19
Times are a changin'? The case for a value resurgence

“Is life always this hard, or just when you’re a kid?” “Always like this” (Leon: The Professional) In the post-financial crisis world, value investors have found themselves facing a period of structural underperformance relative to growth investors which has been unusual relative to history. In fact, this is the longest period of underperformance since at least the 1920s. This raises the question; what, if anything, could cause this to change?

Companies: GVP ASL BEE MIGO TMPL

  • 28 Aug 19
Gabelli Value Plus+ Trust - Overview

With exposure across the market cap spectrum, and a disciplined proprietary value investment philosophy, the Gabelli Value Plus+ trust offers a differentiated investment solution and portfolio to a typical US equity vehicle. Using the proprietary Private Market Value with a Catalyst™ investment process that focuses on both the intrinsic value and strategic premium that a company offers a potential purchaser, the managers seek to identify companies which are trading on a substantial discount to the price which an informed buyer would pay for an entire business in a negotiated transaction. In addition to this, they seek to identify a catalyst(s) to realising this value, looking at a variety of factors or potential drivers of a rerating. These can be company specific or relate to the industry at large.

Companies: Gabelli Value Plus + Trust
  • 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 13 research reports from 2 professional analysts.

Open
88.5p
Range Today
88.0/89.6p
52 Week
79.5/138p
Daily Volume
52.0k
# Shares
98.3m
Daily Liquidity
(0.05%)
Pension Liability
£0m
Enterprise Value
£130.4m
Market Cap
£88.0m
Latest PE (hist)
175.65
Div Yield
0.56

Latest News/RNS

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07Jan20 10:26 RNS Holding(s) in Company
24Dec19 08:00 RNS AGM Voting Update
24Dec19 07:00 RNS Half-year Report
23Dec19 15:11 RNS Holding(s) in Company
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  • 07 Apr 20
LIBERUM: Plus500* - Making the most of the opportunity

The record 1Q20 performance is due to more than just favourable market conditions. It also reflects the benefits of the group’s best-in-class platform, which continues to deliver despite lower leverage limits. Its scalable technology and agile marketing algorithms has enabled it to add 83k new users during the period, at less than half our forecasted AUAC. This dynamic, combined with the quality of these users, sees us upgrade FY20 PBT by 26% and positions the group to continue to deliver profitable growth in the medium-term. Despite this the shares trade on just 9.0x CY21 earnings, and as a result we reiterate our BUY rating and increase our TP to 1500p (from 1450p).

Companies: Plus500
  • 07 Apr 20
The Promised Land

Red Dwarf, the very British sci-fi comedy franchise, ran for 11 seasons – most recently in 2017; and The Promised Land is a feature-length TV movie – out this year. Yes, the programme is an acquired taste. Strangely, too, many episodes are impacted by a virus or three (physiological, not main-frame).

Companies: WJG BKG CSP CRST MCS INL BDEV RDW GLE SPR TW/ PSN VTY GLV CRN ABBY BWY

  • 02 Apr 20
Cenkos: Duke Royalty Ltd -- Assessing the impact across the portfolio

The scaling of Duke's royalty portfolio was progressing as expected up to March 2020, with record cash receipts that month. Due to Covid-19 and the UK's economic shutdown, macro conditions have worsened and become highly uncertain. This is likely to see some royalty partners' future cash royalties decline, which in turn, will negatively impact FV's in the FY20E results. Duke's high margin and cash generative nature ensures it is well placed to trade through these challenges. Given the degree of uncertainty in outlook, we remove forecasts and put our recommendation Under Review and await further clarity on the portfolio.

Companies: Duke Royalty
  • 09 Apr 20
LIBERUM: Premier Miton Group* - AuM in-line with forecasts, integration on track

Premier Miton has released a trading update for H1’20. AuM was £9.1bn at the end of March, as expected, with net outflows running at 1%. The integration remains on track and the increased diversification within the business bodes well for future performance. Whilst difficult to know the exact impact of COVID-19 on the group’s financials, we are encouraged to hear of the robust operational performance, and the initial steps taken by management to protect profitability. On this basis we leave our estimates unchanged and see the shares as trading on just 9.2x CY20 P/E. In our view, this valuation is made more attractive by the company’s commitment to pay a dividend, with an updated dividend payout policy of between 50-65%, again in line with our expectations. We reiterate our DCF based target price of 152p and BUY rating.

Companies: Premier Miton Group
  • 01 Apr 20
THE MONTHLY April 2020


Companies: AVO AGY ARBB ARIX BUR CMH CLIG DNL GDR HAYD PCA PIN PHP RE/ RECI RMDL STX SHED VTA

  • 09 Apr 20
S&U - Update Note - Preliminary Results

S&U released its preliminary FY20 results yesterday morning, which demonstrate considerable resilience against a backdrop of election and Brexit turbulence and weakening consumer demand - although that already feels like ancient history.

