Hansa Trust (HAN/HANA) is arguably unique in its sector, with a portfolio made up of global equities, regional and thematic funds, diversifying (mainly hedge) funds and a large strategic position in Ocean Wilsons Holdings (OWHL), which in turn has a majority stake in Brazilian maritime services company Wilson Sons (WSON). Lead Manager Alec Letchfield’s focus on capital preservation as well as growth has enabled the portfolio to outperform UK and global equity indices in the recent stock market volatility, with new holdings such as Selwood Asset Management Liquid Credit Strategy already having a positive impact. The trust has recently published proposals to redomicile to Bermuda (see Recent developments).
Global equity markets continue to grind slowly upwards, albeit with sharper bouts of volatility than have been seen in recent years, and stand at close to peak levels. In such a late-cycle environment, while an allocation to equities ensures investors do not miss out on growth, a focus on capital preservation should provide an important source of support in any further market setbacks.
- Differentiated portfolio of hard-to-access investments.
- Substantial (although not guaranteed) scope for discount narrowing.
- Focus on capital preservation as well as growth, with defensive allocation recently showing its worth in more volatile equity markets.
- Strong alignment of interests between board, manager and shareholders.
- Proposed move to paying quarterly dividends as part of move to Bermuda.
At 11 July 2019, Hansa Trust’s A-shares traded at a 31.8% discount to cum-income NAV, which is a little above the average discounts over one, three and five years. Because the strategic holding in Ocean Wilsons also trades below NAV, the lookthrough discount to NAV is higher, at 39.4%. Hansa Trust’s discount is well above the average for its peer group, which could afford an element of downside protection to the share price in a market downturn, given it has rarely exceeded 35% even during periods of very poor sentiment towards equities.