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Trust Watch: New Year winners & losers and a P2P revival

Stock markets have got off to a strong start in 2019 after a tough 2018. We look at January's big investment trust risers and fallers and which closed-end funds look like bargains and which expensive.

Bright start to year

After a terrible end to last year, stock markets have rallied at the start of 2019 with the FTSE All-Share and MSCI World indices both up over 4% and emerging markets advancing around 5%.

In a change to the usual format we present Investment Trust Watch in gallery, with separate slides looking at January's big risers and fallers and ending with our roundup of investment companies looking cheap and dear.

If you would like to see all the slides on one page, click here.

Next: January's big risers

 

 

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Bright start to year

After a terrible end to last year, stock markets have rallied at the start of 2019 with the FTSE All-Share and MSCI World indices both up over 4% and emerging markets advancing around 5%.

In a change to the usual format we present Investment Trust Watch in gallery, with separate slides looking at January's big risers and fallers and ending with our roundup of investment companies looking cheap and dear.

If you would like to see all the slides on one page, click here.

Next: January's big risers

 

 

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Biggest risers in January End January (p) End December (p) Change
Summit Germany (SMTG) 1.35 1.11 21.6%
Premier Global Infrastructure (PGIT) 124.00 102.00 21.6%
Altamir Amboise (LTA) 15.18 12.64 20.1%
MedicX Fund (MXF) 89.00 74.60 19.3%
Aurelius Equity Opportunities (AR4) 37.84 32.08 18.0%
Pershing Square Holdings (PSH) 15.26 12.94 17.9%
Independent IT (IIT) 575.00 493.50 16.5%
BB Biotech (BION) 67.75 58.40 16.0%
Edinburgh Worldwide (EWI) 169.20 146.80 15.3%
Pershing Square Holdings £ (PSH) 1162.00 1010.00 15.0%
Unite Group (UTG) 910.50 806.00 13.0%
Golden Prospect Precious Metals (GPM) 20.00 17.75 12.7%
NB Private Equity $ (NBPU) 14.25 12.65 12.6%
Aberdeen Smaller Companies Income (ASCI) 252.00 224.00 12.5%
Chelverton UK Dividend (SDV) 192.00 170.75 12.4%

Source: Numis Securities 31/1/19

January’s big risers

Last year began with a positive January so it is important not to read too much into these trusts that have been quick off the blocks.

AIM-listed Summit Germany (SMTG) is the surprise leader of the pack. Plans for the Guernsey-based investment company to broaden its remit from beyond Berlin to continental Europe and beyond were followed by an impressive news that the euro-denominated portfolio had grown net asset value per share by 54% last year. Its shares are up 21%.

Premier Global Infrastructure (PGIT) is our first example of an investment trust rebounding after a poor 2018, up 21.6% in January. This begins to make up for last year when, even with dividends included, shares in Premier Global Infrastructure fell 22%, as investors worried about prospects for the Chinese wind farm operators and US yieldcos in the £48 million portfolio run by James Smith and Claire Long.  

Medicx (MXF) has jumped 19% as a result of its takeover by Primary Health Properties (PHP) and hedge fund activist Bill Ackman will hope his Pershing Square Holdings (PSH) can hold on to the 18% gain, having lost investors money in each of the last three years.

Elsewhere smaller company funds are in evidence in the bounce back with Independent (IIT), Edinburgh Worldwide (EWI), Aberdeen Smaller Companies (ASCI) and Chelverton UK Dividend (SDV) rallying between 16.5% and 12.4% after hard times in 2018.

Next: the big fallers of the month

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Biggest fallers in January Now Previous Change
Vinaland (VNL) 0.01 0.03 -76.5%
LXB Retail Properties (LXB) 5.73 11.33 -49.4%
Origo Partners (OPP) 0.20 0.25 -20.0%
Ranger Direct Lending (RDL) 530.00 660.00 -19.7%
Sherborne Investors (Guernsey) C (SIGC) 60.00 71.75 -16.4%
Athelney Trust (ATY) 205.00 245.00 -16.3%
Marble Point Loan Financing (MPLF) 0.82 0.95 -13.7%
Macau Property Opportunities (MPO) 141.00 162.31 -13.1%
Raven Property Group (RAV) 43.80 49.90 -12.2%
Aberdeen New India (ANII) 429.00 467.00 -8.1%
LMS Capital (LMS) 46.40 50.35 -7.8%
Global Resources (GRIT) 3.00 3.25 -7.7%
JPMorgan Indian (JII) 651.00 699.00 -6.9%
Fondul Proprietatea GDR (FP/) 9.80 10.50 -6.7%
Ediston Property (EPIC) 101.00 107.00 -5.6%

Source: Numis Securities: 31/1/19

January's big fallers

The 76% plunge in Vinaland (VNL) looks dramatic at the top of our list of fallers but is due to the fund continuing to realise its assets as it prepares to delist.

More dramatic is the 49% drop in LXB Retail Properties (LXB) as investors decide the small, Jersey-based, AIM-listed investor in out-of-town shopping parks is the last place they want to be at the moment. At 5.7p on Thursday, its shares stood on a 78% discount to Numis’ estimated net asset value per share of 25.8p, giving the company a market value of just £10 million.

