The Tip Sheet

The Tip Sheet
The Mail on Sunday thinks Impax Environmental Markets shares are a bargain, while The Investors Chronicle believes Caledonia can solve a quandary faced by some investors. Quandary? The Tip Sheet reveals all.

By
Frank Buhagiar
11 Jun, 2024

MIDAS SHARE TIPS: The unheralded eco firms being turned into green giants
According to the Mail on Sunday tipster, there’s one fund which gives investors exposure to ‘the unheralded eco firms being turned into green giants’ – Impax Environmental Markets (IEM), a fund that focuses on ‘small and mid-sized businesses with an environmental twist, from hazardous waste treatment in America to reusable pallets in Australia.’ The small to mid-cap focus sets IEM apart from its peers which typically invest in either unlisted cash-hungry businesses and projects, or large-scale companies that face stiff competition. It also has the potential to drive ‘faster growth over time’.

The share price is down around a third since 2021, as economic and market uncertainty have weighed on the valuations of IEM’s underlying holdings. But this works both ways – the portfolio managers are looking to take advantage of the current market environment to pick up stocks at attractive prices. Could be perfect timing as climate change continues to rise up the agenda which ought to benefit ‘companies with robust green credentials’.

Midas concludes, ‘Impax Environmental Markets has been through a rough few years but, at £3.96, the shares are a bargain. The group combines green credentials with hard-nosed commercial nous. Buy and hold.’

Investors Chronicle: A clever and cheap way to invest in private equity
Hot on the heels of last week’s tip in The Telegraph, Caledonia Investments (CLDN) finds itself the subject of another positive piece, this time from The Investors Chronicle. The article kicks off by highlighting a quandary faced by investors considering allocating a portion of their portfolios to private equity. On the one hand, there are the stellar returns generated by private equity investment trusts over the past decade, several of which have returned over 200% in this time. On the other hand, some investors will be put off by the sector’s high debt levels, particularly with interest rates high and economic conditions challenging.

What to do? Enter CLDN ‘For those who are intrigued by private assets but are unsure about whether to back a private equity fund, Caledonia Investments (CLDN) is an attractive proposition.’ Why? Because it is a multi-asset investment trust with a long-term buy and hold approach – currently 59% of assets are in private markets with the remaining 41% largely invested in listed companies. And the fund’s strategy has a track record of delivery. The IC highlights how the fund has outperformed broker Investec’s composite index (35% the FTSE All-Share; 65% the MSCI ACWI excluding the UK) – over the last five years, Caledonia has generated a +10.9% NAV return a year, compared to the benchmark’s +10.2%.

And then there’s the income. CLDN has grown its dividends for 57 consecutive years – the shares currently yield just under 2%. All of which leads the IC to write ‘Investors in search of a trust with a long-term approach, a unique strategy and growing dividends will find a lot to like in Caledonia’s portfolio’. That is ‘as long as they are happy not to shy away from private markets.’ And for those worried about investing in the private sector, the 35% discount to net assets at which CLDN’s shares currently trade at provides a useful margin of safety.