Companies: S&U
  • 30 Mar 20
Swift action enables us to look through a lost year

Belvoir’s FY 2019 results were strong, with adj. EPS up 13% (13.6p vs our forecast 13.0p) and strong cash generation. COVID-19 will affect property sales in FY 2020 but lettings (61% of 2019 gross profit) will be more resilient, helped by the Government’s measures to support employment and incomes. Management has reacted quickly, reducing costs and putting plans in place to support franchisees. We now forecast a ‘lost year’ in FY 2020, assuming five months of no sales activity, a significant reduction in financial services and a reduction in lettings fees, partly offset by a £1.5m cost reduction. The capital light franchise model, inherent high levels of cash generation and no final dividend for 2019 mean we forecast gross cash of £2.0m at December 2020, down from £3.6m. Belvoir is in good financial shape to weather the storm and support its franchisees before returning to normal activity. The success of the strategy was again evidenced by a strong start to 2020 prior to COVID-19.

Companies: Belvoir Lettings
  • 02 Apr 20
Palace Capital*

COVID-19 and dividend update

Companies: Palace Capital
  • 07 Apr 20
LIBERUM: Real Estate Investors* - Diversified in the face of uncertainty

RLE’s trading update confirms a strong relative performance considering current market conditions. Importantly, the Q4 19 dividend is still being paid. The portfolio is benefitting from income diversity, with 38% Office-related and an additional 24% representing key worker/essential services. The balance sheet is healthy, with £8.4m cash before drawing on facilities, or further disposals. We lower forecasts (FY20 NAV -4%) to reflect the fact no one is left unscathed, but think RLE will emerge from the crisis into a tailwind of structural opportunity (HS2 etc). The shares trade on a 43% discount to our lowered NAV and imply a c. 25% fall in underlying property values, which seems too steep. BUY.

Companies: Real Estate Investors
  • 07 Apr 20
LIBERUM: Alpha FX* - £20m additional growth capital

We highlighted last week the Company had sufficient capital to hit our revised forecasts and retained a business model, technology platform and client proposition to continue to take share. Since then the company has agreed a payment plan with its largest client and today have announced a £20m fund raise which further supports the capital base in servicing existing clients and importantly positions them to win new ones as competing banks and brokers face their own challenges. No change in profit forecasts. BUY. Target Price 935p.

Companies: Alpha Fx Group
  • 08 Apr 20
£56m new equity already deployed, limited impact from COVID-19

In a positive post-year end update, ULR has deployed £56m of the £136m equity raised in March 2020, acquiring a portfolio (6 assets), two single assets and a development land opportunity - all with solid 5%+ NIYs. Additional opportunities remain under consideration. 93% of all June quarter rents have already been collected. All but 4 assets remain fully operational as a result of the COVID-19 restrictions. We see continuing rental reversion opportunities in the medium term, and a continuing demand for these regional logistics assets as e-commerce and e-fulfilment continues to evolve in the UK.

Companies: Urban Logistics REIT
  • 01 Apr 20
A seismic shift in the way we live and work

The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.

Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO

  • 02 Apr 20
LIBERUM: U+I* - Disposal of share at Harwell

U+I has confirmed the disposal of its share in the Harwell Campus, delivering development and trading gains of c.£11m. Crucially, these should fall in to FY20, subject to discussions with auditors. The >£40m cash realised from the sale compares to a £10m investment six years ago. An adjoining building on the Harwell Campus has also been sold ahead of book value, for £7.5m. We prudently leave any forecasts unchanged at this uncertain time. A post-close trading update with more detail will be given on 15 April. The shares now trade at a 72% discount to NAV, vs the UK sector at a 15% discount.

Companies: U&I Group
  • 02 Apr 20
WHI Morning Comment: DigitalBox (DBOX)

FY Results – Significant strategic progress and well positioned for 2020 Digitalbox is an AIM-quoted digital publishing company, currently owning two distinct digital media assets and with a scalable platform to grow through acquisitions. This morning's FY2019 results evidence the substantial progress the company made in 2019 at both a financial and operating level and with a very robust balance sheet to capitalise on future M&A opportunities. The company reported revenue of £2.24m and a reported adjusted EBITDA of £0.53m, which after adjusting for prepaid costs from 2018 with respect to Facebook marketing cost, yields an EBITDA of £0.63m. Whilst key operating KPI's for 2019 were very strong y-o-y, and Q1:2020 is said to have traded ‘ahead of management expectations', increased traffic to their assets will likely be offset by increased pressure in advertising spend in 2020. As such, we prudently reduce our FY2020E and FY2021E adjusted PBT estimates by 35% and 22% to £0.59m and £0.74m respectively. Revenue and profitability is H2 weighted, and thus it is possible that the company might experience positive momentum in advertising spend, but it's too early to call. Assuming a 10x FY2020E EV/EBITDA multiple, we see fair value at 9.3p.

Companies: Digitalbox
  • 03 Apr 20
Numis Corporation - Sound H120 and opportunity post Covid 19

Numis expects to report H120 revenues c 10% higher than in H119 with revenue from investment banking slightly down and equities ahead on the back of increased market volatility. Given the impact of the pandemic we have provided indicative scenarios rather than a point estimate for FY20. Numis is strongly capitalised and has net cash of over £84m. Looking beyond the current dislocation, it is well positioned to serve its corporate client base in a period in which the need for fresh equity and a revival in corporate transactions could drive a sharp recovery in activity.

Companies: Numis Corporation