Jpmorgan Uk Smaller Comp... Share Discussion Threads

[davebowler] 08/2/2024 10:08

Kepler-
JMI’s proposed combination with JMF will offer investors a range of potential benefits…
Overview
The managers of JPMorgan UK Smaller Companies (JMI), Georgina Brittain and Katen Patel, look to take advantage of the lack of research at the smaller end of the UK equity market cap spectrum to find highly innovative or disruptive firms. They take a bottom-up approach that aims to identify companies that can grow rapidly and become the medium and large firms of tomorrow (see Portfolio). Following an announcement in November 2023, JMI is planning a combination with stablemate trust JPMorgan Mid Cap (JMF), subject to shareholder approval.

The combination will grow JMI’s asset size, increasing liquidity and lowering costs. It will also see the introduction of an enhanced dividend strategy, which will see a 4% yield on NAV paid from a combination of income and capital, an increase of around 50% from the current level. There will also be a reduction in the Charges which are expected to fall by c. 20%.

The managers have delivered excellent Performance over the long term, generating alpha in six of the past seven years and generating strong cumulative outperformance of the benchmark. The trust had a rare challenging period in 2022 but has recovered since, driven by strong stock selection.

Despite the bounce back, the managers believe valuations in the portfolio are low as a result of negative sentiment, best demonstrated by a good free-cash-flow rate versus the benchmark, whilst still exhibiting considerably higher quality and better momentum. The managers have looked to capture this by increasing Gearing towards the top end of the range.

The negative sentiment has resulted in the trust trading at a wide Discount. The current level is in line with the five-year average and the peer-group average, despite the long-term outperformance.

Kepler View
In our opinion the proposed combination has a number of beneficial features for investors. It will likely result in lower Charges, as well as offering an enhanced Dividend policy, which is often popular amongst retail investors. We believe this new vehicle would offer investors a stronger total return offering, with income alongside the capital growth potential of the asset class.

We believe the track record of managers Georgina and Katen is very impressive, the pair having delivered considerable outperformance of the benchmark over the long term, demonstrating the effectiveness of their process and the strength of the resources available to them at JPMorgan. Despite this, the trust is trading on a wide Discount, which we believe is a result of negative sentiment towards the UK small-cap market. As such, we think this could make a compelling entry point for long-term investors. The recently announced combination could have an impact on this, due to the expected improvement in liquidity from the combined vehicle, should it achieve shareholder approval.

The portfolio is currently positioned to capture a recovery in the UK too, with Gearing towards the top end of the range, and the managers rotating into their higher-conviction ideas to ensure they are capturing the best value, quality, and momentum on offer. Should their thesis on a potential recovery prove correct, we believe there is considerable upside on offer from both a continued recovery in Performance and a narrowing of the discount.

Bull
Excellent long-term track record
Trust is trading at a wide discount to NAV
Post-combination should enjoy benefits of scale, being cheap and more liquid
Bear
Gearing is towards the top of its range, which can amplify market movements
Less concentrated portfolio than peers, which can be a headwind in rising markets
Has historically been more volatile than peers

[davebowler] 12/1/2024 15:03

Source: Saba


Unsurprisingly, several of these companies are undergoing some kind of corporate activity including: Invesco Select, which is ditching its umbrella structure; Abrdn Smaller Companies Income, which merged with Shires (SHRS); JPMorgan Mid Cap (JMF) which is planning to merge with JPMorgan UK Smaller Companies (JMI), the latter is also held by Saba; and Abrdn Diversified Income & Growth (ADIG), which has proposed a wind-down.

[essentialinvestor] 07/12/2023 22:43

Divi paid in to the account this morning.

[mozy123] 14/11/2023 12:00

Interesting!

[essentialinvestor] 14/11/2023 11:13

Very good news today, lower charges, higher yield going forward.


NAV gap should close by a few %, all things being equal.

[essentialinvestor] 04/11/2023 12:17

Decent week, with also the recent annual dividend to be paid in December.

[essentialinvestor] 26/10/2023 16:01

Yup that's exactly the crux of current markets, so much now looks discounted
unless something catastrophic awaits.

[its the oxman] 26/10/2023 15:56

Topped up today as well. Seems massively cheap but isn't everything. Hard to believe this can fall that much further.

[essentialinvestor] 26/10/2023 12:08

XD for 7.7 pence, I've 'reinvested' 20% of that this morning -
pay date not until December.

[skyship] 22/10/2023 08:47

Added this to my Monitor a couple of months ago. Still watching and waiting as Market sentiment so poor; and likely to remain so until some positive resolution in the Middle East.

[essentialinvestor] 20/10/2023 17:47

Added a last lot here today, very ugly markets ATM.

[essentialinvestor] 13/10/2023 14:11

11.6% increase in the annual Divi, very welcome. Added.

[essentialinvestor] 22/9/2023 10:58

Bought this week on a 3 year view. The longer term record is very strong.
Same lead Manager in place.

[melloteam] 15/9/2023 14:13

*FREE EVENT*
Just to let shareholders and prospective investors know that
Mello Events are hosting a free Investment Trusts and Funds event on Tuesday 26th September 2023.

The event will feature the following:
Emma Bird, Head of Investment Trust Research at Winterflood Securities, presents ‘Investment Trusts in a Higher Interest Rate World’

Presentations from Georgina Brittain, portfolio manager of JPMorgan UK Smaller Companies (JMI); Impax Environmental Markets plc; George Barrow presents Polar Capital Global Financials Trust; and Ocean Dial and the India Capital Growth Fund

There will be over 500 investors attending and these are very popular shows with company presentations, fund manager and investor interviews, and panel sessions.

To register for FREE, click here:

For more information, click here:

[lozzer69] 01/6/2023 10:09

Yes a good write up and should do well when sentiment turns. Most people think the UK is a busted flush but it will prove the doubters wrong.

[donald pond] 01/6/2023 08:56

Tipped by questor today

[skyship] 14/10/2022 11:59

Added these to my Monitor. Reckon these are a good way to play the sector; and so a good one to buy into after anticipated further sharp falls in the Market.


free stock charts from uk.advfn.com

[lozzer69] 06/9/2022 09:40

Topped up today at 265. Probably bonkers but I think it will be a good long term position.

[its the oxman] 17/5/2022 16:59

Even better time to buy c.280p. Small caps hit really hard.

[its the oxman] 22/2/2022 10:01

Yep, good time to buy, can't say when mid caps will bounce but lots of value should be realised from this level at some point.

[lozzer69] 22/2/2022 09:36

Down now over 30pc from ATH. Surely the UK small caps are getting close to a point that they start to recover?

[donald pond] 21/10/2021 10:15

I've bought in for the first time just now at a little over 395.