IP Select UK Equity Shares portfolio (IVPU) invests in UK equities with a highly active value strategy. The manager, James Goldstone, takes a contrarian approach, aiming to identify companies which in his view are under-appreciated by the market. James’ current main focus has been on companies exposed to the UK economy and consumer, which he thinks have been egregiously undervalued thanks to worries about Brexit, particularly among overseas investors, leading to indiscriminate selling of UK-facing companies. However, this exposure is balanced out by holdings with international, mainly dollar earnings, which James thinks are undervalued for other reasons, which we explain in the portfolio section of this note. The oil and gas producers are a key example.
Companies: Invesco Perpetual Select Trust
IP Select Balanced Risk Allocation share’s (IVPB) objective is to provide an attractive total return in differing economic and inflationary environments, with low correlation to equity and bond markets. The trust has a benchmark of LIBOR +5% per annum, which has been met over almost all periods, with volatility of around two-thirds of that of equity markets since the strategy was adopted in 2012. In contrast to ‘active’ total return funds (such as Ruffer, Personal Assets etc.) the managers have a systematic process to shift tactically around an otherwise relatively static long-term allocation to three asset classes: debt securities, equities and commodities. The team has been running the strategy since 2008, and currently manage over $25bn for various mandates. IVPB invests through highly liquid futures, and looks to allocate risk (rather than capital) equally across the three asset classes. By overweighting the allocations to the less volatile asset classes (such as bonds) and underweighting the allocations to the more volatile asset classes, an equally risk weighted (‘risk parity’) portfolio is created. IVPB sits within the AIC Flexible sector, which as one might expect, has a fair variety of strategies in it. We compare performance relative to some of the better-known trusts that exhibit low equity correlation and find that over the past three years, IVPB has generally been amongst the better performing, behind only Capital Gearing Trust in our sub-set of trusts. IVPB has achieved these returns with correlation to the MSCI ACWI index of 0.75. The board has a zero-tolerance discount policy, which has successfully prevented the discount from deviating far from the board’s target of +/- 2% of NAV. At the time of writing, the shares currently trade on a discount of 0.6%. An additional feature is the ability of shareholders in any of the IP Select Trust's share classes to switch into another IP Select share class on a quarterly basis (UK Equity, Global Equity Income and Cash). This is conducted on or around 1 Feb, 1 May, 1 Aug and 1 Nov each year and is deemed a non-taxable event by HMRC as regards capital gains tax.
Invesco Perpetual (IP) Select Trust has an unusual structure, which is almost unique in the investment trust universe. It has four different share classes which shareholders can periodically (every 3 months) convert between without crystallising a taxable event. In practical terms, this means that any capital gains can be rolled up, whilst enabling investors to change the risk profile of their investment over time. In this way, and used accordingly, IP Select Trust and its four underlying share classes might be viewed by some investors as a Do It Yourself ‘target date’ fund, which we examine in more detail in this article.
IP Select UK Equity shares owns an actively managed portfolio of UK equities held for the long term, with the manager, James Goldstone, aiming to identify undervalued companies and take advantage of the under-pricing. James has repositioned the UK equity portfolio since taking over in October 2016, and the focus is on companies exposed to the UK economy and consumer, which James thinks are currently undervalued. However, this exposure is balanced out by holdings with international earnings, although these positions are all held because of the manager’s conviction in them as businesses and the attractiveness of their valuations, rather than simply risk-management tools. The trust has underperformed this year due to the exposure to domestic earnings, with the UK market being unloved thanks to the uncertainty around Brexit. However, negotiations over the UK’s exit from the EU are nearing a conclusion with the “divorce” scheduled for the first quarter of next year. Gearing has remained at the upper end of the permitted range under James’ management. However, this debt is not structural but reflects the valuation opportunity the manager sees in the UK market. The company tends to trade quite closely to NAV, supported by a strong buyback policy, and in fact traded on a premium prior to the June 2016 referendum. The dividend yield is 4%, paid quarterly, and the board’s intention is to at least maintain the dividend in each year going forward. It has backed this up by using capital reserves to pay when necessary.
