Latest Market Insights

abrdn Property Income Trust -?May Update

Over the first quarter of 2023 abrdn Property Income acquired an industrial site in Knowsley and a Morrisons supermarket in Welwyn Garden City. Mark Blyth, deputy fund manager, details the investment cases for both purchases and provides an update on 54 Hagley Road, a premium office asset where active asset management seeking to improve occupier experience is already having an impact on occupancy and demand.

Watch the update here

abrdn New Dawn -?May Update

James Thom, manager of abrdn New Dawn, talks through the portfolio’s current positioning and breaks down the trust’s recent performance. James explains how they have been selectively adding to domestic consumption and healthcare names in China as they look to benefit from Chinese reopening. These two sectors in particular remain somewhat insulated from the geopolitical headwinds faced in China.

Watch the update here

UK Commercial Property REIT -?May Update

UKCM is one of the largest diversified UK REITs. Fund manager, Will Fulton, speaks to why he believes now is one of the most exciting times to be investing in the sector. After sharp falls in commercial property values triggered by soaring interest rates, there has been some stabilisation in the commercial property market. A combination of reduced valuations combined with continually strong rental demand creates interesting opportunities for investors. As at the end of March 2023, UKCM sat on a 36% discount to NAV with a 6.6% dividend yield.

Watch the update here

Latest News

Doceo Watch List: Mon 03 July 2023

BARGAIN BASEMENT

Discount Watch: 28

Our estimate of the number of investment companies whose discounts hit 12-month highs over the course of the week ended Friday 30 June 2023 – exactly the same number as the previous week.

21 of the 28 were on the list last week: RM Infrastructure Income (RMII), Sequoia Economic Infrastructure Income (SEQI) and GCP Asset Backed Income (GABI) from debt; Greencoat UK Wind (UKW), Foresight Solar (FSFL), Gore Street Energy Storage (GSF), Greencoat Renewables (GRP); Aquila Energy Efficiency (AEET), SDCL Energy Efficiency (SEIT), The Renewables Infrastructure Group (TRIG), and Gresham House Energy Storage (GRID) from renewable energy infrastructure; HICL Infrastructure (HICL), 3I Infrastructure (3IN), GCP Infrastructure (GCP), Cordiant Digital Infrastructure (CORD), BBGI Global Infrastructure (BBGI), and International Public Partnerships (INPP) from the wider infrastructure sector; Edinburgh Worldwide (EWI) from global smaller cos.; Crystal Amber (CRS) from UK smallers; JPMorgan Midcap (JMF) from UK all companies; and finally Seraphim Space (SSIT) from private equity growth capital.

That leaves seven new entries: Phoenix Spree Deutschland (PSDL) from property; Biopharma US Credit (BPCR) from debt; Digital 9 Infrastructure (DGI9) from infrastructure; Ecofin US Renewables Infrastructure (RNEW) and VH Global Sustainable Energy Opportunities (GSEO) from renewables; Taylor Maritime Investments (TMI) from leasing; and Hipgnosis Songs (SONG) from royalties.

ON THE MOVE

Monthly Mover Watch: NB Global Monthly Income Fund (NBMI)

Sits on top of broker Winterflood’s list of the biggest investment trust movers over the last month with a share price gain of 38%. NBMI announced it “intends to distribute to Shareholders an aggregate amount of approximately ￡28.5 million…by way of a partial compulsory redemption of Shares in the capital of the Company…Following the passing of the Shareholder resolutions tabled at the Company's Extraordinary General Meeting held on 27 January 2023, the Company's investment objective is to realise all existing assets in the Company's portfolio in an orderly manner.”

Hansa (HAN) couldn’t match NBMI but has still managed a healthy-looking 15% rise. The flexible investor released its results for the full year during which HAN “…performed robustly on a relative basis in a very difficult market.”

Worst performer of the month has been Seraphim Space (SSIT) – shares are off 27.5%. Only news out over the past month has been a Holdings in Company and the space-focused investor’s Q3 newsletter: “Overall portfolio valuation slightly decreased by ￡0.5m to ￡180.8m during the quarter, driven by an unrealised fair value reduction of ￡1.3m, partially offset by investment of ￡0.9.”

Read more here

That Was The Month That Was

TOP 10 TIPS FOR INVESTING IN AN INFLATIONARY WORLD

6. Don’t put all your eggs in one basket

You don’t need to own everything but don’t have it all in one stock or theme. Covid has seen scores of sector specific investments and start-ups (who tend to be on the higher risk end) wiped out. We also received questions about the crypto – treat this as another high risk investment and diversify

Next time: 7. Best in class

MARKET DATA

% Returns 1 Week 1 Month 1 Year 5 Years

UK Equities (% return) 1.05 0.72 3.94 -3.10

World Equities (% return) 0.87 4.16 14.69 43.63

10 Year US Treasury Yield 3.84 3.69 2.98 2.85

GBP / USD (fx rate) 1.27 1.24 1.22 1.32

As at 30th June 2023. Source: FactSet

THIS MONTH IN HISTORY

1775: Congress authorizes the first issuance of Continental Currency, or US paper money. Officially known as "Continentals” they quickly lost value, partly because they were not backed by a physical asset like gold or silver, but also due to the fact that too many bills were printed

1903: Henry Ford launches the Ford Motor Co. in a refurbished wagon factory in Detroit, with $28,000 raised from 12 investors, including a coal dealer, a carpenter, and a man who made windmills

1979: Sony began selling its Walkman, a portable cassette player; an international sensation, the device changed the way people listened to music.

