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Trust Watch: Baillie bosses it, BlackRock smashes it

It has been another good week for trusts in the Baillie Gifford stable while a BlackRock smaller company trusts gained a tipster's attention and shares in one pharma fund de-rated.

Using the Z-scores

In this weekly report we highlight the big risers and fallers in the investment trust sector and consider which look cheap and which expensive using ‘Z-score’ data from Numis Securities on Thursday 10 May.

Just to recap, Z-scores are a measure used by analysts to put investment trust discounts – shares trading below net asset value (NAV) – or premiums – when shares stand above NAV – into historical context. Roughly speaking a Z-score of -2 or below shows a trust is getting inexpensive and may provide a buying opportunity. By contrast, a Z-score of 2 or more is getting dear and may signal an opportunity to take profits.

For more information about the trusts in our tables, please click on the links to their fact sheets below this article.

Next: Baillie Gifford bosses it

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Using the Z-scores

In this weekly report we highlight the big risers and fallers in the investment trust sector and consider which look cheap and which expensive using ‘Z-score’ data from Numis Securities on Thursday 10 May.

Just to recap, Z-scores are a measure used by analysts to put investment trust discounts – shares trading below net asset value (NAV) – or premiums – when shares stand above NAV – into historical context. Roughly speaking a Z-score of -2 or below shows a trust is getting inexpensive and may provide a buying opportunity. By contrast, a Z-score of 2 or more is getting dear and may signal an opportunity to take profits.

For more information about the trusts in our tables, please click on the links to their fact sheets below this article.

Next: Baillie Gifford bosses it

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Week's top risers Thursday's closing price Previous week (p) Change
Altamir Amboise (LTA) 17.22 13.76 25.1%
Allianz Technology (ATT) 1410.00 1302.50 8.3%
Baillie Gifford US Growth (USA) 112.90 105.10 7.4%
Edinburgh Worldwide (EWI) 836.00 780.00 7.2%
Scottish Mortgage (SMT) 511.00 481.80 6.1%
Jupiter US Smaller Companies (JUS) 946.00 895.00 5.7%
Fidelity China Special Situations (FCSS) 252.00 238.50 5.7%
JPMorgan Smaller Companies (JMI) 1250.00 1185.00 5.5%
JPMorgan US Smaller Cos (JUSC) 303.00 288.00 5.2%
Polar Capital Technology (PCT) 1214.00 1156.00 5.0%
Herald (HRI) 1300.00 1240.00 4.8%
Schroder UK Mid Cap (SCP) 564.00 538.00 4.8%
BlackRock North American Income (BRNA) 163.25 155.75 4.8%
Schroder UK Growth (SDU) 198.00 189.00 4.8%
Monks (MNKS) 823.00 786.00 4.7%

Source: Numis Securities 10/5/18

Baillie Gifford bosses it

It was a good week for Baillie Gifford with five of this week’s top 15 rising investment trusts linked to the Edinburgh group.

Whether it is the dollar and/or its investments, Baillie Gifford US Growth (USA) continues to have a good run since its launch in March with the £196 million portfolio up 7.4% in the week to yesterday’s close. As does flagship Scottish Mortgage (SMT) with the £7.2 billion global portfolio up over 6% this week taking its advance for the year to nearly 14%.

Baillie Gifford’s successful growth style is also evident at global smaller companies trust Edinburgh Worldwide (EWI), also up over 7% and ranked fourth in our table. Monks (MNKS), a former also-ran in the Global sector, has revived and with a 4.7% gain this week is just about keeping in sight of Scottish Mortgage with a 7.8% total return so far this year.

Shares in all four trusts trade on small premiums to net asset value (NAV), which is where Schroder UK Growth (SDU) could be headed, sooner than expected. Anticipation of the trust’s imminent switch to Baillie Gifford saw its shares rise nearly 5%, reducing their discount to 6.5%, around half their average of the past year, to keep it in our list of ‘expensive’ trusts (see last page).

Technology and other US-linked trusts were also on the ascendant, such as second-placed Allianz Technology (ATT), up over 8%, and Jupiter US Smaller Companies (JUS) up 5.7%. Herald (HRI), a largely UK focused technology fund, managed a 4.8% gain.

Next: CatCo crumples

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Week's big fallers Thursday's closing price Previous week (p) Change
CATCo Reinsurance Opportunities Fund (CAT) 0.51 0.72 -29.4%
Ratos AB B (RATOB) 28.94 31.50 -8.1%
Alternative Liquidity (ALF) 0.19 0.20 -4.3%
India Capital Growth (IGC) 98.70 102.75 -3.9%
Eurocastle Investment (ECT) 8.06 8.38 -3.8%
Draper Esprit (GROW) 444.00 459.00 -3.3%
NewRiver Retail (NRR) 280.00 289.00 -3.1%
Dolphin Capital Investors (DCI) 7.05 7.25 -2.8%
Juridica Investments (JIL) 8.95 9.20 -2.7%
JPMorgan Brazil (JPB) 63.50 65.25 -2.7%
Invesco Perpetual Enhanced Income (IPE) 74.00 76.00 -2.6%
River & Mercantile UK Micro Cap (RMMC) 173.00 177.50 -2.5%
Ediston Property (EPIC) 110.25 113.00 -2.4%
Symphony International Holding (SIHL) 0.75 0.77 -2.3%
Greencoat UK Wind (UKW) 119.60 122.20 -2.1%

Source: Numis Securities 10/5/18

CatCo crumples

CatCo Reinsurance Opportunities (CAT) plunged over 29% after shocking shareholders with another big increase in loss provisions against last year’s Hurricane Irma and other natural disasters.