Income has for a long time been top priority for British investors, stripped of the traditional source of income that a savings account once represented by a decade of negligible interest rates. But with bonds in a parlous state and the wheels finally coming off the buy-to-let bubble, the range of options available is increasingly narrow. Equities have for some time now been the beneficiary of this search for yield and equity income funds have done very well on the back of this, attracting huge inflows. However, as we have highlighted in the past, many of them are investing in just a small range of companies and those companies are themselves increasingly stretching for yield - putting this refuge for the income seeker on somewhat thin ice. With all this behind us, and mounting uncertainty about the current rally in front of us, where then is a sensible place to find it?
Companies: JCH IVI EDIN BRIG IVPU SOI BEE
IP Select UK Equity shares have an actively-managed portfolio of UK equities held for the long term, with the manager, James Goldstone, aiming to identify attractive businesses which he feels are undervalued. The portfolio is actually one of four share classes which make up Invesco Perpetual Select Trust. A key differentiator of IP Select Trust is that it is split into four share classes, each pursuing different strategies, and each led by a different manager but sharing the costs of the structure. Alongside the UK Equity shares, the others are Global Equity Income, Balanced Risk Allocation and Managed Liquidity. Investors in the trust can switch between the share classes on a quarterly basis. This profile focuses only on the UK Equity share class. Investors can switch between share classes each quarter without incurring capital gains tax, meaning they can manage their asset allocation dynamically within the closed-ended structure. James has refashioned the portfolio since taking over in October 2016, and the focus is on companies exposed to the UK economy and consumer, which James thinks are misvalued. However, domestic risk on the portfolio is balanced out by holdings with international earnings and gold miners, although these positions are all held because of the manager’s conviction in them as businesses and the attractiveness of their valuations rather than simply risk-management tools. This positioning is yet to be rewarded, with some poor data from the UK in the first quarter increasing consumer nervousness about the market. The trust has remained significantly geared under James. However, this debt is not structural but reflects the valuation opportunity the manager currently sees in the UK market. The company tends to trade quite closely to NAV, supported by a strong buyback policy, and in fact traded on a premium prior to the June 2016 EU referendum. The dividend yield is 3.5%, paid quarterly, and the board’s intention is to at least maintain the dividend in each year going forward. It has backed this up by using reserves to pay when necessary.
UK equities are among the most unloved investments globally, with domestic-facing stocks particularly out of favour. Valueorientated investors may be asking themselves if there is an opportunity here, or if the ‘Brexit discount’ is justified. The Bank of America Merrill Lynch fund manager’s survey of global allocators saw weightings to the UK reach a historic low in March, and the country has been one of the least favourite locations all year amongst respondents. James Goldstone, manager of the Invesco Perpetual Select UK Equity and Keystone trusts, tells us US investors are on a “buyer’s strike”. Amongst domestic investors the data shows a similar pattern: the Investment Association reports that the open-ended UK All Companies sector was the worst-selling in March, as it was in four other months of the past 12. The UK equity income sector was the worst-selling in two months over the same period. We examine a number of trusts which have managers who believe they may benefit from a resurgence of interest in stocks exposed to the UK domestic story.
