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

The Hardman & Co Monthly: March 2024

Feature article: Streamed content takes over…after the Great Correction of 2022 Streaming is a disruptive, content-led, subscription-based technology. Challenging all video distribution business models, it opens up global opportunities for a growing variety of content, including gaming and sport. The Great Correction of 2022 saw the share prices of streamers plunge after market leader Netflix reported slowing subscriber growth. The slowdown in growth of subscribers led investors to refocus on

The Hardman & Co Monthly: February 2024

Feature article: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy - Consolidation is the new mantra. 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 t

Volta Finance Limited (VTAS): Insights from the Report and Accounts

In this note, we review the key information and messages investors should take from the recent Report and Accounts. In particular, we note the detailed explanations as to how Volta is delivering strong returns. This performance reflects the sound fundamentals of the CLO investment market and the value specifically added by the manager (reaffirming the issues we identified in our note, The benefits of having AXA IM as the manager). In terms of outlook, the expected relative resilience of the port

The Hardman & Co Monthly: January 2024

The main function of the HHI is to monitor the performance, and to highlight the attractiveness, of life sciences investments over the long term, and to try to identify those stocks that have disruptive technologies that consistently allow them to outperform both the index and the markets. Many of the 52 constituents of the index are high-risk, still being in the development stage, with micro-capitalisations and a long way from profitability. Despite this, some companies can still make extremely

Volta Finance Limited (VTAS): The benefits of having AXA IM as the manager

In this note, we review the value added to Volta by having AXA IM as the manager. In particular, AXA IM’s scale in Alternative Credit brings i) greater resourcing, allowing specialist expertise to identify mis-priced opportunities and manage risk, ii) a network with informational advantages, allowing early identification of trends, and iii) business introduction and portfolio opportunities unavailable to smaller players. Good governance means potential conflicts of interest appear well managed.

The Hardman & Co Monthly: November 2023

This month's feature article is entitled 'Gold and a Chinese Credit Event'. A Western phenomenon? If you own, or are considering owning, gold or gold equities, it’s likely that you’re concerned about protecting your wealth, or the performance of your fund, in the expectation of some kind of financial instability. Maybe your confidence in policymakers is ebbing, or you’ve researched debt bubbles in history and concluded that physical gold and silver have been the safest places to be invested whe

The Hardman & Co Monthly: October 2023

Feature article: Liquidity – shrinking when it’s most needed A review of liquidity in London since 2016 Summary ► Liquidity is the lifeblood of equity markets. ► Following the events at the Woodford Equity Income Fund (WEIF) in 2019, professional investors, increasingly, focus on liquidity when making investment decisions. ► However, this paper shows that liquidity declined significantly between 2016 and 2022. Our work demonstrates that, in 2016, the total value traded of trading companies lis

The Hardman & Co Monthly: September 2023

Feature article: Equity Income – UK or Global? Should investors widen their horizons? Introduction: ► The UK Equity Income sector (UKEI) is the fourth-largest investment company (IC) sector in the Association of Investment Companies’ (AIC) universe, with £12.5bn of assets (as at August 2023), and is the traditional home for investors looking for income in the equity market. ► The UKEI not only provides investors with a better dividend yield than the ge

The Hardman & Co Monthly: August 2023

Feature article: UK interest rates and “risk-free” gilts at their peak? Infrastructure stocks struggle Executive summary Infrastructure/Renewable Energy Funds ► The share price performances of the nine Infrastructure Investment Companies (IICs) and of the 22 Renewable Energy Infrastructure Funds (REIFs) have been dire over the past year. Undoubtedly, the sharp rise in interest rates has presented the sector with serious challenges, especially since the yield on “risk-free” 10-year gilts has r

The Hardman & Co Monthly: July 2022

This month, we feature a contribution by Stephen Isaacs, who is known in the hedge fund world for his, often, thought-provoking commentaries about markets, economics and politics. It goes without saying that the thoughts expressed in this article are those of Stephen, and do not necessarily reflect Hardman & Co’s views. Feature article: UK/OK – muddling through The past few years have seen previously unheard-of constitutional risks – from threats to the Union to the departure from the EU. Brit

The Hardman & Co Monthly: June 2023

Feature article: UK Water – making waves Over the past year, UK utility share prices have been volatile, especially within the electricity sub-sector. The combination of the war in Ukraine and the associated impact of fluctuating gas prices, along with sharply higher inflation and the consequential rise in interest rates, have destabilised much of the sector. Indeed, most sector constituents have seen their share pieces fall (although not seriously), while Centrica, the UK’s leading gas company

Hardman & Co Monthly: May 2023

Feature article: Recognising the value of Intellectual Property IP rights – always intangible, often inscrutable, but never inconsequential Intellectual Property (IP) rights protect innovation and allow companies to commercialise their endeavours. While this sounds straightforward, the challenge in raising capital to fund development has risen significantly recently as the world has responded to macro challenges and investors have become more risk averse. This has called into question the abili

Hardman & Co Research: Volta Finance Limited (VTAS): An easy guide to the benefits of CLOs

