Category: Uncategorized (Page 374 of 378)

Thomas McMahon

For 2023, I went for AVI Japan Opportunity (AJOT). The trust had a pretty good year, although the share price didn’t quite manage to keep up with the NAV. A lot of my rationale was correct: I picked Japan to outperform, and it has indeed done even better than the S&P 500. Changing interest expectations and the reopening of China have played a part in this, although probably the most important reason was overseas investors coming to realise how significant the corporate governance reforms are in the country. There has been a flood of money into cheap Japanese companies as a result. Unfortunately for AJOT (versus Topix), this has mostly gone into the more liquid large-cap space so far. Whilst AJOT’s returns of 15% are impressive, they have been behind the returns of the large-cap index. Nonetheless, I think 2023 was very much a coming-of-age story for the corporate governance angle in Japan, and I expect AJOT to continue to do very well out of it for years to come.

The right call in investment is often the uncomfortable one. It was hard to buy BP and Shell in late 2020, and hard to buy big tech in Q4 2022, but both would have been excellent decisions. I think buying US small caps could be a similar play, and for this reason, I am picking Brown Advisory US Smaller Companies (BASC) to outperform in 2024.

A huge alligator mouth has formed between the magnificent seven tech stocks and the rest of the US market. It could close in one of two ways: the tech names crash or the rest of the market rallies, and I think whilst most have been positioned for the first outcome, the second is increasingly looking likely. Everyone loves to bash central banks, but the Fed does look like it may have engineered a decline in inflation without crashing the economy. Now, there may be a problem arising in that high nominal growth could boost inflation, which could lead to cries for the Fed to reverse course and hike rates once more. But I think this is unlikely for three reasons. The first is that I think the Fed will reason (correctly) that any temporary uptick in inflation will not threaten a rerun of CPI at 9%. These extreme levels were the result of the global boost in demand following lockdowns, the energy price surge following the Russian invasion of Ukraine and (although I expect they will be less keen to admit it) the extraordinary largesse of the Biden administration.

Idealists may wish to avert their gaze, as my second reason is that I expect the US establishment to do anything they can to prevent Trump from winning the presidency, including the Fed. The chances of Biden winning, or any Democrat who may run in his stead, will plummet if the US falls into recession, and so I expect the various Federal Reserve governors to keep rates low for fear of causing economic misery to the voters. The third reason is that I think inflation is likely to be muted by a struggling Chinese economy which continues to be the main source of demand for commodities. This should reduce the pressure on the US consumer.

So, I think the picture is good for US growth, and I think a combination of high valuations in large caps and the prospect of rate cuts to come will see a rotation into small and mid-caps. The P/E of the Russell 2000 Index (excluding ex-growth companies) is 14.2x, which compares to 21.5x for the all-cap Russell 3000 Index. BASC looks for quality growth companies so there could be some stylistic support as the market prepares for falling rates.

Thomas McMahon

thomas.m@keplerpartners.com

William Heathcoat Amory

For 2023, I doubled down on Hipgnosis Songs (SONG), having also chosen the shares for 2022. My original rationale was correct—that after 2021 which was a barnstorming year for equity markets, it might make sense to rotate out of equity beta, into an uncorrelated asset class. 2022 and 2023 subsequently turned out as hard for alternative strategies as it has for equities. Unfortunately, during 2023 SONG has faced a litany of troubles, and the shares remain on a wide discount. At current discount levels (to the published NAV) of over 50% at the time of writing just before Christmas, the shares must offer value. A new board has been appointed, now including noted deal-maker Christopher Mills of Harwood Capital. As such, patient investors may yet see a recovery in value, and with bond yields in the US now coming down we may see interest in song royalties start to recover: many private equity buyers are leveraged players and so valuations do correlate with bond yields.

For 2024 I am switching asset class, but remaining in private markets, where I continue to think there is significant potential for skilled investors to add considerable alpha. My pick is NB Private Equity Partners (NBPE), which is a private equity trust which focusses solely on co-investment. This is a process where private equity managers invite third-party investors such as Neuberger Berman (NB) into selected deals. NBPE is an equity investor, and sits alongside these third-party managers, typically on a fee-free basis. NB have long experience in co-investing and selects only those investments which it think have a strong likelihood of success. The historic track record is strong, but returns have been relatively muted since the end of 2021 as a result of two headwinds which in our view are starting to roll off. Firstly, during 2021 several of NBPE’s successful investments chose to IPO as a means of starting the exit process. NBPE remained invested in a rump of these quoted investments, which were negatively affected by the downturn in equity markets during 2022. At the same time, rising interest rates led to a significant slowdown in realisation activity, from the boom years of 2020 and 2021.