Companies: ASIT HOT IVPU SUPP
We have for some time argued that traditional equity income funds are too heavily dependent on a narrow range of stocks, and that the stocks themselves are perhaps looking overstretched in terms of the dividends they pay compared to their underlying earnings. In November last year we published research showing that 25.1% of the capital in the AIC UK Equity Income sector is invested in just ten stocks, and across those companies the average dividend cover is 1.17x. We found that open-ended funds are even more heavily concentrated, with just under 30% of assets invested in ten stocks, among which the average dividend cover is just 1.04%. The mood amongst investors seems to be changing as awareness of this concentration grows, not least because of articles like this one in the Times warning of a ‘squeeze’ ahead for investors and, where once UK Equity Income was regularly the top selling Investment Association sector, outflows have been building steadily for some months. In fact the IA UK Equity Income sector saw bigger retail outflows in January this year than any other bar the Specialist sector. Even after recent outflows, however, the sector remains one of the largest overall with assets of more than £62bn under management – accounting for roughly ten percent of all assets invested in open-ended funds. Among investment trusts, assets amounting to £10bn are held in UK Equity Income trusts. Income still commands a strong pull, then, and within the Investment Trust sector, the practise of boosting income by paying out a proportion of capital profits has become increasingly common as a means to attract new investors. The appeal of this practice from a fund manager’s point of view is obvious. Many investors clamour for income, so introducing a yield can encourage greater demand for shares. International Biotechnology Trust (IBT), which we cover in detail here, announced plans in September 2016 to convert some of the capital it generates into income, aiming for a yield of 4%. As the chart below shows, the discount has come in sharply since it did so, moving to a premium earlier this year having previously rarely traded inside a double figure discount for a large proportion of its lifetime. Invesco Perpetual UK Smaller Companies (IPU) saw a similar re-rating when the board announced plans to pay a significantly enhanced dividend partly funded by the capital account in September 2016. Like IBT, the trust, which yields 3.5%, has seen its discount tighten up sharply, moving in from a consistently wide double-digit discount to trade in single figures since the enhanced dividend was introduced. Looking at these share price movements, we thought it might be interesting to examine the broader investment trust sector and see whether a correlation exists between discount and yield.
Companies: IVPU IBT MVI MUT DIG EDIN PLI BEE BRWM IVI SCF AAIF
IP Select’s Global Equity Income Shares (IVPG) portfolio is run by a group of regional managers from the Henley on Thames offices of Invesco Perpetual, and aims achieve a growing level of income return each year, and capital appreciation over the long term, through investment in a diversified portfolio of equities worldwide. The trust actively uses the unique advantages of the closed-end structure to do this, including gearing, an enhanced dividend policy and an active discount control policy which has historically prevented the trust’s shares from slipping to a significant discount to NAV. A key differentiator of IP Select Trust is that it is split into four ‘share classes’, each pursuing different strategies, and each led by a different manager but sharing the costs of the structure. Alongside the Global Equity Income shares, the others are UK Equity, Balanced Risk Allocation and Managed Liquidity. Investors in the trust can switch between the share classes on a quarterly basis. This profile focuses only on the ‘Global Equity Income’ share class. IVPG’s portfolio is run by a committee of regional managers from the Henley office of Invesco Perpetual who form the “Global Income Group” (GIG). They aim to achieve a growing level of income return each year, and capital appreciation over the long term, through investment in a diversified portfolio of equities worldwide. The portfolio is relatively concentrated and is comprised of approximately 50 stocks. The GIG management team look to invest in high quality companies at attractive valuations, offering attractive yields, sustainable income and capital upside. The trust currently has significant exposure to oil companies and banks, with the majority of assets geographically split across the UK (18.4%), US (34.1%) and Europe (35.7%). Over the past year (to the end of February 2018), the trust’s NAV return has outperformed the MSCI World (6.0%), delivering 9.9%. Over five years, the NAV total returns are 83.4%, outperforming the average trust in the Morningstar IT Global Equity Income sector (48.46%) and the MSCI World NR index (83.1%).
Individuals often have set periods over which they hope to achieve an investment objective. Saving for retirement is the obvious one, but a planned house purchase in the future, school fees, or a ‘once in a decade’ holiday or celebration are others. In the current low interest rate environment and assuming the ‘target event’ is far enough away (say 10 years), investors might seek to look to the stock markets to put their capital to work and optimise the amount of capital before they need to use it. However, what could investors do to prepare themselves as this date approaches? How exposed do they feel as the investment period comes to an end, and the time before they need cash in their investments gets ever nearer? How should they react? The volatility of recent weeks is a reminder that remaining fully invested to the last minute can cause heart-stopping moments, and may materially affect the purchasing power of a nest-egg put away for such a purpose. We highlight a unique investment trust which could be used for such a purpose.
