Witan Investment Trust (WTAN) has employed a multi-manager strategy since 2004. Investment director James Hart says the trust gives a balanced exposure to equities across regions and sectors. He suggests ‘the type of companies identified by the managers should provide good long-term prospects for shareholders, especially in the current environment, plus there is currently a wide discount to asset value’. WTAN offers a range of strategies not generally available to the retail investor, with c 25% of the portfolio in specialist areas including emerging markets, climate change and biotechnology. Hart argues the trust ‘brings something different’ and is a more rounded approach to global equity market opportunities.
Companies: Witan Investment Trust
Witan aims to provide investors with a ‘one-stop shop’ for an actively managed exposure to global equities. The trust invests with a range of thirdparty managers who select concentrated portfolios. This approach means that shareholders can benefit from diversification and active management, but with less key-man or manager risk. The selection of these managers is overseen by Witan’s executive team. These underlying managers run high conviction portfolios, which means that the trust’s overall exposure may be quite different from its benchmark. Managers employ different strategies, with some being highly adaptable, to minimise the need to change them over time. However 2020 has been challenging for investors, and the executive team have made an unusually high number of changes to the portfolio. These changes represent around a third of the portfolio, and represent the first substantial changes since 2017. Overall these changes significantly reduce the trust’s exposure to ‘value’, while increasing the exposure – and reducing the underweight relative to the benchmark – to the US. It also represents a change in thinking: that global portfolios, rather than geographic specialists, are now more likely to deliver the best results going forward. Witan employs structural gearing, historically at around 10% of NAV. Over the last six months Witan has been making adjustments to bring interest costs down and increase flexibility. The current gearing at 9% reflects the relatively cautious optimism of the team. At the current share price, Witan yields 3% and has increased its dividend every consecutive year for 45 years. The board notes that revenue earnings per share in 2020 are likely to be around half of the 2019 level, but that they expect to use reserves so that shareholders will see continued dividend growth in 2020.
Witan Investment Trust (WTAN) can be considered as a ‘one-stop shop’ for investment in global equities. Since 2004, it has employed a multi-manager strategy; there are currently 10 third-party managers, while around 10% of the trust is invested directly in specialist funds. WTAN outperformed its composite benchmark in FY19 and has now increased its annual dividend in each of the last 45 consecutive years. While global stock markets are currently under significant pressure due to the coronavirus outbreak, WTAN’s CEO and investment director are ‘optimistic’ on the prospects for equities with a medium to long-term view, while acknowledging short-term challenges. They believe that given the announced fiscal and monetary stimuli across the globe, the economic recovery, when it happens, could be quite dramatic.
Witan is a self-managed investment trust which aims to achieve growth in capital and income over the long term, through a portfolio of global equities. The team follow a highly active multi-manager approach, using a range of third-party managers who run concentrated portfolios of 15 to 60 stocks. Currently there are ten managers in the portfolio, with allocation sizes and mandates being controlled by the board and executive team, led by Andrew Bell. Alongside this, the executive team are directly responsible for up to 12.5% of the portfolio, investing in specialist collective funds and smaller managers that could be larger constituents in the future. Since adopting the multi-manager approach in 2004, the trust has performed strongly relative to peers and the benchmark. This has also been seen over the short term, although the current exposure to the UK and low exposure to FAANG stocks have been a slight headwind in the short term on a relative basis. Alongside capital appreciation, the trust offers investors a strong income stream. The trust has an enviable track record of 44 years of dividend increases, and over the past five years the trust has delivered triple the dividend growth of the average peer in the sector. Over the past few years, the trust has traded on a narrow discount to NAV. The current discount of 3.8% is a little wider than in recent years, and the company is repurchasing shares on a regular basis.
Witan Investment Trust (WTAN) employs a multi-manager strategy providing a ‘one-stop shop’ for exposure to global markets. The trust’s investment director James Hart highlights WTAN’s robust revenue stream, which is underpinned by a portfolio of high-quality companies with long-term growth potential. The trust’s annual dividends have compounded by 8.7% pa over the last 10 years and by an enhanced 10.3% pa over the last five. Hart says that although expectations have moderated, the outlook for growth remains favourable, which is positive for the long-term, patient investor, despite shorter-term periods of stock market volatility.
