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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: BTEM 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.

Open
126p
Range Today
126/126p
52 Week
116/134p
Daily Volume
20.8k
# Shares
99.7m
Daily Liquidity
(0.02%)
Pension Liability
£0m
Enterprise Value
£123.7m
Market Cap
£126.1m
Latest PE (hist)
221.18
Div Yield
0.45

Latest News/RNS

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Date Source Announcement
22Mar19 14:54 RNS Transaction in Own Shares
20Feb19 11:48 RNS Holding(s) in Company
01Feb19 15:42 RNS Total Voting Rights
11Jan19 14:42 RNS Transaction in Own Shares
02Jan19 16:41 RNS Total Voting Rights
12Dec18 17:07 RNS Half-year Report: Submission of Document
07Dec18 16:14 RNS Transaction in Own Shares
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  • 11 Apr 19

Quarterly Research Outlook

We’re just over three months in to 2019 and we’ve seen a 10% UK market rally, retracing much of the Q4 decline, such is the nature of fickle market sentiment. That said, many of the issues we wrote about three months ago that were impacting markets remain: notably Brexit, trade wars, geopolitics and global monetary policy. The 2019 rally thus far feels somewhat fragile, with competing forces of optimism on a potential trade deal which could underpin the rally, against the deterioration in underlying economic data that could ultimately undermine the recent market gains. In this context, we look at what the lead indicators and the market are telling us about the industrial cycle and the stocks most exposed to various industrial trends. The Q4 derating in short cycle industrials and autos had been vicious and while these sectors have seen a more solid footing in 2019, with earnings downgrades being priced in, it will likely take a trough in lead indicators before short cycle stocks can start to perform again and re-rate relative to the market.

Companies: ARS CYAN HYR LIT SOM ABBY AMS AMER ANX ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE DTG DEMG EMR FPO FST GTLY GENL GOR GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO INDI JHD JOG KEYS KCT KGH LAM LOK MACF MNO MANO MOD MKLW OXIG PCA PANR PARK PGM PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TRAK TRI VNET VTC ZOO ZTF

  • 12 Apr 19

LIBERUM: Plus500* - From too much volatility to too little

A low volatility quarter combined with clients making money (pre spreads) to mean very weak Q1 revenues at a third of the level of Q4, however new customer numbers are good, and spread revenue ARPU only down 14% on Q4. The $28m of client P&L takes 6% off our revenue estimate, and then it was a very weak quarter anyway.

Companies: Plus500
  • 16 Apr 19

Q1 2019 AIM Review

2019 started well for investors with U.S. stocks rallying on the back of trade talks between China and the U.S. resuming. Sterling rebounded in Q1 2019 as expectations built the UK would avoid a “no deal” Brexit, providing a further tailwind to more internationally focused UK companies. This sentiment spread across the globe and filtered its way down into small caps.

Companies: PRSM KMK SYS RAI MNO CCS MANO CBOX KGH

  • 16 Apr 19

Year End update

Ahead of its results on Monday 3 June, Tatton Asset Management (TAM) has confirmed that the Group is growing strongly and as a result “Group revenue and operating profit are within the range of analyst estimates” (Consensus range: revenue £16.9m to £17.5m; adj operating PBT £7.2m to £7.8m).

Companies: Tatton Asset Management
  • 16 Apr 19

IMS reveals 14% AuM rise YTD

CLIG’s 3Q update on its Funds under Management (FuM) confirms that while Emerging Market Total Return Index rose 9.9%, CLIG’s FuM rose 13.9% to US$5,268m.

Companies: City Of London Investment Group
  • 28 Mar 19

Litigation, litigation, litigation

Within this note we look to build upon our existing legal sector coverage of Anexo*, Gordon Dadds*, Gateley, Knights, Keystone, Rosenblatt and NAHL to include the litigation funders Burford Capital, Manolete Partners and Litigation Capital Management.

Companies: ANX BUR IMF JIL LIT MANO RBGP

  • 15 Apr 19

Cenkos: Regional REIT Ltd - Top decile Total Return in 2018

Regional REIT (RGL) enjoyed a highly successful 2018, generating a total return of almost 17% which represents a top decile performance in the REIT sector. £222m of portfolio churn has further increased the weighting to regional office buildings to c76%, a market which is widely forecast to generate above average income and total returns in the next 2-3 years.

