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Trust Insider: the best & worst trusts of 2013 and why 2014 is wide open
by James Carthew on Jan 14, 2014 at 00:01
The list of the best and worst performing funds in share price terms during 2013 is dominated by highly geared property funds.
Alpha UK Multi Property (AUMP), Treveria, Mirland Development and Public Service Properties (up 356%, 200%, 106% and 98% respectively). At the other end are Invista European Real Estate (IERE), Argo and Alpha Pyrenees (down 83%, 61% and 60% respectively).
We are now well into the period when most of the debt raised during the boom years has to be repaid or refinanced. Those companies whose shares were priced as though this was going to be a struggle but have somehow managed to pull it off are benefiting and others where the outcome is more in doubt are suffering.
To give a couple of examples, at the start of 2013, AUMP’s share price was in the doldrums with its loan facilities fast maturing. The share price started to nudge upwards in June when it announced it was talking to one of its lenders.
It managed to secure temporary extensions on its loans as they matured. By November, although it reported a modest fall in net asset value (NAV), it was still talking and, at the start of December, was able to announce a refinancing with the aid of a loan from the fund’s manager.
It is paying higher interest rates than before but has avoided the worst, secured new five-year debt and its share price has moved from a 90% discount to a 62% discount. It still has a long way to go if, as it hopes, its finances are finally on a surer footing.
I wrote about IERE in June 2011, and wondered how fast the fund (which had just moved to a realisation strategy) would be able to sell off its portfolio and repay its debt. There was quite a bit to go for – the NAV was close to €0.60, today though it has more than halved as property values carried on falling.
IERE has managed to achieve some disposals but its loans now fall due and it is not yet in a position to repay them. Bank of Scotland sold the IERE loan to a fund affiliated with Cerberus. As part of that deal, IERE got an extension of the loan until April 2014 and will now have to try to negotiate a deal with the new owner. The shares are trading on more than a 90% discount. I have bought a few but it is a gamble really whether it can make the same sort of recovery as AUMP.
In price terms, looking slightly further down the list of top performers, 3i has had a remarkable rerating, largely on the back of Sherborne’s appearance on its register but also encouraged by the management’s moves to reinvigorate the business. I think the shares look expensive now.
Mining and resources funds feature quite heavily in the list of poor performers, in NAV as well as share price terms. Golden Prospect Precious Metals wins the wooden spoon for the worst performing fund over 2013 in NAV terms, down 55%, but Altus Resources , Praetorian Resources and Baker Steel Resources each lost more than 40% of their asset value in the year.
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Look up the shares
- Treveria PLC
- MirLand Development Corporation PLC
- Argo Real Estate Opportunities Fund Ltd
- Praetorian Resources Ltd
- Biotech Growth Trust PLC
Look up the investment trusts
- Alpha UK Multi Property (Ordinary Share)
- Invista European Real Estate (Ordinary Share)
- Alpha Pyrenees Trust (Ordinary Share)
- Golden Prospect Precious Metal (Ordinary Share)
- Altus Resource Capital (Ordinary Share)
- Baker Steel Resources (Ordinary Share)
- British & American (Ordinary Share)
- International Biotechnology (Ordinary Share)
- Worldwide Healthcare (Ordinary Share)
- Aberforth Geared Income (Ord Income)
- Premier Energy and Water (ZDP 2015)
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