Witan Investment Trust’s (WTAN) investment director James Hart suggests that equities are currently an attractive asset class for the patient and selective investor. He believes that selectivity is becoming more important given the elevated valuation levels of parts of the equity market. The director argues that this plays to the strengths of WTAN’s multi-manager investment approach, with experienced managers that are able to take advantage of the evolving investment environment. Although relative performance was weaker than average in 2018, the trust has outperformed its composite benchmark over the last three, five and 10 years, while generating NAV and share price total returns between 11.0% and 15.0% pa over the last three, five and 10 years.
Witan follows a highly active ‘manager of managers’ approach, using a range of thirdparty managers to gain exposure to global equity markets. Currently, the company consists of ten managers, who run a collection of concentrated portfolios under the overall asset allocation plan set by CEO Andrew Bell and the management team. Alongside this, the executive team runs up to 12.5% of the portfolio, investing in specialist collective funds and smaller managers that could be constituents in the future. The trust’s objective is to generate long-term NAV growth and to deliver income at a rate greater than inflation. Since adopting the multi-manager approach in 2004, the trust has performed strongly. Over five and ten-year periods, to the end of 2018, Witan has delivered an NAV total return of 52.1% and 207.1% respectively, compared with the benchmark’s 44.6% and 163.4%. For most of 2018, Witan’s returns were positive and ahead of the benchmark. However, Q4 hit the trust particularly hard and the macro and political uncertainty, coupled with the trust’s gearing, meant the trust ended in negative territory. Alongside capital appreciation, the trust offers investors a decent income stream. The trust has an enviable track record of 44 years of dividend increases, and the 2018 dividend of 23.5p was 11.9% greater than the 21p paid in 2017 and once again greater than the rate of inflation and fully funded by earnings. As of the most recent annual report (December 2018), the trust has revenue reserves that cover the dividend by 1.5x, adding further reassurance to income dependent investors. Over the past few years, the discount has narrowed significantly. After trading on a discount of close to 10% to NAV in 2016, the trust now trades at a discount of 2.5%. The board places a high degree of importance on creating sustainable liquidity at or near to asset value and has buyback authority which it continues to use as necessary.
Witan Investment Trust (WTAN) offers investors broad exposure to global equities via a multi-manager strategy. The trust’s investment director, James Hart, believes that the global economy, led by the US, is still growing at a healthy but moderate pace, even though there are regions that are growing more slowly, and equity valuations are reasonable. He says this provides opportunities for long-term investors. While recent performance has been affected by higher stock market volatility, WTAN’s longer-term record of outperformance versus its composite benchmark remains intact. Given the trust’s robust level of income so far in FY18, the board is confident of another year of dividend growth, which would represent the 44th consecutive annual increase.
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. Statistics from the AIC show that during 2017, independent financial advisors bought £990m-worth of investment trusts through platforms. That was 46% more than in 2016, and 41% more than the previous record of £704m in 2015. This increased demand has shown itself in the average discount across the investment trust universe, which has narrowed markedly, as shown in the chart below.
Companies: ATST JCH WTAN
Witan pursues a highly active ‘manager of managers’ approach, using a range of third party managers based around the world, each one investing in concentrated portfolios under the overall asset allocation plan set by CEO Andrew Bell and the management team. The trust’s objective is to generate long-term NAV growth and to deliver income at a rate greater than inflation. Since the change in strategy in 2004, when it adopted the multimanager approach, the trust has performed strongly, comfortably beating the composite benchmark over one, three, five and ten years (to the end of May 2018). In particular, 2017 was a strong year for the trust, as the financial backdrop was prime for global equities. Throughout the year the trust beat its benchmark by 3.9%, with NAV total returns of 19%. However, 2018 has brought new challenges, and macroeconomic backdrop has exposed it to some volatility. In particular the possibility of trade wars has impacted performance, as well as the effect that an environment of higher interest rates could have on emerging markets. Additionally, the lack of exposure to US markets has squeezed relative performance. Whilst the trust has not performed particularly well this year, Witan has a good long-term track record and Andrew Bell, James Hart and the team have a proven ability to identify strong managers for the fund’s allocations. We note that the trust has taken steps to increase its active share in the last twelve months, increasing the portfolio's stock specific focus at a time when - in hte manager's words - "index valuations offer few windfalls". It is also worth highlighting that the trust enforces a fairly strict discount control policy, limiting discount volatility, and - while it isn't the cheapest in the sector - it is by only slightly more expensive than the average trust in OC terms.