A number of the fallers we have previously highlighted: Ranger Direct Lending (RDL), down nearly 20%, is also winding up while small-cap minnow Athelney Trust (ATY) is attempting to forge a new future for itself although the shares have fallen 16% after fund manager Robin Boyle regained control of its board. Marble Point Loan Financing (MPLF) is still reeling from the pain in US loan markets with its shares falling nearly 14%.

Next: 'cheap' trusts

 

 

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'Cheap' trusts Share price premium (- discount) to net asset value % 12-month average premium (- discount) % Z-score
Tufton Oceanic Assets C (SHPC) -1.1 5.8 -6.4
Greencoat Renewables (GRP) 2.0 8.9 -4.2
TwentyFour Select Monthly Income (SMIF) -0.1 3.5 -3.3
Fondul Proprietatea GDR (FP/) -42.9 -31.0 -3.3
Ruffer Investment (RICA) -4.5 0.9 -3.1
Macau Property Opportunities (MPO) -42.7 -29.8 -3.1
Highbridge Multi Strategy (HMSF) -3.8 -0.2 -2.5
Globalworth Real Estate (GWI) -9.5 4.8 -2.4
Sherborne Investors (Guernsey) C (SIGC) -12.1 4.5 -2.2
Athelney Trust (ATY) -17.1 -6.0 -2.2
Blackstone GSO Loan Financing £ (BGLP) -13.1 -3.1 -2.1
Downing Strategic Micro-Cap (DSM) -3.9 0.6 -2.1
Gabelli Value Plus (GVP) -12.6 -8.3 -2.1
Tetragon Financial (TFG) -47.2 -41.8 -2.0
Diverse Income (DIVI) -2.7 0.4 -2.0

Source: Numis Securities 31.1.19

Tufton trades low

There is an unusual situation at the top of our 'cheap' list with Tufton Oceanic Assets (SHIP) C shares (SHPC) trading 1% their net asset value (NAV), in contrast to the near 6% average premium they have stood at since the investor in second-hand commercial vessels issued the shares last October. That gives them a Z-score of -6.4.

Just to recap, our remaining tables rank investment trusts and investment companies by their 'Z-scores', which is a measure used by analysts to put their discounts – shares trading below NAV – or premiums – when shares stand above NAV – into historical context.

Roughly speaking a Z-score of -2 or below shows a trust is getting cheap compared to its own trading history and may provide a buying opportunity (first table). By contrast, a Z-score of 2 or more is getting dear and may signal an opportunity to take profits (second table).

Tufton is unusual because its ordinary shares - issued when the company floated over a year ago - stand on a 7.9% premium to NAV and yield 4.7% in quarterly dividends. However, in the fourth quarter, it was the C-share portfolio that performed better as a result of the mark-up of product tankers bought by the company. It looks like the C-shares - which will convert to ordinary shares when they are fully invested - may not have kept up with the underlying NAV and so look cheap.

Next: is P2P re-rating

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'Expensive' trusts Share price premium (- discount) to net asset value % 12-month average premium (- discount) % Z-score
Carador Income Fund Redeemable (CIFR)  13.4 -8.0 3.8
Alpha Real Trust (ARTL) -13.7 -22.1 3.1
P2P Global Investments (P2P) -12.6 -16.6 2.5
Templeton Emerging Markets (TEM) -9.6 -12.4 2.4
Bluefield Solar Income (BSIF) 10.4 5.5 2.3
LXI REIT (LXI) 10.6 2.9 2.3
BH Global - £ (BHGG) -0.8 -4.9 2.3
Lowland (LWI) -1.9 -6.0 2.3
Renewables Infrastructure Group (TRIG) 8.9 4.0 2.3
MedicX Fund (MSF) 10.0 0.1 2.2
BH Macro - £ (BHMG) 1.8 -6.2 2.2
Ranger Direct Lending (RDL) -23.1 -40.2 2.2
Schroder AsiaPacific (SDP) -8.4 -11.1 2.2
Carador Income Fund (CIFU)  -1.8 -9.1 2.2
Hipgnosis Songs (SONG) 11.7 9.3 2.1

Source: Numis Securities 31/1/19

All change at P2P

It’s all change at P2P Global Investments (P2P), the investment trust that pioneered investing in loans through peer-to-peer lending platforms but over expanded and disappointed investors with sub-par returns.

P2P ranks third in our table of ‘expensive’ trusts with its discount – still wide at 12.6% - having narrowed from a 12-month average of 16.6% to give it a Z-score of 2.5.

Under the management of Pollen Street Capital – managers of rival Honeycomb (HONY) – which took over in September 2017, the fund has shifted towards asset-backed lending with the legacy P2P portfolio accounting for just 20% of assets. As a result a new name is being considered.

Although the share price is up only 6% in the past year, if the company’s broker Liberum is to believed, prospects are brightening. In a note published last week Liberum’s Conor Finn predicted P2P would shortly raise its dividend by 25% to 60p per share, equivalent to an annual yield of 7.4%, which he believed would act as a ‘catalyst for a share re-rating’ as he lifted his target price from 905p to 920p. The shares are currently 827p.

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