NBPE is in a strong position to weather a deal slowdown, because of the deal-by-deal way in which it deploys capital. As such, the trust is very unlikely to find itself overextended because of commitments, and it can deploy capital opportunistically. The portfolio is increasingly mature, meaning that many of the investments may be at a stage where the sponsor (or private equity manager leading the deal) is looking to crystallise value gains through a transaction. The portfolio of mainly US-headquartered companies has delivered strong earnings growth over past years, a function I believe of the strong stock picking delivered by NB. There is no guarantee of course that this will continue, but I believe that private equity-backed companies are more resilient than those on quoted markets. Fundamentally, the private equity industry has developed such that the resources that managers can lean on to support investee companies’ management is huge. They can react quickly to changed circumstances, and gain market share when dynamics change. Certainly, private equity-backed companies do tend to be more enthusiastic users of borrowing. However, we believe that there is evidence that whilst higher rates are a headwind, they are not an insurmountable or life-threatening challenge, especially as interest rates look to be on a downward trend.

NBPE’s discount has narrowed from its widest levels but still sits at a discount to NAV of c. 25%. Of more interest, in our view, is the latent potential of its investments. If deal activity starts to normalise thanks to interest rates starting to fall from their peak, then we believe there is potential for some strong progress on the NAV front. We think it is likely that dividends will remain the primary route for returning capital to shareholders. Over the last ten years, NBPE has returned c. $375m of capital, of which the majority has been through dividends that add to $316m over the period. NBPE’s board has not ruled out share buybacks, and so if the share price doesn’t keep up with the NAV, it clearly has to be an interesting and accretive avenue for re-deploying capital from realisations. A potential tailwind to the investment case, given that the portfolio is denominated in US dollars (USD), is recent USD weakness, which has fallen from 1.21 to the pound at the start of October, to 1.27 at the time of writing. Certainly, there are those (including FT journalists) who believe that private equity valuations are opaque and too high, and riding for a fall in the new era of higher interest rates. I’m not of the same view, believing that private equity managers, such as those that NB partners with for NBPE, create value in a repeatable process over cycles. NBPE is a great way to access this talent, hence why I am picking it as my trust for 2024.

William Heathcoat Amory

william@keplerpartners.com

The Motley Fool

It’s good to set goals, especially when trying to achieve something remarkable. Like building a six-figure passive income for retirement. Amazing things can be done by drawing up a plan and sticking to it.

I didn’t start investing seriously in stocks and shares until my early 30s, but wish I’d begun a full decade earlier. That’s because time is the biggest friend an investor can have. Especially when investing primarily in FTSE 100 dividend shares, as I do.

In the short term, stock markets are volatile. There are years when my portfolio has fallen in value rather than risen. Yet, over time, history shows that equities beat every other asset class, with the FTSE 100 delivering an average long-term return of 7% a year.
I’m thinking long-term
I love buying FTSE 100 dividend stocks when they’re trading at low valuations and offering ultra-high yields. This is where my long-term buy-and-hold strategy comes into its own. By reinvesting my dividends, year after year, I can buy more and more shares, which pay me more dividends, in an endless virtuous cycle.

I even benefit in years when share prices fall, as my reinvested dividends pick up more stock at the lower price. If I’d been wise (or rich) enough to start investing, say, £500 a month at age 25, I’d be smashing it today, as my crude calculations show. Especially if I had the foresight to increase my contribution by 5% every year.

If I did that and my chosen stocks matched that average FTSE 100 return of 7%, by age 68, I’d have made cumulative contributions of £857,960.

Compound interest would have added a thumping £2.41m to that. Combined, they would give me a total retirement pot of a staggering £3.27m. If my portfolio yielded at 5% of the time and I took all my dividends as income, I’d earn £163,625 a year without lifting a finger.

My capital should keep growing
If I picked my stocks carefully and generated an average annual return of 10% a year (as I hope to do in reality), I’d have £6.88m at the end of my 43-year investment timeframe. With a yield of 5%, that would give me income of £343,797 a year – almost £350,000. And that’s just the income. I’d still have my capital, which should continue to grow as markets rise.

