The Results Round-Up – The Week’s Investment Trust Results

Which two funds are celebrating 10 years as listed companies but face continuation votes later this year? And which fund is looking to grow net assets organically to £5 billion?

ByFrank Buhagiar

Hansa’s (HAN) star performer

HAN reported a +25.1% NAV total return for the year. The star of the show was the fund’s holding in Oceans Wilsons which was up +55.3%. Excellent timing, as HAN is waiting on the findings of a strategic review that is running the rule over Brazil’s largest integrated provider of port and maritime logistics. According to the latest update, non-binding indicative offers have been received for Oceans, which accounts for around 30% of HAN’s net assets.

JPMorgan: ‘In our view as a package Hansa Trust is an eclectic mix of assets and any investor has to be comfortable in particular with the large strategic holding and concentrated shareholder register until there is more clarity on what Ocean Wilsons will do, we remain Underweight’.

Ashoka WhiteOak Emerging Markets (AWEM) punching above its weight

AWEM’s Annual Report included an +11.81% NAV total return, comfortably ahead of the MSCI EM (GBP) Index’s +7.94%. Reward for those shareholders who backed the May 2023 IPO, the first and only investment company listing on the Premium Segment of the Main Market since 2021 (the only equity-focused investment company listing since 2018). Post period-end, the £37 million market cap proposed a tie-up with the much larger Asia Dragon Trust (DGN). AWEM ‘intends to participate’ in a full strategic review subsequently launched by DGN. Begs the question, what will AWEM get up to in its second year?

Winterflood: ‘Stock selection contributed to relative performance, particularly within SME segment. India overweight was key geographic contributor.’

NextEnergy Solar Fund’s (NESF) ten-year anniversary

NESF’s tenth full-year results included some major milestones: net operating capacity hit 1GW; the number of operating assets passed 100; the capital recycling programme saw a 60MW ready-to-build solar project sold for £15.2m, a 100% premium to the holding value. And according to CEO Michael Bonte-Friedheim, the 11% dividend yield is ‘one of the highest in the sector and FTSE 350’. Total dividends paid since the April 2014 IPO now stand at £345m. One blot on the report card, NAV per share dropped to 104.7p from 114.3p a year ago due, in part, to lower UK power price forecasts.

Jefferies: ‘NESF has announced a £20m share buyback programme. This is helpful given the weakness in the shares so far during calendar 2024, although material extensions of the programme are unlikely while the fund is still repaying its RCFs.’

Numis: ‘Further progress on disposals would be welcomed and remains an important driver for share price improvement. The forthcoming discontinuation vote at the AGM in August will be a key event for assessing the market’s appetite for the long-term prospects of the business.’

Personal Assets (PNL) remaining cautious

PNL’s ‘investment policy is to protect and increase (in that order) the value of shareholders’ funds per share over the long term’. And it’s done just that. According to Chairman Iain Ferguson, since 1990, ‘NAV has grown at an annual compound rate of +6.5% compared to +3.4% for the UK Retail Price Index and +4.3% for the FTSE All-Share Index, our two main comparators.’ As for the latest financial year, NAV grew +1.2%, compared to the FTSE All-Share’s +3.4%. The investment manager thinks ‘Grounds for caution remain. This is a time for patience and prudence, not ebullience.’

Numis: ‘We continue to believe that Personal Assets is an attractive long-term vehicle for cautious investors.’

Cordiant Digital Infrastructure (CORD) exceeding expectations

CORD’s +9.3% full-year total return came in ahead of the 9% target. So too, the annualised NAV total return which, at +10.5%, exceeds expectations set at the time of the IPO. Total dividends for the year were also ahead of guidance, up 5.0% to 4.2p. What’s behind the forecast-busting numbers? Strong overall performance at the portfolio-company level: aggregate EBITDA grew 7.2% year-on-year to £139.3 million. Everything seemingly going in the right direction, apart from the share price which languishes at a hefty discount to net assets. Chair Shonaid Jemmett-Page ‘believes the causes are macroeconomic rather than specific to the Company’.

Investec: ‘We believe that the diversified and highly contracted nature of the revenue streams, combined with high EBITDA margins underpins future NAV growth. Combined with an attractive yield (5.8%), we believe that the shares offer a compelling total return proposition and we reiterate our Buy recommendation.’

