Mention here - |
They've just bought 10% of CHRY, no doubt for it's Starling holding. |
They've opened a position in Reckitt Benckiser - they seem to be investing increasingly in traditional single name equities. This is a bit different to their usual focus - discounted investment companies and special situations. Have mixed feelings about this. Entain was another recent example - can't say I'm a fan of that one and looks like it hasn't performed well so far. |
June report - |
An old favourite of Bauernfreund. |
20/6 /24 Net Asset Value ‑ Debt at fair value: 257.79 pence |
All time high for OCI, one of our largest holding? |
 Half Year report- 4 June
Your Company’s NAV is some +23% higher than
when we wrote to you this time last year. At the
time sentiment was dour; investors were fretting
as to the potential fallout from the collapse of
Silicon Valley Bank; inflation remained stubbornly
high; and the deeply inverted yield curve was
flashing red that the most anticipated recession
in recent history was about to bite.
A year on and there has been no real contagion from the regional banking
crisis, with the actions of the United States Federal Reserve having
ensured financial stability. The picture on inflation has certainly improved,
but we are not off the mountain just yet. And a recession remains the
watched pot that hasn’t boiled, with the economy proving much stronger
than many had anticipated.
These better-than-expected developments, combined with strong
share price performance of a narrow-band of US technology companies,
that are thought to be beneficiaries of AI, has propelled markets to new
all-time highs.
For the interim period since September, AGT has produced a NAV
total return of +13.9%. This was slightly behind the performance of our
comparator benchmark, the MSCI AC World Index (£), which returned
+16.1%.
From the very wide levels observed in October 2023 – when the portfolio
weighted average discount hit 37.0% – discounts have started to narrow,
such that the weighted average discount at period end stands at 31.5%.
We have taken advantage of this, fully exiting positions in Pershing
Square Holdings and Godrej Industries, and reducing positions in strong
performers, Schibsted, FEMSA, KKR and Apollo.
KKR was the standout performer adding +253bps to returns. Having
initiated a position in the company in 2020, we have held a decidedly
different view to the market on the durability of the company’s earnings
power and growth prospects. The market has been coming round to our
way of thinking, with the shares up by +319% over that time, and we have
been reducing the position.
We continue to believe this is a stock picker’s market, and a market where
a focus on events, catalysts, and activism to crystallise value is important.
Illustrative of this is Schibsted, which has undergone significant structural
simplification (detail below) and was one of the strongest performers over
the period.
Over the six-month period we have been adding to News Corp, D’Ieteren,
Bollore and Entain, all of which have attractive underlying fundamentals
and NAV growth prospects combined with potential catalysts.
Despite Hipgnosis Songs Fund being a detractor over the interim
period and requiring a lot of work and intensive engagement from our
investment team, a takeover battle subsequent to the period end has
resulted in an excellent outcome for shareholders.
More generally, over the last 18 months our exposure to closed-end funds
has increased. There is a structural lack of interest in such companies,
almost entirely for non-fundamental reasons, and we believe this to be an
attractive opportunity set with discounts at wide levels where we can add
value through activism.
The opportunity for engagement in Japan also remains compelling. Longterm readers of our reports will know that we have spent a significant
amount of focus on Japanese small-cap equities since 2016/17, when it
became clear to us that the winds of change had begun to blow, and that
the corporate governance reform agenda had gained critical momentum.
2023 was something of a (re) coming out party for Japanese equities –
which are becoming increasingly relevant again to international equity
investors, who have grown to appreciate the very clear agenda of
the Tokyo Stock Exchange (‘TSE’) and other authorities in unlocking
corporate value. As is to be expected, flows have concentrated on larger
cap companies, which have outperformed smaller caps. For unhedged
international investors (such as ourselves) the continued depreciation of the
Yen has proved a headwind. We do not expect this to persist indefinitely.
Far from the madding crowd of increasingly concentrated equity markets,
it remains an exciting and fruitful time for our approach to investing.
Discounts have started to narrow but remain relatively wide by historical
standards and we are finding a high number of attractive opportunities
from all parts of our universe. Reflective of this, net gearing (debt at fair
value) has continued to increase and stands at 9.6% as of the period end.
