Aberforth Smaller Compan... Share Discussion Threads

[davebowler] 10/12/2024 12:15

Kepler...One trust that has benefitted from the M&A rush has been Aberforth Smaller Companies (ASL). The six-strong management team have an enviable track record of takeouts, having captured over a third of all M&A activity in their benchmark, the Deutsche Numis UK Smaller Companies ex Investment Companies Index, plus TI Fluid Systems which was a top five position at the end of November. This is simply an outcome of their stock selection approach and strong focus on valuations, and not a goal despite the high hit rate. The managers also engage actively with buyers if they don't believe a bid reflects the real value of the firm, and have a good track record of improving outcomes for all shareholders.Whilst M&A has been a positive contributor to performance, the strong focus on valuations has been the primary driver, leading to outstanding performance over multiple time periods. The managers describe this as their 'value roll' approach, which has seen average portfolio sales of 10.1x EV/EBITDA, versus an average 8.3x for purchases. For context, the average sale for their takeovers has been 13.9x showing the value bid activity has added. As such, we believe ASL can continue to deliver outperformance should the return of inflows prove short-lived, though it would certainly prove a healthy tailwind to a trust that has outperformed notably in the c. three and a half years since the UK last saw net inflows.

[panshanger1] 29/7/2024 15:50

Closing all time high

[panshanger1] 16/7/2024 08:30

Yes excellent year Hats off to the managers here Always good to invest when they have so much skin in the game too !

[davebowler] 08/7/2024 08:45

Net Asset Value ("NAV") per Ordinary Share for the above company as at the close of business on 4 July 2024



Including ALL Revenue = 1,708.43p

[davebowler] 04/7/2024 08:38

''Despite the recent good run in absolute terms, the managers still believe the market offers very compelling value opportunities. They note that valuations reflect poor sentiment, but fundamentals are nowhere near as bad as these falls would suggest, and therefore there is the potential for a significant rebound. To support this, the managers note that the UK is undervalued versus global markets, small-caps are undervalued versus large-caps and ASL is undervalued versus the benchmark. As such, they believe their portfolio is on an effective triple discount.''

[davebowler] 22/6/2024 10:34

Good mention....hTTps://www.ii.co.uk/analysis-commentary/trusts-offering-solution-declining-company-listings-ii532046?utm_source=newsletter&utm_medium=email&utm_campaign

[speedsgh] 20/2/2024 09:02

James Carthew: Sit on Aberforth’s income until the UK rerating arrives -

Annual results from Aberforth Smaller Companies underline anomaly of £1bn trust’s 12% discount with its holdings valued at under eight times earnings and paying good dividends...

[the deacon] 08/2/2024 11:43

Updated top 10Wincanton Wilmington VesuviusMorgan Advanced MaterialsRedde Northgate FirstGroup International Personal Finance Just Group Mitchells & ButlersCentamin

[the deacon] 08/2/2024 11:41

Monthly investment commentary: JanuaryThe UK stock market fell in January and trailed the gains made by other major international indices.  The disinflationtrend continues, but CPI releasesin the month were not as low as hoped.  As a result, expectations for the first roundof rate cuts from the Federal Reserve and Bank of England have been pushed further into the future.  Within the UK,large caps performed slightly better than small caps and the growth style out?stripped value.  The Fund was down by2.0%, in?line with the 2.0% decline of the benchmark DNSCI (XIC) and behind the FTSE All?Share's 1.3% fall.The leading positive contributor to performance was Wincanton, the logistics provider.    It was subject to arecommended cash offer from a subsidiary of CMA CGM, the French shipping and logistics operator.  CMC Markets,the financial derivatives dealer, performed strongly following the announcement of improved quarterly trading, ledby an increased contribution from its B2B and institutional business.  Foxtons Group, the estate agent, was anothergood performer as it issued a positive trading update, which indicated 2023's earnings would come in ahead of priorexpectations.Losers in the month included Close Brothers, the banking and asset management business.  The share price fell afterthe Financial Ombudsman decided against motor finance companies, which prompted a review by the FCA.Compensation or redress could affect the bank's earnings and capital base.  Shares in Reach, the publisher, fell butthere was no company specific newsin the month.  In the background, concernsremain about a sustained slowdownin advertising spending, while changes to Google's approach to third party cookies complicate how advertisersreached their intended audience.

[davebowler] 16/1/2024 17:18

Peel Hunt- Similarly, ASL's price to earnings of 6.9 times is a near record low, reflecting its focus on the smaller company end of the UK, where the discount to global markets is particularly stark. Peel Hunt emphasised the portfolio has strong balance sheets, with under 20% holding net debt twice as high as pre-tax profits.The £1.3bn trust benefited from increased M&A in 2023, driving shareholder returns of 6%, ahead of its benchmark's 4%. While the shares trade at an 11% discount, Peel Hunt does not expect it to persist as international and domestic buyers realise the returns on offer at the small-cap end of the UK market.