Witan is one of the UK’s largest investment trusts and aims for capital growth and an income which rises faster than inflation, with a portfolio of global equities managed by a number of third party management groups overseen by chief executive Andrew Bell. Witan has performed strongly over the past year, and delivering NAV total returns of 17.8%, in comparison to the benchmark total return of 14.2% (full year to 31.01.2018). For the same period, the share price total return is +21.4%. Since the start of January 2017, Witan’s benchmark has been a composite of 30% FTSE All-Share, 25% FTSE All-World North America, 20% FTSE All-World Asia Pacific, 20% FTSE All-World Europe (ex UK), 5% FTSE All-World Emerging Markets. Since Andrew Bell (pictured) took over as CEO in 2010 the trust has performed well – outperforming the board’s customised benchmark on a NAV basis in four of the past five years. On a NAV total return basis, it has also outperformed the MSCI All Countries World Index, and the average trust in the AIC Global sector over Andrew's tenure. During 2017, the board bought shares 2,857,284 shares, demonstrating the boards policy to use buybacks to achieve a "sustainable low discount (or premium) to NAV... taking account of prevailing investment conditions". The trust has traded on an average discount of -2.3% over the course of the year to 5 March 2018 according to data from Morningstar.
Witan Investment Trust (WTAN) invests globally and is one of the largest investment trusts, with net assets of c £2.0bn. It adopts a primarily multi-manager investment approach, aiming to generate long-term capital growth and real growth in income. The trust has a solid investment track record; it has outperformed its blended composite benchmark over one, three, five and 10 years. Against an improving economic and political backdrop in Europe, WTAN has increased its exposure to the region. It has replaced Marathon’s pan-European mandate, appointing two new managers: CRUX Asset Management and S.W. Mitchell Capital. They both run actively managed, concentrated continental European portfolios, using the FTSE Europe ex-UK Index as a benchmark. WTAN has a distinguished dividend history; its annual payout has increased for the last 42 consecutive years.
Witan Investment Trust (WTAN) uses a multi-manager investment approach to invest in global equities. Since 2004, it has allocated capital to eight to 13 external managers (currently 11), who all run high-conviction investment strategies and up to 10% of the fund is invested directly in collective specialist assets, which includes private equity. The multi-manager approach aims to generate an attractive NAV total return ahead of WTAN’s benchmark (a composite global equities index reflecting its chosen investment universe), as well as real dividend growth. NAV total return is ahead of its benchmark over one, three, five and 10 years.
Witan Investment Trust (WTAN) is a well-established fund that is unique among its peers in having a predominantly multi-manager approach. It aims to generate capital return and income growth in excess of UK inflation. The trust currently has allocations to 10 external managers, all with high-conviction investment strategies. Up to 10% of the fund is invested directly in specialist collective assets, including private equity. WTAN’s NAV performance versus its benchmark is positive over one, three, five and 10 years. Its dividend yield compares favourably with the peer group average and the annual dividend has increased for 41 consecutive years.
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Life sciences is one of Mercia’s areas of focus and investment expertise. Seven of Mercia’s top 20 holdings at 31 March 2020 were in life sciences, valued at £29m in aggregate or 33% of total portfolio value (all of which had originated through Mercia’s third-party managed funds), with another c 40 earlier-stage life sciences investments across its third-party managed funds. COVID-19 has accelerated the opportunity for a new generation of novel and recombinant vaccines. This explosion of potential new treatments will require new diagnostics and bio-manufacturing support to scale supply once they are approved. These are areas where Mercia is already invested.
Companies: Mercia Asset Management PLC
Cenkos Securities plc has terminated coverage of Record Plc. Our previous recommendation (BUY) and forecasts can no longer be relied upon.
Please contact Cenkos for further information.
