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

Mid Wynd looks forward to a more normalised market environment; Schroder Asian Total Return goes defensive; VH Global Sustainable Energy likes being different; Oakley Capital flies the private equity flag; India Capital Growth thinks execution is key; RTW Biotech expects to be busy; while Schiehallion sees sentiment improving.

Frank Buhagiar

Mid Wynd International (MWY) and the Compounders

MWY +17.1% share price total return for the year, a tad short of the MSCI All Country World’s +20.1%. NAV per share, a little further behind at +13.9%. Chairman, Russell Napier, puts this down to the concentration of market returns in a handful of US megatechs, aka the Magnificent 7. Nevertheless, positive start for new investment managers Lazard Asset Management. The new team promptly set about rebalancing the portfolio (35 stocks were added, another 35 sold) to bring it into line with their Global Quality Growth strategy. This focuses on “Compounders”, companies “capable of generating consistently high returns on capital and reinvesting in its business to drive future growth.”

In the meantime, the investment managers “are comfortable with the Company’s performance in a short-term market environment that is unusually ‘narrow’ – where a small number of stocks have generated a disproportionate amount of the overall market return.” As for what a “small number of stocks” looks like, less than a quarter of the S&P 500’s constituents beat the MSCI ACWI in H1 2024, the lowest figure since at least 1980. The managers “believe equity markets will broaden. A strategy such as ours, which is focused on financial productivity, should benefit in a more normalised market environment.” Share price added 7p on the day to close at 777p. Market expecting a “more normalised environment” sooner rather than later?

JPMorgan: “In common with every fund invested in global equities that compares its performance to a global market cap weighted index, the impact of Nvidia has been the most material component of relative performance. MWY has no holding in Nvidia. With that context in mind it is perhaps not too surprising to see the start of Lazard’s tenure as manager of MWY as a period of relative NAV underperformance but in our view it is too early to judge the success of the approach within MWY and the manager’s global equity quality growth strategy has a long history of good returns in other funds.”

Schroder Asian Total Return (ATR) Goes Defensive

ATR outperformed over the half year: a +10.1% NAV total return comfortably ahead of the MSCI AC Asia Pacific ex-Japan Index’s +9.5%. The fund’s technology holdings and use of gearing both mentioned in despatches. The strong performance means, on an NAV basis, ATR has beaten the Index over the one, three, five and ten-year periods. A full house!

Sounds like the investment managers are looking to protect that track record. A defensive position has been adopted because “current indicators are now decidedly neutral to cautious with limited scope for material short term positive returns based on historic trading patterns. What does this mean in practice? We have reduced gearing down to 5% and we are now in a modest way adding to capital preservation strategies.” Some of the fund’s technology positions in Taiwan have also been trimmed. “All of this should mean the Company is positioned a little more defensively.” Market liked what it heard – shares tacked on 3p on the day to close at 451p.

Winterflood: “Managers observed that Taiwan market has become ‘frothy’, driven by AI theme, with MSCI Taiwan +30% over H1 2024. Portfolio remains significantly underweight China/Hong Kong (c.17% exposure vs. c.27% benchmark).”

VH Global Sustainable Energy Opportunities’ (GSEO) Differentiated Portfolio

GSEO’s -5% NAV per share decline for the latest half year may have been down to adverse foreign exchange movements, but the longer-term track record remains robust: 8% total annualised NAV return since IPO to June 2024. Dividend looks robust too with the payout fully covered by cash. Chair, Bernard Bulkin, believes “This reflects the Company’s differentiated portfolio, which continues to generate predictable and healthy income to support GSEO’s attractive dividends.” Only half time in terms of the year and in the second half, “focus will be on enhancing the portfolio’s value by completing the construction of existing assets and continuing to create additional value through active management of the operational assets.” Shares ticked a little higher to close at 78p.

Numis: “We recently published a detailed note highlighting potential for attractive total returns from GSEO’s differentiated portfolio, as construction assets complete and asset optimisation strategies are executed”.

