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Edison Investment Research is terminating coverage on Avacta Group (AVCT), BCI Minerals (BCI), Destiny Pharma (DEST), Globalworth Real Estate Investments (GWI), Henderson Alternative Strategies Trust (HAST), Herantis Pharma (HRTIS), Jupiter Green Investment Trust (JGC) and Rockhopper Exploration (RKH). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website
Henderson Alternative Strategis Trst
Henderson Alternative Strategies (HAST) offers access to niche and specialist investments, which are otherwise hard to buy, aiming to outperform listed equity markets over the course of a cycle with lower volatility. James de Bunsen took over in 2014 as co-manager, shortly after the management of the trust was awarded to Henderson. James, and original co-manager Ian Barrass, who retired last year, then spent considerable time overhauling the portfolio and liquidating unwanted and unwise investments. The trust offers access to unlisted opportunities in the private equity, hedge fund and property space as well as more mainstream investments selected for their cheap valuations or idiosyncratic risk and return profile. Risk-adjusted returns have been on an upward curve, with the three-year Sharpe ratio on NAV top quartile for the AIC Flexible Investment sector, according to Morningstar data, and the trust used the diversification benefits of its wide universe to outperform equities strongly in the down year of 2018. The trust trades on a discount of 16%, having struggled to earn a re-rating despite the improved performance and new approach.
Henderson Alternative Strategies Trust (HAST) aims to provide a ‘one-stop shop’ for investors seeking to allocate to specialist and alternative assets. Following the retirement of co-manager Ian Barrass in June, HAST is now co-managed by James de Bunsen and Peter Webster. The trust’s focus on areas such as property and hedge funds, alongside specialist credit, private equity and emerging markets, among others, means it should be well placed to act as a source of less-correlated returns in times of mainstream equity market volatility. HAST’s NAV held up well in the market wobbles of Q118 and its move to more defensive positioning through the summer has so far stood it in good stead during the current sell-off in equity markets. Meanwhile, recent ‘buying on the dips’ in favoured holdings such as Worldwide Healthcare Trust and Polar Capital Global Financials will allow HAST to take full advantage of any recovery in sentiment.
Henderson Alternative Strategies Trust (HAST) has recently passed its three-yearly continuation vote, underlining investor confidence in the rebuilt portfolio of specialist and alternative funds. Medium-term NAV total returns are now in line with the informal annualised target of c 8% over rolling three-year periods, and in FY17 (to 30 September) all the underlying strategies – hedge funds, private equity, property, specialist sector and specialist geography – contributed positively to returns. In an environment of increased market volatility, the differentiated nature of many of the underlying assets could provide a source of diversification for investors, and a progressive dividend policy underpins the current yield of 1.8%.
Henderson Alternative Strategies Trust (‘HAST’) has delivered a share price total return of 19.8% for its financial year ending 30th September 2017. Over this period the discount has narrowed from 19.3% to 13.1%. Since the HAST financial year end the NAV has risen 2.4% and the discount has narrowed further to around 11%. In addition, the look through discount on the underlying portfolio is around 7-8%. HAST has a shareholder continuation vote at the end of this month, which we are confident will be passed by shareholders on the back of this strong performance. The continuation vote is repeated in three years’ time. Ordinary dividend of 4.75p, up 25% from last year puts the shares on an approx. 1.5% yield.
Henderson Alternative Strategies Trust (HAST) has continued in H217 to produce solid absolute returns from its portfolio of specialist and alternative funds investing in areas such as private equity, property, emerging markets and specialist credit. The three-year process of rebuilding the trust’s portfolio after its move to Janus Henderson was concluded nearly a year ago, and the managers are pleased with the progress made towards the informal target annualised return of 8%, measured over a three-year period. Share price returns over one year have kept pace with buoyant equity markets but with lower volatility, and over the same period HAST ranks third in its peer group for NAV total returns. The improved performance and a narrower discount may provide support as the trust approaches a three-yearly continuation vote in January 2018.
Henderson Alternative Strategies Trust (HAST) invests in a portfolio of specialist and alternative funds with the objective of beating longer-term global equity market returns. It allocates assets to five main types of strategy – hedge funds, private equity, property, specialist geography and specialist sector – focusing on funds that private investors would be unable or unlikely to access individually. After a three-year reconstruction process following its move to Henderson, the portfolio now represents the 30-40 best ideas of the investment team, and recent performance has improved dramatically. The trust has instituted a progressive dividend policy and also recently announced a special dividend.
Henderson Alternative Strategies Trust (HAST, formerly Henderson Value Trust) has been reconstructed into a portfolio of specialist and alternative funds. The managers have focused on private equity, hedge funds, property and specialist sector and geographical funds that individual investors are unable or unlikely to access. The aim is to achieve returns in excess of those from global equities on a three-year view, but with limited correlation to equity markets. The reconstruction is beginning to show through in performance, and over 12 months the trust has outperformed its informal composite benchmark and the FTSE All-Share. The discount remains wide at c 19%, reflecting a difficult history and a climate of investor risk aversion, but has scope to narrow should the performance upturn be sustained.
HAST’s transition has entered the final furlong. It has been gruelling for investors and the managers alike; relative NAV performance has been poor. The fund’s market pricing (22% discount) isn’t optimistic and we don’t expect investors to respond until management has delivered. That said, market conditions have turned positive for HAST’s strategy and we expect the fund should start recovering some of its relative NAV performance in 2016. Acknowledging that this isn’t the same as delivering a positive return, we believe it could prove to be a turning point in how investors perceive the fund.
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