The Balanced Risk Allocation share class portfolio is managed by Scott Wolle and the Global Tactical Asset Allocation team in Invesco’s Atlanta office. They aim to provide an attractive total return in differing economic environments, with low correlation to equities and bonds. The NAV has met the performance target of LIBOR +5% over almost all periods since 2012, with volatility of around two-thirds that of equity markets. In contrast to ‘active’ total return funds (such as Ruffer, Personal Assets etc.) the managers have a systematic process to shift tactically around an otherwise relatively static long-term allocation to three asset classes: debt securities, equities and commodities. This systematic investment process means that, compared to a more active strategy, investors should be able to have a good understanding of how the strategy will perform in different environments, and therefore offers an interesting complement to many of the popular balanced, or low equity correlation, total return funds. The share class offers investors an exposure to almost all of the developed world’s liquid investable assets which offer a ‘risk-premium’, encompassing indices in equities, bonds and commodities. Because each asset class earns a risk premium over the long term, and they are uncorrelated to each other, the combination results in a portfolio with significantly improved risk / return characteristics than when compared to any one asset class. Over five years the shares have delivered a total NAV return of 26.8% (five years to 31/01/18) compared to the MSCI All Country World index return of 88%, and the average for the lower beta trusts in the AIC Flexible sector total NAV return of 31.9%. It has achieved these returns with around two thirds of the volatility of equities at 6.5% (compared to the MSCI ACWI volatility of 9.3%), and a relatively low correlation to the index of 0.62.
James Goldstone took over responsibility for the UK Equity share class in October 2016. He is responsible for managing one other UK investment trust (Keystone), as well as the in-house Invesco UK Equity Pension fund. He manages IP Select’s UK Equity share class portfolio in an unconstrained manner, with little regard for benchmark weightings. He looks for UK listed businesses, with what he views as strong balance sheets, high barriers to entry and the ability to expand market share, with the potential to deliver a compelling total return, comprising both income and capital growth. In doing this, he has a strong focus on valuation, and invests in those companies which he views are undervalued. Currently James views the spectre of inflation in the UK to rise, particularly driven by wage growth. At the same time, stocks exhibiting growth characteristics and the ‘bond proxies’ are trading at historically high valuations relative to ‘value’ characteristics. James believes that if the perceived wisdom that the low growth, low interest rate environment is permanent proves erroneous, sector rotation and the resultant correction in share prices could be dramatic. As a result, whilst maintaining diversification across the portfolio, he has tilted the portfolio towards companies that in his view offer undervalued exposure to a better domestic out-turn than is generally expected. These include companies within the Financials sector as well as those exposed to UK consumption, which stand to benefit if the consensus outlook for continued negative real wages and resultant weak demand fails to materialise. The share class offers investors’ exposure to UK listed companies which the manager has selected. As a result investors have less direct exposure to different currencies as well as economies than with the Global Equity Income share class, although given the international feel of many of the companies that James holds, this will still be a feature. James took over management of the Trust from Mark Barnett in 2016 but both sit within the same team. Over five years the shares have outperformed the FTSE All Share index with a total NAV return of 90.9% (five years to 31/01/18) compared to the index return of 49.3%. It has achieved this with a similar level of volatility 9.7%, and a relatively low correlation to the index of 0.63.
The fund aims to generate a return equivalent to cash. The managers aim to achieve this by investing in the Invesco Perpetual Money Fund and the Sterling Liquidity Portfolio of ShortTerm Investments Company (Global Series), each of which invests in a diversified portfolio of high quality sterling denominated short-term money market instruments. The share class offers investors exposure to very liquid cash instruments which the manager has selected. Over five years the shares have delivered a total return of 0.36%, with volatility of 0.44%, and very low correlation to the MSCI All Country World index of 0.15.