Jefferies: “the highly contracted revenue position remains GSEO’s key source of strength, supporting dividend cover and a projected increase in gearing.”

Oakley Capital Investments (OCI) Flies the Private Equity Flag

OCI’s +4% total NAV return per share for the half year would have been 6% had it not been for adverse forex movements. These aside, the underlying strength of the portfolio holdings there for all to see: average year-on-year organic EBITDA growth at the portfolio company level came in at 14%. According to Chair Caroline Foulger, NAV growth has been “driven by higher earnings across a portfolio of tech-enabled, disruptive businesses that have demonstrated an ability to perform regardless of the economic backdrop.” And the Chair believes this “underlines the attractive nature of Private Equity and the outcomes achievable through investing longer-term capital in high-growth, high-potential private businesses, coupled with hands-on management that influences the investment outcome.” All that private equity flag-waving good for a 4p increase in the share price to 503p.

Jefferies “A number of the aggregate portfolio metrics were surprisingly static, but importantly earnings growth remains strong.”

Numis “We think that the future looks bright for OCI and that an estimated discount of c.29% (adjusting for currency), offers an attractive entry point for a high-quality fund.”

India Capital Growth’s (IGC) Double-Digit Return

IGC’s +10.6% NAV total return for the half year, largely in line with the BSE Sensex’s +10.9% but some way off the BSE Midcap’s +26.7%. Despite this, since 2011, the fund has achieved a compound annual growth rate of +15.2%. In their outlook, the investment managers highlight concerns that the valuations for many companies are above historical averages and that the 20%+ annual earnings growth delivered by the corporate sector over the past three years will be hard to repeat given the high earnings base. That said, “the Indian economy is well positioned, with political stability, policy continuity and a favourable macroeconomic environment. Looking ahead, execution is critical.” If the 1.5p results day share price rise to 187p is anything to go by, the market has faith in IGC’s ability to execute.

Winterflood: “Primary detractor was zero weight in state-owned enterprises. Key sector detractor was Financials, while Healthcare and Communication Services contributed.”

RTW Biotech’s (RTW) Busy Half

RTW’s +3% NAV per share return for the half year brings the total gain since the fund’s 2019 admission to +87.7%. By comparison the Russell 2000 Biotech and Nasdaq Biotech are up +1.7% and +4.0% over the half year and +6.5% and +34.6% over the longer time frame. MD, Richard Wong, notes “an intense period of activity for the group, with 14 new core positions initiated, an IPO and a reverse merger.” Sounds like it is only going to get busier, as “The market environment for the biotech sector is improving and the opportunity set for stock picking is encouraging. As we look out to the second half of 2024, we are excited by prospects for the biotech sector and opportunities that the Group’s scale, post-Arix acquisition, presents.” Market containing its excitement for now – shares largely unchanged following the results.

Numis: “In our view, the fund offers an attractive way to access a sector that benefits from numerous tailwinds.”

Schiehallion (MNTN) Sees Sentiment Improving

MNTN’s NAV and share price moved in opposite directions over the half year: NAV down -3.2%, share price up +44.1%. Same goes for NAV and the operating performance of the portfolio companies: portfolio-weighted revenue growth was +41%. Encouraging news on the valuation front. According to the Interim Management Report, “The gradual uptick in private markets activity over the past twelve months have given us opportunities to compare our carrying valuations with external price discovery moments.” Out of 11 price discovery events, MNTN had to revalue its holdings upwards on nine occasions, with a median revaluation of +18%. The two occasions holdings were revalued down, the median revaluation was -2%.

The investment managers “believe the share price appreciation over the last six months hints at an improved sentiment in general towards growth equity in the markets. If so, it is a sentiment we share.” Not much of a surprise to see the shares a smidgeon lower on the back of the results, that 44% share price rise perhaps enough to tempt shareholders to take profits.

Numis: “We believe Schiehallion has an interesting approach and is run by Baillie Gifford who is a well-respected long-term growth investor.”

Fox Squirrel

Dear reader

VPC is in a period of wind down. Its dividend on a “headline” basis is one of the strongest on the market at an alleged 19.51% per annum (according to HL).

