Global Macro Commentary & Investment Companies Roundup January 2023

• Performance: Atrato Onsite Roof soars as investors look on the bright side. • Premiums and discounts: Investors deserting Pollen Street following dividend cut. • Money in and out: Funds struggle to attract new funding.

Global Macro Commentary & Investment Companies Roundup January 2023

• Performance: Atrato Onsite Roof soars as investors look on the bright side. • Premiums and discounts: Investors deserting Pollen Street following dividend cut. • Money in and out: Funds struggle to attract new funding.

Scottish Mortgage

SMT’s discount may prove attractive for a long-term investor willing to accept the ups and downs of a high growth strategy…

Wide Boys

When we last updated our portfolio of discounted opportunities, markets were basking after a vaccine-pumped rally which proved good for NAVs and saw discounts narrow. The last three months (since 07/01/2021) have been rockier. While the news about the timetable for re-openings has been good in the UK and in the USA, and the results from the Israeli experiment have been close to ideal, Europe and the emerging markets have had setbacks. There has been some volatility in the hottest sectors in the

This time next year Rodney...

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

Five ways to play Indian equities

India is one of the countries hit worst by the coronavirus crisis. In Q2 the country’s GDP fell 23.9%, which compares to an average of -6.9% for the OECD average and growth of 11% for China, following a 10% decline in Q1. India’s government has also definitively lost control of the virus itself. While other countries can at least claim to be restraining its spread (although that is contentious), India has been continuing with its national unlocking while cases rise rapidly (even if some states h

The next big thing two megatrends that everyone should own

2020 has so far proven to be the latest episode in a long period of technology outperformance, as we observed in this article. Over the past decade, technology-related companies have tended to perform like consumer staples or defensives on the downside, and like high-growth discretionary stocks on the upside: an ideal combination from the investor’s point of view. As a result the indices (and fund managers’ portfolios) are increasingly correlated to ‘big tech’. How do investors who want a divers

Scottish Mortgage - Overview

Scottish Mortgage (SMT) aims to generate superior returns from global equities with a highly active, long-term approach. The success of that strategy, particularly over the past decade, has led SMT to grow into the largest investment trust on the FTSE and pass on the benefits of scale in exceptionally low fees. The NAV growth has largely come through performance. As we discuss in the Performance section, over the past decade the trust has generated annualised NAV total returns of c. 20%, one of

Riding for a fall

In the financial markets, the biggest winners from the crisis so far have – without a doubt – been the technology sectors. Software, hardware, ecommerce and related sectors have outperformed in the immediate aftermath (as we discussed in a recent strategy note). They also seem likely to benefit from some of the likely long-lasting changes to society that the crisis will forge. This is the latest episode in a long period of outperformance. Looking back over the past decade, technology-related com

On solid ground

To those who regularly invest in investment trusts, discounts can often be part of the opportunity. But to others, discounts are an extra complication, not to mention an extra risk. The last six weeks has probably strengthened the prejudices of both sides on the topic. The recent bout of volatility has – in our opinion – more clearly exposed both the advantages and the disadvantages of investment trusts. Our perspective is that discounts are like a drunk friend. They are fun to have around, but

First Quarter of 2020

We have knitted together the impact on the investment companies from what is now widely considered to be the most severe pandemic in a century. The collapse in asset prices over the latter part of March, brought the curtain down on an up-market that lasted more than ten years. In amongst this, there were pockets, such as the technology sector, that held up well. For many industries, the worst is still to come, as we brace ourselves for the sharpest contraction to global growth since the US great

Children of the Revolution

The COVID-19 pandemic is far from over, but with March coming to a close we have perhaps seen the end of the first act. Most of the developed world is in various degrees of ‘lockdown’; anxiously watching poorly reported – and often poorly understood – numbers for indications that their government’s strategy is working. Meanwhile equity markets saw one of their worst ever quarters in Q1 2020, as whole swathes of the economy were shut down by government diktat. The speed with which the situation d

Mind the gap

Recent years have seen companies opt to remain private for longer; due to their ability to access capital from alternative areas and to remain free of the increasingly burdensome requirements of being listed. The implosion of the Woodford Equity Income Fund as a result of liquidity problems has shone a negative light on open-ended funds holding stakes in private companies. However, the capacity to hold illiquid assets is one of the key characteristics of the investment trust structure. In this a

Sail away: the best trusts to escape the UK

nvestors are increasingly turning to global funds. We suggest that concerns around Brexit are most likely leading investors to seek diversification overseas. In terms of retail sales the global sector has been comfortably the most popular among investors over the past few quarters. In 2018 global funds had close to twice the level of retail sales of any other sector, as can be seen in the chart below. A similar trend has emerged in the investment trust sphere, where the average discount within t

Scottish Mortgage Investment Trust - Overview

Scottish Mortgage (SMT) is a global equity portfolio run with a long-term investment time-frame, via a highly-concentrated, growth-orientated stock picking approach. It is the largest ‘conventional’ UK-listed investment trust with net assets of over £8.3bn. The managers aim to invest in the most promising growth companies across the globe, whether publicly listed or private. SMT, which is a member of the FTSE 100, has built a long-term track record of outperformance, growing assets at a rate fa

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

LIBERUM: Speedy Hire: Weakness in FY 24 but recovery in FY 25

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

H&T Group (HAT): Core franchise build, short-term retail noise

In our 15 March 2023 initiation, 'Pawnbroking royalty, with strong, profitable growth', and subsequent notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities. These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%. Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2

Morning Note – 29 February 2024

Hardman & Co Insight - Asset managers had a poor 2022

Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m