IP Select Balanced Risk Allocation share’s (IBRA) objective is to provide an attractive total return in differing economic and inflationary environments, with low correlation to equity and bond markets. The trust has a benchmark of LIBOR +5% per annum, which has been met over almost all periods since the strategy was employed in 2012, with volatility of around two-thirds of that of equity markets. In contrast to ‘active’ total return funds (such as Ruffer, Personal Assets etc.) the managers have a systematic process to shift tactically around an otherwise relatively static long-term allocation to three asset classes: debt securities, equities and commodities. The team has been running the strategy since 2008, and currently manage $24.6bn for various mandates. IBRA invests through highly liquid futures, and looks to allocate risk (rather than capital) equally across the three asset classes. By overweighting the allocations to the less volatile asset classes (such as bonds) and underweighting the allocations to the more volatile asset classes, an equally risk weighted (‘risk parity’) portfolio is created. Because each asset class earns a risk premium over the long term, and they are each uncorrelated to each other, the combination results in a portfolio with significantly improved risk / return characteristics than when compared to any one asset class. IBRA sits within the AIC Flexible sector, which as one might expect, has a fair variety of strategies in it. We compare performance relative to some of the better-known trusts that exhibit low equity correlation and find that IBRA has generally been amongst the better performing, aside from during 2015 when the strategy struggled both in absolute and relative terms due to the weakness of the commodity market. Subsequent to 2015, IBRA has made up more than all of the lost ground relative to the peer group, and is on a par with Capital Gearing Trust in being the best performer in the sub-set of trusts over five years. IPBR has achieved these returns with the lowest correlation to the MSCI ACWI index of the sub-peer group below over five years, at 0.62. The board have a zero-tolerance discount policy, which has successfully prevented the discount from deviating far from the board’s target of +/- 2% of NAV. As a result, the company’s shares might be considered to have lower discount risk compared to most other investment trusts, particularly when compared to those trading at high premiums to NAV. An additional feature is the ability of shareholders in any of the IP Select Trust’s share classes to switch into another IP Select share class on a quarterly basis (UK Equity, Global Equity Income and Cash). This is conducted on or around 1 Feb, 1 May, 1 Aug and 1 Nov each year and is deemed a non-taxable event by HMRC. The systematic investment process means that, compared to a more active strategy, investors should be able to have a good understanding of how the strategy will perform in different environments. As it is, aside from 2015, it has performed well with volatility of 6.5%, relative to the target of 8% and equities of c.10%. With allocations to equities, bonds and commodities, IBRA has delivered an impressive return stream within a relatively smooth path. It has delivered lower volatility than equity markets and, given the novel approach, offers an interesting complement to many of the popular balanced, or low equity correlation, total return funds.
The recent volatility in financial markets has highlighted the importance of flexibility in reacting to a changing investment landscape. With four independently managed share portfolios, the Invesco Perpetual Select Trust plc offers the opportunity for shareholders to gain exposure to a wide range of asset classes and markets. But it’s not the only way in which the trust offers flexibility and diversity: the Balanced Risk share portfolio provides exposure to equities, bonds and commodities, with the aim of providing an attractive total return in differing economic and inflationary environments. Most asset classes gained value over 2017, benefitting our risk balanced funds. However, market environments can turn as easily as the weather, and I believe it is important to be prepared for potential rough seas ahead. In August 1628, Sweden was at war with Poland and built the most powerful warship in the Baltic named Vasa. Tragically, Vasa sank on its maiden voyage just one nautical mile out of the port of Stockholm upon encountering only moderate wind gusts. An extensive inquest determined that faulty construction and engineering was to blame: Vasa’s hull was imbalanced. For over 300 years, Vasa lay in a cold, silty and unknown grave at the bottom of Stockholm harbour. Then, a complex salvage operation ensued and Vasa was brought into port almost fully intact. A museum was constructed around her, and she is now regarded as a Swedish national treasure born out of tragedy.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Invesco Perpetual Select Trust. We currently have 15 research reports from 1 professional analysts.
