The Tip Sheet

ByFrank Buhagiar•06 Aug, 2024•


The Times thinks Alliance Witan will be a tried-and-tested machine once the merger completes, while The Telegraph believes the outlook for Edinburgh Worldwide has brightened.

By
Frank Buhagiar
06 Aug, 2024

Tempus: Alliance Witan will be a tried-and-tested machine
The Times’ Tempus Column is minded to give the proposed combination of Alliance (ATST) and Witan (WTAN) the thumbs up. After all, the new fund, which will be known as Alliance Witan, has a fair bit going for it. There’s the combined fund’s size – at £5 billion, the global investor will match F&C Investment Trust (FCIT) for size and will only be behind Scottish Mortgage (SMT). Qualification for FTSE 100 membership therefore likely which “will increase demand among institutions that are mandated to hold shares in the entire index and will match the Alliance management’s desire to put more pension funds, insurance companies and other investment groups on the share register.”

Then there’s the substantial overlap between the two trusts. The two portfolios share capital and income growth strategies that will enable costs to be spread more widely. Both also deploy a multi-manager approach, whereby several fund managers covering different specialisations, regions or industries are mandated to manage a portion of the funds’ assets. It’s an approach that has a track record of delivery: Alliance has generated a +105% shareholder total return over the last seven years; Witan, +65%.

The two funds also have a long track record of dividend growth: Alliance boasts 56 successive years of dividend increases; Witan 48 years. All of which leads Tempus to write “Alliance Witan is a tried-and-tested machine that will appeal primarily to institutions and investors content with a middling income level today on the assurance that it will rise steadily in future.”

Questor: Back this SpaceX investor before its shares rocket
When The Telegraph’s Questor Column first published the above article on global small-cap investor Edinburgh Worldwide (EWI) on 17 July 2024, the message in the title could not have been clearer: buy before the shares go higher. At the time, EWI shares were trading at 154.4p. Two weeks on and the share price still trades at around the same level. Investors, it seems, haven’t missed the boat (or should that be rocket) yet then. Worth a revisit of the tip.

The trigger for the piece, reports that the valuation of Elon Musk’s SpaceX had reached $210bn (£161bn). That’s good news for the £587m fund – at 11.8% of total assets, SpaceX is EWI’s largest position. For the trust invests in both public and private companies that it believes “have exceptional long-term growth prospects, even if they are not necessarily currently profitable. It is more skewed towards younger, smaller businesses valued at under $5bn at the point of first investment and has a pronounced technology theme.”

Certainly, the shares could do with a boost. For over the past three years, EWI’s share price has halved. And in the latest half-year results, the trust posted a relatively pedestrian-looking +4.6% underlying return compared to the +15% gain clocked by the index. But at least that was an improvement on the -23% and -40% losses reported for the previous two financial years. What’s more, Questor believes that with, albeit limited, interest rate cuts on the horizon, the outlook for the growth fund has brightened. The article concludes “investors should be wary of committing too much money to Baillie Gifford if they already hold Scottish Mortgage for example. Nevertheless, viewed on its own merits, we have no hesitation in repeating our recommendation for this trust.”