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Trust Insider: how have my key picks for 2013 performed?
by James Carthew on Aug 22, 2013 at 09:37
When markets are quiet it is always good to have a bit of a stocktake.
About a year ago I had a look at Henderson Smaller Companies. It had been outperforming funds like Mercantile but it was still trading on a discount of 22%. I thought this was unjustified and suggested the discount should narrow. I am pleased to say that HSL’s run of good performance has continued, HSL is one of the best performing UK small cap trusts so far in 2013 and, best of all, the discount has narrowed to 14% so, in share price terms, HSL is the best performing fund in its sector over the past 12 months.
Last October it was Picton property’s turn to come under scrutiny. Like many other property funds Picton was faced with restructuring its finances at a time when banks were desperate to shed exposure to the sector. By October 2012 though, Picton had managed to rollover its zero dividend preference shares and secure new finance from Aviva and Canada Life. I suggested its discount, then 32% should narrow. Investors agreed, it now trades close to asset value and it is the best performing UK property trust in 2013, up 45%.
Aberforth Geared Income (“AGIT”), which I wrote about last November, had been doing fairly well but its managers were saying that the stocks in its portfolio were still cheap relative to history. They thought that investors were still fixated on growth stocks but were hopeful that their focus would change. That seems to have been the case so far in 2013. The NAV of AGIT’s ordinary shares is up over 40% in 2013 (the second best performing of all investment companies over the past 12 months). Their discount has widened a little however maybe on fears that AGIT may eventually run out of steam.
Two weeks later I enthused about Biotech Growth. I have always had a soft spot for the sector (my brother is a pharmacist and my mum worked for a large pharmaceutical firm). I think Orbimed do a great job of managing this fund and this is reflected in its performance so far in 2013 – the NAV is up over 50%, good enough to put it 7th in the list of the top ten performing funds of the past decade.
In my New Year article I highlighted the performance of Acorn Income and suggested that it deserved to be a bigger fund. Its NAV performance figures for 2013 year to date may have slipped a little but it has managed to start issuing stock. In March 2013 it announced it was planning to raise fresh capital and it published a prospectus in May to facilitate that. Since then Acorn as issued over three million ordinary shares and four million zeros, pushing its gross assets through the £50 million mark.
In February, while writing about private equity funds, I mentioned Sherborne’s stake building in 3i. At the end of January 3i had disclosed that Sherborne held 1.6% of the company. The shares shot up on the news (and a profitable disposal by 3i of one of its largest investments). I was wondering then why Sherborne would bother to persevere with the investment but persevere they did and now they hold more than 5% of 3i’s equity. Quite what they hope to achieve by this though I am still not sure. Though it has to be said that they have made a lot of money on their investment with 3i’s shares now probably close to a 20% premium and up nearly 80%(!) this year.
In May I talked about BlackRock Frontiers. At the time the fund was two and a half years old but had only just made it back to its 100p launch price having traded for a long time in the 70s. This is a fund I like, that I think is well managed and, over the long term, should do well – I just think its launch was unfortunately timed (as with many investment companies). I said then they should be thinking about expanding the fund and with similarly great timing, between me writing the article and it being published BlackRock announced a C share issue for the fund. This went well – raising £63.5m.
Finally I wanted to mention Jupiter Second Split. The article on this fund was written in the middle of May. I was lamenting the poor performance of the ordinary shares (which I hold, hence the moaning) and especially the overly, in my view, cautious portfolio. On 2 August Jupiter announced that the portfolio manager would retire on 1 November this year. My fingers are crossed that the new manager can turn the fund around.