Read more here.

Listed infrastructure valuations: listing or compelling?

doceo’s Law#17: every investment company sector has its turn under the spotlight. Whether the trigger is a specific event or a sharp move in the markets, all sectors come under heightened broker (and sometimes press) scrutiny at some point. Take renewable energy infrastructure for example - the trigger here was the Electricity Generator Levy (EGL) and what it meant for individual companies’ profitability. Or debt - the wiping out of holders of Credit Suisse’s Additional Tier 1 (AT1) bonds following the bank’s tie-up with UBS prompted analysts to review AT1 exposure across the sector. Or UK residential - the publication of a short-seller report on Home REIT saw brokers forensically examine rent rolls and counterparty risk at other trusts operating in the space.

And if ‘under the spotlight’ is defined in terms of the near-simultaneous publication of multiple broker commentary, then it seems listed infrastructure is currently hogging the limelight on the investment trust stage. Between 27 and 28 June, three brokers saw fit to publish notes on the sector.

The prompt?

Share price falls on Monday 26 June. At first glance, HICL Infrastructure’s (HICL) 2.9% share price decline, 3I Infrastructure’s (3IN) 2.5% fall and International Public Partnership’s (INPP) measly looking -1.6% drop hardly warrant such close attention from the broking community – the share price falls could be down to just a bad day at the office. So, why the fuss? Because the falls seen on 26 June were no one-offs. The sector is in the midst of an extended period of pressure, one which has seen share prices move from trading at premia to net assets to, as reported in doceo’s Watchlist on 26 June 2023, trading at or close to 52-week high discounts. Question is, after such steep falls, where does listed infrastructure go from here? Over to the brokers – Jefferies, Numis and JPMorgan…

Read more here.

A 360 view of the latest results

Quote of the week

“The Company overall had a worthwhile year…”?Worsley Investors (WINV) Chairman W. Scott.

This should provide investors with comfort

Annual Report from?Augmentum Fintech (AUGM). Chairman Neil England wrote: “Despite challenging markets, the bulk of your Company’s investments have performed well and…made a positive contribution to the Company’s NAV per share after performance fee, which increased by 3.7p to 158.9p. Your Company has now successfully exited five portfolio investments, all of which have been at or above the last reported holding value. This should provide investors with comfort that our valuations process is rigorous…We maintained our investment discipline over the last year and, with our strong cash reserves (￡38.5 million at 31 March 2023, ￡50.0 million at 30 June 2023) we are well placed both to take advantage of new opportunities and to reinforce our appeal as a supportive investor.”

Portfolio manager Tim Levene added: “Our 10 highest value holdings have seen revenue growth at an impressive average of 117% year-on-year and raised over US$300 million in capital during a challenging macroeconomic and fundraising environment. Despite an increased focus from venture investors on companies displaying a clear path to profitability and reducing cash burn, the growth in our portfolio through the cycle reflects the quality of many of our companies and the unabated advance of digital transformation in the financial services sector. We are seeing a material increase in the number of compelling investment opportunities at more pragmatic valuations and expect that to continue into 2024. Our fintech specialism and strong balance sheet position leave us well positioned to take advantage of more favourable investment conditions.”

Winterflood?wrote: “NAV per share (after performance fee) +2.4% from 155.2p to 158.9p. Share price TR -27.1% as discount widened from 14.3% to 39.0%; 5.8m shares bought back at average discount of 34.1%. Increase in NAV per share after performance fee driven by return for the year +1.9p and impact of share buybacks +1.8p; strong revenue growth at top 10 holdings largely offset by multiple compression in comparable public markets. NAV at year-end was ￡294.1m, of which value of investment portfolio was ￡254.3m (31 March 2022: ￡268.8m).”

Liberum?added: “Once again, the management of the company proved its credentials with a strong performance of its underlying assets. Revenue growth of investee companies added ￡84.8m (+28.7% of starting NAV) to the net asset value of the portfolio, while FX movements added ￡5.6m (1.9%). Augmentum invested ￡19.9m (6.7% of NAV) during FY23, while the sale of ii generated ￡42.8m (14.5%) of proceeds and the exit from Cushon (closed on 1 June) another ￡22.8m (7.7%) post period-end. Declining comparables reduced the valuation of investee companies by ￡81.2m (-27.5%) largely offsetting the increase in valuations from revenue growth. Since IPO, the company has thus created an IRR of 18.5% underpinning the strong long-term performance…The high cash reserves will allow the management to invest this cash in new ventures at attractive valuations, creating fertile ground for even higher IRRs going forward.”

Numis?sees value: “AUGM has a unique mandate among London-listed funds and appears well-placed to exploit the rapid growth potential among European fintech companies, which are seeking to disrupt the business models of traditional banking and financial services. We regard the management team, headed by Tim Levene, highly, and we believe that the fund is an attractive long-term investment, albeit that the early-stage nature of the companies means that it may not always be a smooth ride for investors. The portfolio appears to be performing well despite the difficult environment and the fund has benefitted from downside protections which are represented across the majority of the portfolio. The shares trade on a c.40% discount to NAV, which we believe offers value, although the fund is small with a market cap of just ￡170m and limited trading liquidity.”

Read more here