As we look ahead, we remain humble in the unpredictability of financial
markets and macro events. Our conviction, however, is built from the
bottom up. We have assembled a concentrated-yet-diverse collection
of companies that should compound NAV at attractive rates; discounts
are generally wide and across the portfolio there are numerous potential
corporate catalysts to unlock value. We believe this to be an
attractive medley. |
Citywire-
Investment company bargain hunter Joe Bauernfreund says the 39% return the trust made in eight months on SONG demonstrates value of shareholder activism and importance of having the right board.
Jamie Colvin
BY
JAMIE COLVIN
comments
Activist investor AVI Global (AGT) has sold out of Hipgnosis Songs (SONG) after a ‘highly successful’ holding that saw the rejigged board engineer a takeover bid above the shares’ 2018 listing price.
Writing in the £1.2bn trust’s half-year report, fund manager Joe Bauernfreund highlighted his role in fighting off the proposed sale of a portion of SONG’s catalogues and urging fellow shareholders to vote against the company’s continuation last October.
The activist then pushed successfully for the appointment to the board of Robert Naylor and Francis Keeling, who had just stepped down from rival Round Hill Music Royalty (RHM) following its acquisition by Concord.
In April, a bidding war commenced in which Blackstone, the majority owner of Hipgnosis Songs Management, saw off another bid from Concord with a recommended offer at a 47% premium to the share price.
‘We are delighted with an outcome that has not only generated a very strong return for AGT’s shareholders but has demonstrated again both the value of shareholder activism and the critical importance of having the right people on boards,’
Bauernfreund first invested the trust in SONG in late 2020; he sold more than half its stake 12 months later. He then rebuilt the position back up to 6% ahead of the continuation vote.
While the stake detracted from returns in the six months to 31 March, over the whole period of its last phase of ownershp up to May 2024, AVI Global received a 39% total return. The trust has returned 24.6% in one year.
Bauernfreund hasn’t been the only seller. Most long-term holders sold out after Blackstone won the day, with hedge funds flooding in to take the 131-cents-per-share (102.7p) offer when the deal completes in the third quarter. The shares trade at just over 101p.
Trust bargains
Over the half-year, AVI Global delivered total returns of 14%, including the 1.2p dividend, while the shares jumped 16%, falling just short of the MSCI All-Country World index’s 16.1% gain, largely driven by US mega-cap stocks.
Bauernfreund has taken advantage of the wide discounts across the investment company sector, which are ‘almost entirely for non-fundamental reasons’, where the trust can add value through activism. As a result, gearing, or borrowing, has increased to 9.6% of assets.
Closed-end funds made up 31% of the trust at the end of May, with the larger positions including private equity funds Oakley Capital Investments (OCI) and Princess (PEY), and Cordiant Digital Infrastructure (CORD), which have respective weightings of 6.7%, 5.6% and 3.6%.
Over the period, US private equity company KKR was the top performer, adding 2.5% to net asset value (NAV) as its share price soared 64%. AGT’s investment thesis remains that alternative asset managers remain undervalued.
Asia-focused private equity firm Symphony International Holdings was the worst performer, knocking 0.8% off performance; its dollar shares fell as the discount widened from 36% to 50%, exacerbated by a rally in the pound.
Rupert Murdoch’s News Corp is now the largest asset in the portfolio, with an 8.8% weighting, after Bauernfreund added to the position. Oakley and Princess are the second-largest holdings.
Over the past five years, the trust’s shares have soared 74%, ranking it third in the AIC Global sector, where the average return has been 57.7%.