But is that good value for money? Is it “real” and sustainable? And should existing shareholders hold on, average down, or exit?

For a start, the true dividend is 18.3%. That’s because the dividend is/was/has been 2p per quarter (backed by strong returns on VSL’s loan portfolio) but due to a 0.11p/share B shares capital return this has now been reduced to 1.89p per qtr. 7.56p on a 41.2p ask price is 18.3%.

Still, a chunky old divvy covered by earnings.

For anoraks only.

Is VSL a wee foxy lass?

“The Oak Bloke from The Oak Bloke’s Substack” <theoakbloke@substack.com> 

Is it the right time to invest in the UK stock market ?
Story by Harvey Dorset

Currently, UK equities are cheap compared to their foreign counterparts. But with potential takeover activity on the horizon, and growth back on the cards, it appears the tide might be beginning to shift.

In recent years, the UK market has been struggling to keep up with its competitors and has suffered due to its lack of high-quality tech stocks as US-based firms have seen meteoric gains.

As a result, UK equities are considerably cheaper than those in the US or Europe, and at the same time are delivering higher dividends and operating in a faster growing economy.

On the rise: Cheap UK equities could be set to grow in value as the economy stabilises
Richard Hunter, head of markets at Interactive Investor, said: ‘The FTSE 100 has tended to languish over recent years, not least of which was due to the fallout from Brexit and the index’s relatively low exposure to the technology sector, which has latterly been “the” trade which investors chase.

‘However, there are some signs that fortunes could be on the turn.’

Last month, the Bank of England cut interest rates for the first time in 2024 to five per cent and is expected to make further cuts before the year is out.

In comparison, the US has yet to see a rate cut, though this could be on the cards for the looming Fed decision.

The UK has also delivered strong growth in 2024 so far, with GDP having risen by 0.7 per cent in the first quarter and 0.6 per cent in the second, compared to 0.3 per cent and 0.2 per cent growth for the eurozone and 0.4 per cent and 0.7 per cent growth for the US.

‘The signs are the UK economy is set to keep growing,’ Tom Stevenson, investment director at Fidelity, said.

‘In July, the IMF upgraded its forecast for UK growth in 2024 from 0.5 per cent to 0.7 per cent, while sticking with its forecast that the economy will expand by 1.5 per cent next year.

‘Moreover, the UK is now underpinned by several factors including more growth and the actual onset of falling interest rates.

‘That could fuel a further unwinding of the discount that’s been applied to UK shares ever since the Brexit referendum in 2016.’

While the UK market is increasing in value, data from Fidelity shows it remains at a considerable discount.

The UK stock market has a price to earnings ratio of 11.7, far lower than 21.0 for the US and Canada, and 14.1 for Europe (excluding the UK).

Price to earnings ratios indicate the value of a company’s share relative to its earnings.

Often companies with low ratios are considered to be value stocks.

Stevenson said: ‘The UK stock market is no longer trading in absolute bargain territory – but it is pretty close to it.
‘Valuations in the US – even after the hiatus in markets mid-summer – remain close to their recent peaks.’

With UK equities still trading at a marked discount to those elsewhere, they are becoming increasingly attractive prospects for potential buyers.

‘Evidence of the market’s attractive valuation and newfound political stability comes from the number of foreign takeovers we’ve seen so far this year.

‘Indeed, the value of bids for UK companies hit its highest since 2018 earlier this year,’ Stevenson said.

Cyber-security firm Darktrace and packaging company DS Smith have both seen high-profile bids this year, with Rupert Murdoch’s REA group now mulling a bid for Rightmove.

Added to this, the Government has pledged to promote new investment in the UK, both through a £7.3billion national wealth fund, as well as considering reducing regulation and axing stamp duty in order to make the UK a more attractive prospect.

Hunter said: ‘The possibility of luring pension funds back to the UK in a meaningful way is another intriguing possibility which would immediately bolster prospects.’