Companies: Record plc
What’s new: Today’s trading update reveals 17% rise in assets under management (AuM), double digit revenue growth, and an increasing operating margin as the business scales. The outlook is positive. Highlights are:
12.6% rise in 1H Group Revenues to £11.0m (1H last year: £9.7m);
21.9% rise in 1H adj operating profit to £5.0m (1H last year: £4.1m);
17.4% rise over 6 months in AUM to £7.8bn on 30 September 2020,
n.b. From 31 March 2020 the WMA balanced index rose 11.6% to 4510;
- Market movements added 12.5% to AUM (i.e. Tatton outperformed WMA);
- 1H net inflows of £328.1bn were 4.9% of opening AUM (i.e. c 10% annualised net inflows);
3.0% rise in Paradigm Mortgage Services member firms to 1,591
2.5% rise in Paradigm Consulting member firms
Interims will be announced on Wednesday, 18 November 2020
Companies: Tatton Asset Management Plc
Following on quickly from its impressive full year results, these interim results confirm that our confidence for growth in the Program Management business was not misplaced.Contracted Premium increased 95% YoY (and 12% ahead of December 2019) to $925m –a stone's throw away from the $1bn 2020 guidance set in 2018. At the same time, Gross Written Premium (GWP) grew 42.6% to £247.2m, resulting in Economic EBITDA turning positive, at £0.8m compared to a loss of £0.3m in 1H19
Companies: Randall & Quilter Investment Holdings Ltd.
The Vaccine Group (TVG) has agreed a collaboration with the world-leading Pirbright Institute to develop a vaccine to combat type-1 PRRSV disease, as part of an 18-month development project funded by ECO Animal Health (EAH-LON). PRRSV is a viral disease causing reproductive failure and often fatal respiratory disease in pigs. PRRSV is one of the most economically significant disease affecting swine production, costing pig producers over >$600m in the US and >€1.5bn in Europe each year. Investing (particularly in vaccines) and seeking to in-license new products are a key part of ECO Animal Health’s growth strategy; as such, positive results from this project could facilitate additional research projects and/or potentially licensing agreements with ECO Animal Health. This early industry endorsement for TVG’s herpesvirus vector vaccine technology is encouraging, and data from the project also has relevance to the ongoing development of a SARS-CoV-2 animal vaccine and other vaccines at TVG. Other TVG projects in African Swine Fever and Bovine Tuberculosis are ready to enter animal trials once testing facilities become available (pandemic dependent). Frontier IP currently has an 17% equity stake in TVG. We are encouraged by TVG’s progress in line with Frontier IP’s development strategy, but anticipate the news today to have no material impact on Frontier IP at this juncture. The next anticipated catalyst for Frontier IP will be FY’20 results expected in the coming weeks.
Companies: Frontier IP Group Plc
Fidelity Special Values (FSV) employs a value-based, contrarian investment style aiming to achieve long-term capital growth primarily through investment in UK companies, which the managers believe are undervalued or where potential has not been recognised by the market. FSV has endured a challenging period of underperformance. However, lead manager Alex Wright and co-manager Jonathan Winton believe the Q120 market sell-off created many investment opportunities, which they have sought to exploit. In their view, UK value stocks, and FSV in particular, now offer great value, which is further amplified by the trust’s current discount making for a good valuation starting point for investment. The managers see significant scope for the trust to outperform not only growth strategies and UK equities in general, but also other asset classes.
Companies: Fidelity Special Values
The handover of Witan Pacific (WPC) to Baillie Gifford (BG) on 16 September 2020, following the board’s decision and favourable shareholders’ vote, marks the trust’s transition to the new asset manager. BG won the mandate with its proposal to transform the Asia Pacific growth and income trust into a pure China equity growth strategy. The manager considers that ‘still misunderstood and underinvested’ China (a c 2.5% allocation in 2019 global portfolios) is the key global growth market of the 21st century, and that global investors who miss out on the present China opportunity run the major risk of being left behind.