AGT’s shares closed at 239.5p on Wednesday, 8% below NAV. The board spent £24m on buybacks to narrow the discount over the half-year |
Major holding tipped....https://www.dailymail.co.uk/money/mailplus/article-13508623/MIDAS-SHARE-TIPS-UPDATE-private-equity-stock-tip-18-bargain-buy-investors.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 |
I agree re. Entain. |
May factsheet out. Looks like a new 4% position in Reckitt Benckiser - they seem to be doing more single stocks rather than more traditional holding companies/investment funds. Interesting that CORD is now also a top 10 holding. Still not sure about Entain - personally wouldn't touch that with a bargepole. |
quoted-data-Listed Fund ResearchAVI Global TrustThriving under pressureThe AVI Global Trust (AGT) has gone from strength to strength as its managers identify a wealth of opportunities. A share price total return of over 30% in the past year highlights the value of the company's strategy of targeting high-quality companies whose shares are trading at a discount to their intrinsic value.Against a backdrop of markets adjusting to structurally higher interest rates, especially in the US, we expect this momentum to continue, and the value of less correlated market returns (in other words returns not tied to the performance of broader market indices), such as those provided by AGT, to increase.Despite its strong performance, the company continues to trade on a share price discount to net asset value (NAV) of 7.4%. Given AGT's performance track record and increasingly optimistic outlook, we believe this is an attractive entry point for investors, particularly for those looking to manage exposure to increasingly concentrated and expensive market indexes.Extracting value from discounted opportunitiesAGT aims to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value. It invests in quality assets held through unconventional structures that tend to attract discounts; these types of companies include holding companies, closed-end funds, and asset-backed special situations.NB: Marten & Co was paid to produce this note on AVI Global Trust Plc and it is for information purposes only. |
April Factsheet makes very good reading. |
hTTps://www.trustintelligence.co.uk/investor/articles/strategy-investor-from-riches-to-rags-to-riches-is-this-time-really-different-for-japan-retail-apr-2024?utm_s |
It should be noted that AVI have held SONG for a long time so would have initially suffered losses on this position. They more recently increased their stake as discount widened, but hard to say if overall they've made a profit. I'm sure there'll be more detail in due course. |
Net Asset Value per Ordinary share (inclusive of accumulated income) of AVI Global Trust plc, at the close of business on 22nd April 2024 was as follows:
Net Asset Value ‑ Debt at par value: 256.69 pence
Net Asset Value ‑ Debt at fair value: 259.67 pence |
This one has turned out to be a good bet on "let's take a stake and twist their arm".
We had to admit defeat on LMS and Third Point in the past few years.
In a way Joe Bauernfreund knows when to cut losses, which is to his credit. |
Looks a good result on Hipgnosis |
hTTps://www.trustintelligence.co.uk/articles/fund-profile-avi-global-trust-mar-2024?utm_campaign=weekly-2024-04-09&utm_medium=email&utm_source=followfund |
Kepler
AGT is trading at close to its widest ‘double discount’ since the Great Financial Crisis…
AVI Global Trust (AGT) offers investors a highly differentiated exposure to global equities. Portfolio construction is centered around identifying high-quality companies trading at significantly depressed values to their estimated NAVs. This leads to a particular focus on closed-ended investment funds, family-backed holding companies, and Japanese smaller companies.
Macroeconomic uncertainties and elevated levels of risk aversion have seen discounts across investment trusts widen significantly, this a resulted in an increased exposure to listed private equity and venture capital investment companies. AGT’s own discount of 10.9% is currently at wider levels than its five-year average discount, which combined with the wide discount for the underlying investments, means AGT is trading close to its widest ‘double discount’ since the Global Financial Crisis in 2008.
The team also look to add value by taking a highly active approach - particularly through their allocation to Japan, where the team see the improved macroeconomic environment and focus on corporate governance as an opportunity. Furthermore, their regional expertise allows them to take a consultant-like engagement approach with the aim of making significant improvements to business operations.
AGT’s performance has been impressive across both the short and long term. In our view, with AGT’s ‘double discount’ being close to historically wide levels, now could be one of the best opportunities to invest in the trust for a long-term investor looking to gain exposure to a truly benchmark-agnostic, global equity investment strategy. As interest rates look to be peaking in the US and the UK, and the premise of a softer landing becomes a more probable outcome, this bodes well for the potential NAV appreciation of the underlying holdings, particularly the increased allocation to private equity, and for the wider-than-average discount of AGT itself. |
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