[davebowler] 12/1/2024 15:33

Tip Watch #2: Keep faith in my 2023 investment trust tips - they WILL come good

So says This is Money’s Jeff Prestridge. The commentator opens his above-titled article by highlighting how in 2023 “…equity investing…proved very much hit and miss…” Why? Because of “…a mish mash of factors – from uncertainty over the global economy to continued geopolitical tensions and a toxic mix of persistent inflation and high interest rates.” What’s more “The performance of investment trusts reflects this uncertain backdrop…of the 380 stock market-listed funds covered by the industry's trade body, the Association of Investment Companies, only 210 (55 per cent) have generated positive returns during 2023 – returns including both dividends and capital gains, but excluding investor costs. Factor those in and the number of positive returners reduces further…Of course, when five-year performance numbers are looked at, the picture changes. Far more funds (three quarters of them) have delivered positive returns.”

As for Prestridge’s 2023 tips: “This time last year, I assembled an investment trust portfolio that I thought could deliver spectacular returns. Not necessarily straightaway, but certainly over three to five years. The portfolio comprised ten trusts…investing in different parts of the world, some for growth, others for a mix of capital and income return…What linked these ten trusts a year ago was the fact that their share prices did not reflect the value of their underlying assets. They were sitting at big double-digit price discounts…My thesis was that these bargain prices would not last forever –resulting at some stage in a performance boost. I thought that maybe the discount propellant might kick in this year.” The ten trusts are listed below:

abrdn New India; Augmentum Fintech; Herald; Seraphim Space; Aberforth Smaller Cos.; Brunner; Invesco Asia; Schroder UK Mid Cap; Templeton Emerging Markets; and VinaCapital Vietnam Opportunity

The article continues: “So what's happened to these trusts over the year? Have they delivered the stellar returns I thought they were capable of? The answer is no. I know this because I invested £100 in each of these ten trusts at the start of the year via my stocks and shares Isa. Looking at my Isa yesterday, the collective value of these holdings was £845.32. Add in the dividend income I have received of £15.09, and my £1,000 investment is now worth £860.41. In percentage terms, that is a significant fall of 14 per cent.” Despite the disappointing performance, Prestridge is sticking to his guns: “…I still believe that this portfolio will prove itself in time. Tellingly…nine of these trusts still have share prices at a big discount to the value of their underlying assets. These discounts will disappear if market sentiment improves. Maybe that will happen next year, maybe not. But I will hold these ten trusts until they sparkle.”

[boozey] 21/12/2023 09:39

An improvement indeed Dave!

[davebowler] 21/12/2023 09:31

The Net Asset Values ("NAVs") per Ordinary Share for the above company as at the
close of business on 19 December 2023 were:-

Excluding current year Revenue = 1,457.80p

Including ALL Revenue = 1,504.45p

[davebowler] 17/11/2023 07:25

IC...This trust, which has assets worth over £1bn, invests in UK smaller companies and was trading at a 12.7 per cent discount to NAV as of 31 October. But my feeling is that UK equities trusts in general, especially small and mid-cap focused ones, look quite attractive. The valuations of Aberforth Smaller Companies’ holdings in particular look reasonable, as well as the trust being on a discount to NAV.

The underlying portfolio has a price/earnings ratio (PE) of about 7 times [in late October] and from that valuation the prospects for absolute gains are good. About half of its stocks have net cash on the balance sheet so they are not highly leveraged ‘zombie’ companies. Even if earnings don’t come through, the portfolio is still very inexpensively valued. And its managers have noticed a pick up in mergers and acquisitions – overseas investors buying UK smaller companies.

I hope that the Aberforth trust will outperform the FTSE All-Share index over the next three years, but in any case buying at about £11.44 [the price at the time of writing] will make you money eventually – if you are patient. The trust is more likely to go down than up in the next three months, and its managers take a value oriented approach so returns will either be at the top or bottom of its sector. Over the past decade this investment style has not done well but is a bit of a tailwind at the moment. And as interest rates peak out and inflation comes down, purchasing a well run portfolio should pay off even if we go into recession.

[davebowler] 29/9/2023 08:05

27 Sep NAV Including ALL Revenue = 1,417.00p

[topvest] 27/1/2023 18:42

A 34% increase in a well covered dividend. Nice!

[my retirement fund] 12/10/2022 20:17

Held up well, presumably all thanks to an overweight RPS position. Imo they need to cash in and start deploying the proceeds now.

[topvest] 09/2/2022 20:59

This is one of my favourite trusts.

[2wild] 02/10/2021 12:43

NAV up 33.5% in 9 months to 30th September from 1292.38p to 1725.71p.

At 1502p discount to nav is 13%

[topvest] 12/8/2021 11:51

Their investment approach is very sound. They focus on many companies that I wouldn’t necessarily buy in my portfolio so it’s a good strategy for me. Good for targeted return of 10%+ per annum in my view.

[2wild] 11/8/2021 11:31

NAV up 37.9% from 1292.38p to 1782.5p so far in 2021.

Paid 1605.6p this morning a 9.9% discount to nav