Companies: Witan Pacific Investment Trust
There was an eclectic mix of property companies to feature in the top price movers for September. Top of the tree was private rented sector and residential development specialist Sigma Capital Group, with a 34.2% rise. The group launched a £1bn joint venture with EQT Real Estate, the real estate platform of global investment firm EQT, to deliver 3,000 private rental homes in Greater London. Micro-cap investor Panther Securities also hit double-digit gains, while Macau Property Opportunities saw an uplift in its share price after announcing debt refinancing and a disposal. CLS Holdings, the investor in offices in Germany, France and the UK, continued to see a recovery in its share price – which has risen 15.1% in the last three months. Off the back of solid results, Berlin residential landlord Phoenix Spree Deutschland saw its share price gain 7.2%. Schroder REIT’s share price rose 6.6% in the month as it embarked on a share buyback programme, while Irish commercial property investor Yew Grove REIT also saw positive shareholder reaction to amending its investment strategy to increase its target loan to value ratio to 40%.
Companies: SUPR DIGS CRC PSDL ASEI TPON RLE UKCM BREI BCPT RGL SIR SLI TOWN CAL
Altus Strategies* (ALS LN) – BUY, Target 115p – 5,000m trenching programme launched at the Laboum Gold Project, Cameroon | Arc Minerals* (ARCM LN) – Annual report describes transformational year for Arc as it focusses on Zambian copper prospects | BlueRock Diamonds (BRD LN) – Third quarter figures highlight substantial improvement in volume and grade | Keras Resources* (KRS LN) – Progress in Togo and Utah | Power Metal Resources* (POW LN) – Launch of website galley | Shanta Gold (SHG LN) – West Kenya Scoping Study confirms attractive project economics | Yamana Gold (AUY LN) – Admission to London’s Official List
Companies: ALS ARCM BRD KRS POW SHG
FY20A results largely reflect a period prior to the Covid-19 lockdown, yet show Duke entering a more challenging FY21E with momentum. Yesterday's trading update demonstrated another notable rise in quarterly cash receipts for Q2/21, as royalty partner trading continues to improve. As some partners' forbearance measures will expire this month, Q3/21 receipts should continue this upwardly momentum. This opens the door to a return to cash dividends at some future point. Today, Duke also confirms it is now seeking new royalty partners, alongside follow-ons.
Companies: Duke Royalty
To achieve YoY revenue growth over H1/20A despite the challenges of Covid-19 and its impact on the travel sector is testament to Equals' resilience and increasing focus on B2B and International payments services. While weaker gross profit and EBITDA margins have impacted profitability in H1/20, we see potential for an earnings recovery in H2/20 given cost reduction measures currently being undertaken. This should lead Equals to cash breakeven in Q4/20 and FCF positive by early FY21.
Companies: Equals Group Plc
City of London has announced a trading statement covering its first quarter FUM and financial performance. With the Karpus merger taking place on 1 October, all figures refer to the pre-transaction entity. Markets were very supportive over the quarter, with a smaller offset from net outflows. At the quarter-end, FUM were $5.94bn, an increase of 8% on the $5.50bn at the financial year-end. Fund performance was good in the main strategies, with Frontier being the exception. It was also the source of the majority of the outflows, as the largest client reallocated away from the sector.
Companies: City of London Investment Group PLC
It was a remarkable second quarter with global markets staging the sort of comeback few would have thought plausible, at the end of March. With some countries still battling the first wave of infection and others seemingly headed to a second, not to mention what happens when governments start to remove direct stimulus measures, uncertainty still abounds.
Companies: NCYF EGL NAIT NAIT THRG GCP IGC HHI JLEN PCT VNH ASLI IBT HRI CSH SIGT
MJ Hudson's FY20A Adj EBITDA of £4.2m is slightly ahead of our pre-Covid forecasts (£4.1m), despite the period including four months' trading during the pandemic. Since a March nadir, the business has seen evidence of recovery, with group LfL revenue by mid-Sept ahead of prior year levels. Today, MJH also announces the acquisition of an Irish funds service provider (Bridge Consulting) for €2m upfront, and up to €9.8m earn-out. Our forecasts and recommendation remain Under Review.
Companies: MJ Hudson Group Plc
Montanaro European Smaller Companies (MTE) has generated impressive returns for investors over the past year and has outperformed its benchmark in four of the past five 12-month periods. The trust is ahead of both its benchmark and its peer group average by more than 80 percentage points over the five years ended 30 September 2020
Companies: Montanaro European Smaller Co.S Trust