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
AuM grew by +43% (+16% organic) to £29.4bn in Q3. Investment performance was strong (+£2.5bn) as COVID vaccine news propelled markets. Net inflows were maintained qoq (£792m). Sustainable was the stand out performer (+24%). AuM has broken through £30bn post-period end. Better than expected AuM drives +3% FY21e EPS and +5% in outer years. Continued distribution efforts in Sustainable, Global Equity and Multi-Asset funds stands to catalyse earnings. Alongside flow momentum, 12x FY22e PER is not reflecting this upside.
Companies: Liontrust Asset Management PLC
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
Urban Logistics REIT (“REIT”) has acquired another high quality “last mile” asset in the Wirral for £16.3m (5.0% NIY). The 169k sqft site is let to a subsidiary of Culina. It is leased through to 2032 and has clear rental progression, with an uplift on commencement of a reversionary lease in 2022 and a rent review in 2027. 99% rents for the Jan-Mar quarter have already been collected – highlighting the resilience in the tenant base/income. We do not change forecasts, already assuming full deployment by year end. We estimate that c.£75m capital capacity remains. We note a 6%+ dividend yield in FY22e – a 12m period of full capital deployment – and note that the discount ignores embedded NAV growth potential.
Companies: Urban Logistics REIT plc
Hipgnosis Songs Fund, is independently valued by Massarsky, who in December chose to reduce the discount rate on the revenues generated by the portfolio from 9% to 8.5%, due to strong evidence of growth in streaming numbers and the stable nature of the revenue stream. This produced a NAV of 125.35p as at the 30 September interim period end. It is worth noting the recent publication of significant changes in the discount rate as announced by Professor Aswath Damodaran of the Stern Business School in New York for the Entertainment Industry to 4.82% from 7.83% in January 2020. Combined with recent evidence that music streaming revenues in 2020 are now larger than the entire music market in 2016, we believe this is an encouraging backdrop for potential further reductions in the discount rate being applied by Massarsky going forward
Companies: Hipgnosis Songs Fund C Shares
Henderson Opportunities Trust (HOT) has performed strongly since experiencing sharp NAV and share price declines in the Q120 market sell-off, powering to the top of the AIC UK All Companies sector over the past 12 months with an NAV total return of c 40% in the second half of 2020. Managers James Henderson and Laura Foll say performance has benefited from holding a number of ‘next-generation leaders’ in the UK. The portfolio is esoteric in its make-up and seeks to avoid being overly exposed to trends in the global and domestic economy. The managers continue to see good value opportunities across the UK market, particularly on AIM, and say their intention to maintain gearing at a ‘decent’ level (c 10–15%) is indicative of feeling the portfolio and market offer good value.
Companies: Henderson Opportunities Trust
Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb. Moonpig, the digital greeting card company, is planning an IPO with a potential valuation of £1bln, according to multiple media reports. Further details expected to be announced over the next two weeks.
Companies: ZPHR PANR PRSM SENS CYAN G4M ITX CRCL FEN ZIN
CVC Credit Partners European Opportunities (CCPEOL) has achieved a total NAV return of 1.9% (target 8% annual return) in the last 12 months. Its index outperformance was helped by sector rotation early in the COVID-19 crisis and by staying positive on the market. The manager sees the greatest opportunity in the upper CCC and lower B segments and in structured finance. CCPEOL remains optimistic in the credit opportunities segment, despite the market recovery. It expects 2021 will bring more leveraged loan issuance from broader industrial segments, thus providing greater investment prospects. Portfolio resilience led CCPEOL to raise its annual dividend from 4p/4c per share to 4.5p/4.5c in September 2020.
Companies: CVC Credit Partners Europn Opprtnity
Allied Minds has announced that Joe Pignato has decided to step down as CEO and from the board with immediate effect. However, he will continue to support the company as CFO for an interim period as the board continues its search for a permanent CFO. As part of a streamlining process, Allied Minds will now become a board-led company with no immediate intention to appoint a new CEO. The chairman and NEDs (experienced VCs and private company investors) will represent Allied Minds on portfolio company boards (including Federated Wireless, BridgeComm and Spin Memory) with an intention to accelerate realisations where possible.