The dollar-denominated shares in the Bermuda-based investment company now stand on a 26% discount to NAV, according to Numis, which puts them on a ‘cheap’ Z-score of -2.5. There are unlikely to be many buyers though, given the continued uncertainty over its exposure to last year’s spate of hurricanes, wildfires and earthquakes.

The C-shares (CATC) the company issued last year look better value: at $1.03 they are priced at NAV or ‘par’, have no exposure to last year’s events and could benefit from a surge in reinsurance premiums this year, although Numis, its broker, cautioned they could be held back by poor sentiment towards the sector.

Next: Polar healthcare needs pick-me-up

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'Cheap' trusts Share price premium (- discount) to net asset value % 12-month average premium (- discount) % Z-score
Sherborne Investors (Guernsey) C (SIGC) -2.3 6.9 -4.5
Phoenix Spree Deutschland (PSDL) -2.5 19.7 -2.9
CATCo Reinsurance Opportunities Fund C (CATC) 0.2 3.7 -2.8
Leaf Clean Energy (LEAF) -66.3 -43.4 -2.7
Montanaro European Smaller Companies (MTE) -16.0 -11.3 -2.7
Invesco Perpetual Enhanced Income (IPE) 0.0 4.8 -2.6
Polar Capital Global Healthcare (PCGH) -9.5 -2.3 -2.6
CATCo Reinsurance Opportunities Fund (CAT) -25.7 -6.0 -2.5
BB Healthcare (BBH) -2.0 1.9 -2.4
CVC Credit Partners Euro Opps - Euro (CCPE) -0.8 1.6 -2.4
Fidelity European Values (FEV) -11.3 -8.7 -2.4
AXA Property (APT) -36.0 -15.1 -2.3
BBGI (BBGI) -0.2 9.8 -2.3
Polar Capital Technology (PCT) -4.2 -0.5 -2.2
Martin Currie Global Portfolio (MNP) -2.0 -0.8 -2.2

Source: Numis Securities 10/5/18

Polar healthcare needs pick-me-up

Having previously covered the top six in our table, the major new-entrant to Numis’ ‘cheap’ list this week is Polar Capital Global Healthcare (PCGH).

The most cautiously-run of the handful of biotech and healthcare trusts, PCGH has continued to lag its sector and index benchmarks since emerging as a more growth focused successor to the Polar Capital Global Growth & Income trust a year ago.

Over one year its net asset value is up just 1.2%, which reflects the market and political uncertainty of the past 12 months, although it is also behind the 6.8% average of its peer group and the 3.2% gains in both the MSCI World Health Care and Nasdaq Biotechnology indices.

Shareholders appear to be losing interest with the shares off 6.7% over that time and the stock now trading 9.5% below NAV. This compares to their average 2.3% discount of the past year to give it a ‘cheap’ z-score of-2.6.

Next: Pricey Prentis

 

 

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'Expensive' trusts Share price premium (- discount) to net asset value % 12-month average premium (- discount) % Z-score
European Assets (EAT) -0.2 -86.8 5.2
Schroder UK Growth (SDU) -6.5 -12.1 4.7
Ashmore Global Opportunities - US$ (AGOU) -28.8 -34.9 2.9
Pacific Horizon (PHI) 3.0 -7.0 2.9
LondonMetric Property (LMP) 24.6 15.0 2.8
BlackRock Smaller Companies (BRSC) -7.4 -12.0 2.8
DeA Capital (DEA) -17.0 -30.7 2.6
Altamir Amboise (LTA) -18.2 -27.9 2.5
HBM Healthcare Investments (HBMN) -6.5 -17.0 2.5
Kubera Cross-Border (KUBC) -13.1 -26.3 2.5
Henderson Smaller Companies (HSL) -7.7 -12.8 2.4
Myanmar Strategic Holdings (SHWE) 190.8 51.2 2.4
BlackRock Throgmorton Trust (THRG) -9.3 -14.6 2.3
Foreign & Colonial (FRCL) -1.1 -5.0 2.3
Juridica Investments (JIL) -21.5 -44.4 2.2

Source: Numis Securities 10/5/18

Pricey Prentis

BlackRock Smaller Companies (BRSC), the best performing listed UK smaller companies fund over 10 years, is having another go at narrowing its discount below 7%, the all-time peak it reached in February.

A tip update by the Telegraph this week brought in more buyers for the shares and squeezed the discount closer to NAV and away from the one-year average gap of 12%, leaving the Mike Prentis managed trust on a pricey Z-score of 2.8.

On this measure this makes it the most highly rated small-cap trust, although only by a small margin in some case. Rival trusts from Henderson (HSL), also in the table, and JPMorgan (JMI) also trade on Z-scores of 2 or more. Ironically, Harry Nimmo’s Standard Life UK Smaller Companies (SLS) has one of the lowest Z-scores of 0.2 but also one of the narrowest discounts of 3%.

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