These are crazy figures. They posit a perfect world, where I start investing early, increase my contributions consistently, and never, ever raid my savings. Also, there’s no guarantee I will hit my investment targets. I may fall short if my stock picks underperform or equities do worse in the future than in the past. Dividends are never guaranteed.

Yet my rough maths highlights an important truth about investing. It is possible to build huge sums, from relatively small regular investments. The key is to start young and stick with it. While early birds do best, even starting at age 35, 45 or 55 is far better than never starting at all. My portfolio won’t stop growing when I turn 68, but with luck should keep rising for as long as I live. As will my passive income.

The post How I’d aim to turn £500 a month into a stunning passive income of almost £350k a year appeared first on The Motley Fool UK.

Primary Health Properties PLC

(“PHP” or the “Company”)

Notice of Interim Dividend

The Company announces that the first quarterly interim dividend in 2024 of 1.725 pence per ordinary share of 12.5 pence each will be paid as to 1.45 pence by way of a Property Income Distribution (“PID”) and the remainder as an ordinary dividend on 23 February 2024 to shareholders on the register on 12 January 2024. 

SUPERMARKET INCOME REIT PLC  

(the “Company”)  

LEI: 2138007FOINJKAM7L537  
  

DIVIDEND DECLARATION

Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust providing secure, inflation-linked, long income from grocery property in the UK, has today declared an interim dividend in respect of the period from 1 October 2023 to 31 December 2023 of 1.515 pence per ordinary share (the “Second Quarterly Dividend”).

The Second Quarterly Dividend will be paid on or around 14 February 2024 as a Property Income Distribution (“PID”) in respect of the Company’s tax-exempt property rental business to shareholders on the register as of 12 January 2024. The ex-dividend date will be 11 January 2024.

22/12/23

Bluefield Solar Income Fund Ltd on Friday announced a strategic partnership with GLIL Infrastructure, with both parties investing over GBP200 million total into a UK portfolio.

The Guernsey-based income fund, which focuses on UK-based renewable energy assets, will invest GBP20 million to acquire the 247-megawatt UK-based solar portfolio from Lightsource bp. GLIL, a group of UK pension funds investing in core UK infrastructure, will invest GBP200 million.

Bluefield Solar also said it will repay GBP10 million of its revolving credit facility, reducing its holding companies’ RCF balance to GBP167 million.

Bluefield said both parties have signed a memorandum of understanding with GLIL to form a long-term strategic partnership, which will commit them to investing together in UK-focused solar assets.

This includes a provisional agreement for GLIL to acquire a 50% stake in a Bluefield-owned portfolio exceeding 100 MW in early 2024 but in line with the portfolio’s current valuation.

Subsequently, Bluefield and GLIL intend to commit capital to a selection of assets in Bluefield’s development pipeline, expected to be grid connected over the next two to three years.

“Current capital market conditions make it difficult for us to raise new capital using the instruments which have served the company and its shareholders well through the past ten years,” explained Chair John Scott.

He continued: “The strategic partnership with GLIL is an exciting and significant development for the company; it creates the opportunity for both parties to invest in [our] sizeable renewable energy pipeline…while responding to shareholder feedback in reducing our short-term debt position.”

“The world is crying out for more solar power and Cop28 has called for a tripling of capacity by 2030,” Scott said. “We see tremendous potential in this partnership as a means to help Bluefield Solar play its part in achieving this goal.”

I’ve bought for the portfolio 7554 shares in Bluefield Solar BSIF

for 9k.

The Board has set a target dividend for the 2023/24 financial year of not less than 8.80 pence per Ordinary Share. This is expected to be covered by earnings and to be post debt amortisation.

Current yield 7.4%

I’ve sold the portfolio shares in ADIG for a loss of £57.00.

The trade was placed to make a profit on the winding up notice

but the market was already ahead of me.

The AGM is in Feb so likely to be a long and winding road.

The Trust only yields 6.9% so there are still better yields

available in the market.

JPMORGAN CHINA GROWTH & INCOME PLC (the ‘Company’)

DIVIDEND DECLARATION

Second quarterly interim dividend for the year ending 30th September 2024

The Board of JPMorgan China Growth & Income plc announces that the Company’s cum income Net Asset Value (‘NAV’) at close of business on 29th September 2023 was 276.05 pence per share. Accordingly, in line with the Company’s distribution policy, the Directors have declared that a second quarterly interim dividend of 2.76 pence per share for the year ending 30th September 2024 will be paid on 1st March 2024 to shareholders on the register at the close of business on 19th January 2024. The ex-dividend date will be 18th January 2024.