Companies: Allied Minds PLC
Interim results demonstrate YoY growth and a resilient outcome that has exceeded management's expectations from the start of the Covid-19 pandemic. This is testament to the degree of recurring revenue generated across the business. FY21 trading looks to be more challenging, as notably lower new insurance sales post-lockdown will translate into lower premium income. A number of organic opportunities are being worked on to fill the shortfall. Rising UK redundancies and their impact on policyholder retentions creates great uncertainty, hence our forecasts remain withdrawn and recommendation remains Under Review.
Companies: Personal Group Holdings Plc
I once sat through a three-hour performance of Samuel Beckett’s Waiting for Godot at the Theatre Royal which, despite the best efforts of Ian McKellen and Patrick Stewart – both of whom I like very much – to this day remains one of the dreariest experiences of my life. It is on that note that we welcome 2021, with all the promise it holds, and return to our ‘top picks’ for 2020, a year which is probably best summarised (for those of us lucky enough to have been not directly impacted by the virus) by the Lord Chamberlain’s censor in his review of the first performance of Godot in 1955 – in which he described having to ‘endure hours [and hours] of angry boredom’. As always, these ‘picks’ do not represent advice, and should in no way be relied upon as such; they have been chosen on a lighthearted basis with no thought given to their suitability for your personal circumstances.
Companies: TFG IPU IEM HOT OCI BRWM JRS RICA BHMG BRLA JMI GPM MINI SMT
Trident Royalties plc is a relatively new royalty and streaming company focused on building a diversified portfolio of royalty assets to broadly mirror the mining sector. Unlike the majority of other royalty companies which are focused on gold/silver in the Americas, Trident’s aim is to unearth value with low-cost acquisitions across multiple commodities in tier 1 and lower risk mining jurisdictions. Acquisition of the Pukaqaqa royalty marks the 6th transaction since listing on AIM in June 2020 reflecting the company’s fast-paced growth strategy. TRR's shares are up over 100% since IPO. Trident is superbly positioned to exploit the gap in the royalty/streaming space. With producing cash-generative royalties already under its belt and an active pipeline of new opportunities, Trident is firmly pursuing an aggressive yet disciplined growth trajectory. Scale will bring higher royalty income, increased diversity and lower risk, the convergence of which should help unlock premium valuation multiples. In the current volatile markets, picking individual mining equities is challenging but Trident offers ground-floor entry into what looks likely to become a major royalty player in London. We have analysed the evolution of royalty peers and investing early appears to be the key. We see TRR’s current share price and value as unchallenging versus peers given the company is already a significant revenue generator. We initiate coverage with a 47p/sh price target.
Companies: Trident Royalties Plc
RLE’s recent updates address two concerns expressed by investors: security of rent and the reliability of appraised asset values. Rent collection is arguably the key measure of portfolio performance for a REIT, particularly in a period of uncertainty and on that basis the first update is reassuring. It confirmed 89.92% collection of rent due for the September quarter (Oct-Dec), including monthly and deferred agreements, broadly in line with the two prior quarters at the same stage. That provides evidence of tenants’ ability to deliver, the durability of RLE’s rental income (and dividend cover) and demonstrates management’s ability to influence events in the short term. The second announcement relates to the sale of properties for £9.725m, all at prices at or above book value. These disposals, some of which will complete in FY21 will reduce net debt and put the group in a strong position to capitalise upon opportunities to acquire assets, which meet its criteria, at attractive prices in a distressed market.
Companies: Real Estate Investors plc
Redde Northgate has come through the COVID crisis in very good shape so far. We expect minimal impact on the former Northgate business from “lockdown 2.0”, a strong recovery in profits and a re-rating as normality returns and Redde reverts to mean. We could see further useful earnings upside from acquisitions such as Nationwide and revenue synergies not yet included. The Group is transforming itself into a mobility business which is higher returning, more diversified and has sustainable compounding growth prospects.
Companies: Redde Northgate PLC
Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange.
Companies: PMI RMM SUN BOIL ITM TRMR MLVN 88E IME ANP