The industry-specific terminology associated with CLOs can give the impression of a complexity to the product that belies reality, and, in our view, is unhelpful to the Volta investment case. Accordingly, in this note, we give investors a simple guide to what CLOs are, the benefits they provide, and how Volta is taking the market opportunities. The core of CLOs is uncomplicated cashflows. They are just a pooling of loans into a vehicle, which funds itself by issuing a range of debt and equity. T

Hardman & Co Monthly: March 2023

Feature article: Higher interest rates overshadow IIC/REIF prospects We focus on the nine quoted infrastructure investment companies (IICs) and on the 22 renewable energy infrastructure funds (REIFs), most of which saw their share prices fall during 2022, while the FTSE 100 rose by just 0.9%. In our ‘Quoted UK Infrastructure and Renewable Energy – Prospects for 2023’ publication, we have addressed the three key issues of recent months – higher inflation, extremely volatile power prices and risin

LIBERUM: Plus500: Strategic progress pays dividends

Tatton Asset Management (TAM LN) - Record net inflows

Tatton, the leading on-platform discretionary fund manager (DFM) and IFA support services Group has released a trading update ahead of its results to 31 March 2024, due on 18 June 2024.

Ondo InsurTech FY24 Trading Update

Ondo InsurTech has released a brief post-YE update revealing its good progress continued through 2H24 and consequently FY24 will be in line with market expectations.

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

BlackRock World Mining

BRWM’s managers: we see all the classic signs of high commodity prices...

NextEnergy Solar Fund - Attractive Refinancing

The refinancing of a £135m revolving credit facility and the extension of a similar £70m facility gives NESF firepower as development opportunities for new solar are especially attractive thanks to lower module prices in Europe. They give the fund key financial flexibility at a critical time as it pursues its capital recycling programme.

Resilient FY24, confident long-term outlook

Vp’s full year update highlights sector-leading results, once again benefiting from the diversity of its end markets and the quality of its specialist businesses. With results expected to be broadly in line with expectations, we trim our FY24 PBT forecast by c.5% to £39.0m, a shade below the FY23 outturn (£40.2m). We consider this an impressively resilient performance set against a mixed market backdrop. Under new leadership, a strategic refresh is underway and management is confident in long

NextEnergy Solar Fund – High- and growing-income opportunity?

NextEnergy Solar Fund (NESF) is almost 10 years old. Since launch, it has built a £1.2bn, 933MW portfolio of 100 operating solar assets, powering the equivalent of over 330,000 homes, declared dividends totalling £333m, and avoided the emission of about 2.2 Mt CO2e. NESF is on track to pay 8.35p in dividends, with forecast dividend cover of about 1.3x. Share price weakness that has afflicted the whole sector means that dividend translates to a yield of 11.1%, one of the highest in its sector, a

Jupiter Green

JGC’s fundamental story continues to show resilience, but the discount remains wide…

Lowland Investment Company - Is the tide turning?

Lowland Investment Company’s (LWI’s) unconstrained, multi-cap investment policy differentiates it from most peers in the AIC UK Equity Income sector. It offers investors broad market exposure, outside of the large, traditional ‘income stocks’ at a 13% discount to NAV. The underperformance of small- and mid-cap companies versus larger peers has slowed and a turnaround would be very positive for LWI. Portfolio returns are already benefiting from acquisition activity, spurred by low valuations, and

AUM up 30% in FY24, record flows, forecasts raised

AUM jumped £3.8bn or +30% in FY24, reaching £16.6bn on 31 Mar 24, 12% above our previous forecast of £14.7bn. Including 50%-owned 8AM Global, Assets Under Influence hit £17.6bn. Investment performance provided a tailwind, adding £1.5bn to AUM. But our key takeaway from Tatton’s hugely impressive last few years, is that it has designed and implemented a superior offering in platform-MPS with net flows consistently far higher than peers. That leadership looks even more pronounced in H2-24 with net

abrdn Private Equity Opportunities – On the way to greener pastures?

Despite navigating through what its managers considered to be challenging conditions in 2023, abrdn Private Equity Opportunities (APEO) was able to report both positive NAV growth and double-digit share price returns in its recently published annual results. APEO’s discount has narrowed by more than 10% in recent months, so that it is trading on a 28.9% discount currently, narrowing from about 45% last October. These figures were generated over a period that saw a slowdown in activity in Europea

Tetragon Financial Group - FY23 growth driven by idiosyncratic factors

Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3

Hybridan Small Cap Feast - 16/04/2024

16th 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: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radical Limited for

Agronomics - A unique offering in a rapidly developing sector

Agronomics (ANIC) invests in cellular agriculture companies. Since mid-2022 it has placed increasing emphasis on companies using precision fermentation technology or providing contract precision fermentation services, as these appear to have greater near-term commercial potential than cultivated meat and seafood. Agronomics’ NAV has risen almost 100% since the inception of the current strategy in April 2019, and looks set to increase further as the company’s portfolio holdings receive regulatory