He added: ‘For the longer term the UK remains an investment destination full of quality and proven names, and while the returns can be lower than some other indices, the potential rewards coming from many well-regarded names is evident and may be increasingly coming to the attention of overseas investors looking for an alternative outlet.

Here’s how investors can build a meaty second income starting from scratch.

Story by Charlie Keough

Young female business analyst looking at a graph chart while working from home© Provided by The Motley Fool

The main reason I invest is to build my second income. Further down the line when I’m thinking about retirement, I want to have a stream of income that I can rely on to help me enjoy life more. That’s the dream, isn’t it?

How to invest

Before I started to think about how much I wanted to invest, the first step I’d take would be to open a Stocks and Shares ISA. That’s because I wouldn’t be taxed on any profit I made. From the dividend shares I’d be buying, I’d also be able to keep all of the passive income I received from dividend payments.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Starting out

So, I’ve decided I’m going to invest with my ISA. That’s the best way for me to set myself up for success. But what’s next? Well, now comes the most important part. It’s about getting started no matter how much money I have to invest.

But that’s far from the case. How we start doesn’t matter. What’s imperative is that we start as early as possible and over the long run  the stock market work its magic. I think £100 a week is a sensible starting amount.

Phoenix Group Holdings

Let me show an example of just how powerful this can be. The stock I’m going to use is Phoenix Group Holdings (LSE: PHNX).It’s an insurance company and a leader in the sector.

Its share price is down 1.8% so far this year. But a falling share price isn’t always a negative. For savvy investors, it means they can snap up bargains while the rest of the market overlooks it.

At its current share price, it has a dividend yield of 10.1%, way above the FTSE 100 average (3.6%). I like Phoenix Holdings because it has a strong balance sheet with plenty of cash spare as well as a rising dividend payout.

Money to be made

Taking my £100 a week and applying it to Phoenix Group’s 10.1% yield ought to see me make slightly over £525 a year in passive income. Not bad.

However, the longer I leave my money in the market, the better chance I have of building my wealth. If I adopt a 30-year investment time frame and reinvest all the dividend payments I receive, at the end of that I’d be making £10,168 a year in second income. I’d have a nest egg worth £106,269.

Investing always comes with risks and the stock market is volatile. There’s no guarantee that Phoenix Group’s yield will stay the same. It could rise or fall. Nevertheless, what this shows is that even investors starting from scratch are able to build a sizeable pot if they give it time.

The post Here’s how investors can build a meaty second income starting from scratch appeared first on The Motley Fool UK.

The 2025 fcast for the Snowball is income of £9,170 and a target of £10,000.

If the fcast is achieved that will be the plan’s fcast for the year ending 2027.

If the target is achieved that would equate to a future income stream in ten years of 20k pa. a yield of 20% on seed capital, if the dividends are re-invested at 7% or above.

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

The Board of Triple Point Social Housing REIT plc (ticker: SOHO) is pleased to announce its unaudited results for the six months ended 30 June 2024.

Chris Phillips, Chair of Triple Point Social Housing REIT plc, commented:

“The Company’s portfolio has continued to demonstrate operational and financial resilience and the Group has benefited from strong rental growth that has increased income.

The Group will continue to benefit from having exclusively long term fixed priced debt and we look forward to building on the progress made in the first half of the year particularly in relation to the increase in rent collection and the corresponding increase in dividend cover, which ensured that the dividend was fully covered on an adjusted earnings basis for the six months ending 30 June 2024.”

Triple Point Social Housing REIT plc

(the “Company” or, together with its subsidiaries, the “Group“)

DIVIDEND DECLARATION

The Board of Directors of Triple Point Social Housing REIT plc (ticker: SOHO) has declared an interim dividend in respect of the period from 1 April 2024 to 30 June 2024 of 1.365 pence per Ordinary Share, payable on or around 4 October 2024 to holders of Ordinary Shares on the register on 20 September 2024. The ex-dividend date will be 19 September 2024.

The dividend will be paid as a Property Income Distribution (“PID”).

The Company is targeting an aggregate dividend of 5.46 pence per Ordinary Share for the financial year ending 31 December 2024.