Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a856415

Investment Trust Watch: Better Capital, nasty profits warning

Better Capital's shares were under the cosh before today's profits warning but RIT Capital Partners and BlackRock World Mining look to have been doing better.

 
Investment Trust Watch: Better Capital, nasty profits warning

Shares in Jon Moulton's Better Capital (BC12) fund were already under pressure before today's profits warning wiped 5p, or more than 9%, off their price.

The venture capital fund has warned that poor trading in its portfolio companies would wipe around 20% off its net asset value for the end of September, which would reduce it from 98p to around 80p.

At last night's close the shares stood at 55p, a 44% discount to the 98p NAV per share, and giving it a 'cheap' Z-score of 2.4 (see first table).

Today the shares finished at around 50p today, leaving them on a slightly lower discount of 38%, according to Panmure analyst Charles Murphy.

Murphy said that given that Better Capital had earlier disclosed poor trading at Jaeger, the luxury fashion retailer it is trying to turn around, the size of the write down suggested problems with at least one other company in the portfolio.

'BC12’s valuation looks interesting and reflects a degree of capitulation,' he said. 'That said, it would be a brave investor who started a position before knowing what portfolio’s new issues might be.'

Half-year results are expected to say more on 25 November.

The announcement to the stock exchange said there was expected to be no 'material' change for the 2009 sister fund, Better Capital (BCAP).

'Given that BCAP has already announced the writedown of Fairline (5.2% of NAV or c7p per share) it suggests that any additional news won’t be negative. BCAP is trading at 96.75p or c20% discount to its written down March 2015 NAV.

Custodian raises cash

Elsewhere, our weekly tables from Numis Securities show a number of high yielding trusts continue to trade below their usual valuations.

Direct lending trusts continue to drift, with VPC Specialty Lending, 8% yield, and P2P Global Investment, 6%, both slipping to a discount of nearly 4% below their NAVs. Last week we highlighted the recent collapse of Trustbuddy and the Madden US court case had hit sentiment but recent fund launches are likely to be a factor as well.

Custodian Reit (CREI) enters the table after its premium rating dropped in response to a £50 million fund raising by the regional property fund this week.

'Cheap' investment trusts Share price premium (- discount) to NAV % 12-month average premium (- discount) Z-score
Cambium Global Timberland (TREE) -61.3 -35.6 -4.2
Custodian REIT (CREI) 2.3 6.7 -3.9
VPC Specialty Lending (VSL) -3.8 2.8 -3.6
Qannas Investments (QIL) -8.9 3.4 -3.6
DW Catalyst - £ (DWCG) -13.1 -2.9 -3.1
Duet Real Estate Finance (DREF) -23.1 -7.3 -2.9
DW Catalyst - US$ (DWCU) -12.7 -2.9 -2.8
Alcentra European Floating Rate Income (AEFS) -4.4 1.1 -2.6
TwentyFour Income (TFIF) 2.3 6.2 -2.6
AEW UK REIT (AEWU) 3.0 4.6 -2.5
BH Macro - £ (BHMG) -7.0 -4.4 -2.4
P2P Global Investment (P2P) -3.8 9.7 -2.4
Better Capital 2012 (BC12) -44.2 -30.8 -2.4
VPC Specialty Lending C (VSLC) -6.1 -0.3 -2.3
Origo Partners (OPP) -77.3 -63.3 -2.2

Source: Numis Securities

RCP moves to a premium

Several popular trusts are trading above their 12-month average valuation and have made into our second table of 'expensive' trusts. RIT Capital Partners (RCP) has moved to a small premium while BlackRock World Mining (BRWM) has seen its discount narrow to 6% below NAV. This gives them both a Z-score of 2.1.

The Z-score is a measure used by analysts to assess whether a share is trading significantly outside its normal range. A score of 2 and above shows a trust is getting dear compared to its history while a score of -2 or below shows it may be inexpensive.

'Expensive' investment trusts Share price premium (- discount) to NAV % 12-month average premium (- discount) Z-score
Golden Prospect Precious Metals (GPM) -0.3 -12.6 2.9
RAB Special Situations (RSS) -2.1 -22.9 2.8
Burford Capital (BUR) 57.9 28.8 2.5
Vinaland (VNL) -33.0 -39.1 2.4
Trinity Capital (TRC) -13.5 -29.7 2.4
Unitech Corporate Parks (UCP) 62.5 -46.3 2.3
Alliance Trust (ATST) -10.4 -12.5 2.2
Lindsell Train IT (LTI) 31.8 16.6 2.2
RIT Capital Partners (RCP) 2.9 -1.4 2.1
Oryx International Growth (OIG) -6.0 -15.7 2.1
JPMorgan Smaller Companies (JMI) -12.3 -15.8 2.1
BlackRock World Mining (BRWM) -6.6 -10.6 2.1
JPMorgan European - Growth (JETG) -3.2 -6.8 2.0
JPMorgan Private Equity (JPEL) -16.9 -23.2 2.0
European Real Estate (ERET) -23.7 -38.8 1.9

Source: Numis Securities

1 comment so far. Why not have your say?

Keith Cobby

Nov 06, 2015 at 18:34

Glad I avoided 'Better' Capital (far too complex for me!). I think I'll stick to SMT and FGT.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the shares

  • RAB Special Situations Closed Fund
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Burford Capital Ltd
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Trinity Capital PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Unitech Corporate Parks PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Cambium Global Timberland (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Custodian REIT Plc (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • VPC Specialty Lending Invest (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Qannas Investments (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • DW Catalyst GBP (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Duet Real Estate Finance (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • DW Catalyst USD (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alcentra Eur Floating Rate Inc (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • TwentyFour Income (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • AEW UK REIT (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BH Macro GBP (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • P2P Global Investments (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Better Capital PCC 2012 (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • VPC Specialty Lending Inv C (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Origo Resource Partners (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Golden Prospect Precious Metal (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Vinaland (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alliance Trust (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Lindsell Train (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • RIT Capital Partners (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Oryx International Growth (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • JPMorgan Smaller Companies (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BlackRock World Mining Trust (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • JPMorgan European Growth Pool (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • JPMorgan Private Equity (Split (Ord Income)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • European Real Estate IT (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Wage growth and US advance lift FTSE higher

by Gavin Lumsden on Oct 18, 2017 at 17:22

Sorry, this link is not
quite ready yet