Jefferies: ‘The twin portfolio pillars of Emitel and CRA continue to drive aggregate earnings growth and the overall valuation/NAV. Here the recycle of the cash flow back into the portfolio bodes for ongoing growth.’

Liberum: ‘These results reinforce our view that the market has been undervaluing CORD’s performance. We rate CORD as BUY with a 120p TP.’

Numis: ‘We believe the share price discount of 36% is an opportune entry point and undervalues the potential of the portfolio.’

JPMorgan European Discovery Trust’s (JEDT) year of two halves

JEDT’s full-year results were boosted by a second half pick-up in performance: NAV per share was up 4.5% for the year to 31 March 2024, but up +19.8% from 30 September 2023 to 31 March 2024. The +6.8% total return on net assets also beat the MSCI Europe (ex UK) Small Cap Index’s (GBP) +5.9%. Chairman Marc van Gelder’s appears to have included a weather forecast in his statement ‘The outlook for European small cap companies seems considerably brighter than when I wrote my last statement to shareholders for the Half Year Report six months ago.’ All set fair then?

Numis: ‘Within its annual results, the Board has committed to return up to 15% of share capital via a tender offer at a 2% discount to NAV. It is unsurprising to see some proposals put forward ahead of the continuation vote at the upcoming AGM in July’.

Henderson Opportunities (HOT) set for a HOT streak?

HOT’s +18.6% NAV total return for the half year trumped the FTSE All-Share’s +14.2%. The Interim Management Report puts the outperformance down to stock selection and the benefits of gearing. The Report points out that ‘This was a welcome recovery in both absolute and relative terms, although we recognise that on a long-term basis performance remains disappointing and therefore we need this trajectory to continue.’

Winterflood: ‘Performance drivers were recovery in smaller company share prices from oversold levels as well as ‘recovery’ shares.’

Syncona (SYNC) eyes up £5billion

SYNC’s +1.2% NAV per share return for the year was down to ‘Positive returns from our life science portfolio and capital pool, enhanced by accretive share buybacks.’ CEO Chris Hollowood described the performance as ‘resilient’. He also reminded readers of the healthcare investor’s ‘ambition to organically grow net assets to £5 billion.’ Progress is being made ‘Our maturing strategic portfolio of 13 companies expects to deliver eight key value inflection points with the potential to drive significant NAV growth by the end of 2026, including two in the next six months.’ Code for watch this space

Jefferies: ‘The portfolio’s shift towards later-stage assets has become a lot more apparent. Looking forward, this should provide additional flexibility to make shareholder distributions from the capital pool, and also potentially accelerate near-term NAV performance.’

JLEN Environmental Assets’ (JLEN) resilience

JLENmarked its 10th anniversary as a listed company with a -1.6% NAV total return for the year. Chair Ed Warner believes ‘this year’s performance is another demonstration of our resilience, despite it being a challenging year for the listed renewable investment company sector.’ Warner hopes’ JLEN’s excellent record of delivering consecutive dividend growth since the Company’s launch in 2014, combined with the exciting prospects for the broad range of technologies and assets that it invests in, will encourage all shareholders to vote ‘against’ the discontinuation resolution put forward at the AGM.’ Question is, will that be enough for shareholders?

Jefferies: ‘Dividend cover remains strong, but the most pertinent takeaway is that an asset sale is expected over the coming months. This is particularly positive in the context of the very limited disposal activity to date, the material RCF balance still to repay, and the lack of share buybacks.’

Liberum: ‘we view greater income and NAV growth potential for the portfolio than for lower-risk solar peers and maintain our BUY rating.’

JPMorgan Japan Small Cap Growth & Income (JSGI) believes growth will out

JSGI’s +5% total return on net assets for the year, some way off the MSCI Japan Small Cap Net Return Index’s (sterling) +12.0%. A better reflection of the company’s portfolio is the MSCI Small Cap Growth Index which was up +6.6%. That’s because JSGI has ‘a bias towards smaller cap, quality, growth names’. Chair Alexa Henderson ‘shares the Portfolio Managers’ conviction that good quality companies with strong growth prospects will always perform well over the longer term.’ Henderson has the numbers on her side: the fund’s annualised return on net assets of +8.0% over the ten years ended 31st March 2024, not far off the benchmark’s 8.5%.

Winterflood: ‘Underperformance partly attributed to fund’s bias towards smaller cap, quality, growth names, whereas market favoured larger, lower-quality value-oriented stocks.’