Companies: Regional Reit
  • 17 Apr 19

Market bounce gives FUM bounce

City of London has announced its FUM as of 31 March for 3Q’19. They were positive on all counts, with strong markets complemented by net inflows into most strategies and outperformance as well. Overall, FUM grew by 11% to $5,268m, supported notably by the MSCI Emerging Markets Index, which was up 10%. The EM strategy also saw welcome net inflows of $45m, with Developed Markets receiving another $101m, and Opportunistic Value $7m. These three strategies also outperformed due to narrowing discounts and some positive NAV movements. The Frontier strategy was the exception, with no net flows and underperformance.

Companies: City Of London Investment Group
  • 20 Mar 19

LIBERUM: Aquis Exchange* - Revenues double and beat, costs in line.

Revenues 19% ahead of our expectations and costs in line. Market share doubled over the year. Data is now being sold to 12 customers and technology licensing contracts signed for a range of asset classes.

Companies: Aquis Exchange
  • 15 Apr 19

Diverse Income Trust (The) - Unloved small-caps offer long-term opportunities

The Diverse Income Trust (DIVI) aims to generate a good and growing level of income, as well as capital gains over the long term. It is not constrained by benchmarks and has a wide opportunity set across the market capitalisation spectrum to find high-quality, resilient companies that can sustain dividend growth over the long term. The managers, Gervais Williams and Martin Turner, have a small-cap bias and over two-thirds of the portfolio is outside of the FTSE 350 index. Since its inception in April 2011, the trust has delivered an annualised NAV total return of 12% and consistent growth in its regular dividend. Performance in more recent years has lagged the FTSE All-Share index, which the managers believe reflects small-cap and value stocks being overlooked, and they are finding superior investment opportunities in this segment of the UK equity market.

Companies: Diverse Income Trust
  • 12 Feb 19

LIBERUM: Plus500* - Too much of a good thing

Elevated volatility is good for trading platforms, but market falls in Q4 caused significant client losses ("P&L gain”), rather than higher spread revenue. The company is choosing to subtract this gain from Q4 revenues and to base 2019 guidance on the organic growth which they have always achieved.

Companies: Plus500
  • 14 Jan 19

UK Housebuilding Sector in 2018

‘From the deserts of East Ham to the gardens of Cottenham’, the UK Housebuilding Sector was whacked to the tune of 27% in 2018; and not one share price (out of 18) rose on the London Stock Exchange.

Companies: BWY CRST BDEV WJG PSN RDW TW/ MCS CSP TEF BKG ABBY GLE

  • 27 Mar 19

Rally seen in the first quarter stalls

Parliamentary and Brexit developments continue to hold centre stage, although the precise path forward remains as unclear as ever. The uncertainty over Brexit, worries over a possible slowdown in the US and the outlook for global economic growth generally have all contributed to the recent falls in markets. While the rally seen since the start of the year has petered out, most indices have still made progress. In Share News & Views we comment on Bloomsbury Publishing, Bonhill Group*, Braemar Shipping Services*, Burford, Clarkson, LightwaveRF*, Marshall Motor Holdings and Synectics*.

Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LWRF LSAI NKTN PCF SNX TCN VRE W7L

  • 03 Apr 19

The Monthly April 2019

Although the focus of Hardman & Co is predominantly on companies in the smallto mid-sized market capitalisation range, when writing research reports, it is important to position them relative to the industry in which they operate. Apart from Japanese companies, all the major global pharmaceutical companies have reported full-year results for 2018 over the past few weeks; therefore, we have taken the opportunity to update our industry database and generate the first cut of global rankings for 2018. For an industry that requires a long investment cycle – it still takes, on average, 10 years from discovery to launch of a new drug – decisions made many years ago have important consequences on current financial results. Therefore, looking back at operational performance over 20 years reveals how different company strategies have panned out.

Companies: OPM AVO AJB AGY ARBB CMH CLIG CSH DNL GTLY HAYD KOOV LWRF MCL MUR NSF OXB PCA PHP RE/ REDX STX SCE SIXH TON VAL VTA W7L

  • 04 Feb 19

Cenkos: Duke Royalty Ltd - A step change in scale

Duke has announced the acquisition of Capital Step, the only known rival provider of royalty finance and debt products to SMEs in UK&I. The acquisition materially accelerates development of Duke's royalty portfolio, adding 6 core new investments (to a total of 11) in several new sectors. This adds significant diversification, de-risking the portfolio to individual names/sectors. The deal is expected to be immediately earnings enhancing, reflected in our upgrades to FY19E & FY20E EPS forecasts of 5% and 3%. This gives further support to DPS estimates which produce a market leading 9% yield on our revised FY20E forecasts.

Companies: Duke Royalty