Doceo watch list 11.07.22
Discount Watch: 10
The number of investment companies whose discounts hit 12-month highs over the last seven days increased by one this week to 10. Case of deja-vu in the private equity and infrastructure sectors after there were second consecutive appearances for LMS Capital (LMS); Schroder British Opportunities (SBO); and infrastructure’s Sequoia Economic Infrastructure (SEQI). Infrastructure has another name on the list this week – HydrogenOne Capital (HGEN). Elsewhere, UK equity and bond income has one entry –British & American (BAF); there are two from UK smaller companies – Marwyn Value Investors (MVI) and R&M UK Micro Cap (RMMC); and one from North American equity income – BlackRock Sustainable American Income (BRSA). Finally, the commodities & natural resources and debt sectors both contributed one trust each – Geiger Counter (GCL) and NB Global Monthly Income (NBMI).
Dividend Watch: 5.6%
That’s how much Artemis Alpha’s (ATS) full year dividend is set to rise by this year compared to 2021 after the Board declared a final dividend of 3.46p (2021: 3.19p) per share. If approved by shareholders at the AGM, the final dividend will bring the total pay out to 5.60p per share (2021: 5.30p).
Meanwhile a 4p dividend was declared by JPMorgan Global Core Real Assets (JARA) for the full year. Furthermore, “the Board intends to maintain the current dividend level for FY22/23.”
Fee Watch: 0.45%
The new management fee agreed between the board of Martin Currie Global Portfolio Trust (MNP) and fund manager Franklin Templeton. Previously, the investment management fee was 0.5% per annum for the first £300m of the Company’s net asset value and 0.35% for net assets in excess of £300m. The change in management fee takes effect from 1 July 2022.
Broker JPM had this to say: “It is unusual to see the removal of a tiered fee structure, but at the current NAV of around £250m, the combined effect of the cut in ad valorem fee and removing the company secretarial fee amounts to a reduction of 14% in annual fees. Only above £505m would the new arrangement cost more, but that would require a doubling in the current NAV.”
Borrowings Watch: Two-year extension
For NextEnergy Solar’s (NESF) existing £70m RCF with Santander UK, which now expires in July 2024. JPM wrote: “The revised facility has been agreed at a margin of 160bps over SONIA, including an uncommitted option to extend the facility term for an additional twelve months if required.” Numis added: “The extended RCF provides NESF with flexibility over timing to raise equity to pay down the drawn balance. NESF has expressed a wish to raise new capital, but the shares are currently trading on a discount to NAV of 5.2% so will need to rerate before this is possible.”
Raise Watch: 169p
No, not the amount HICL Infrastructure (HICL) is looking to raise, rather the price at which the company is raising funds via a tap issue which is expected to close on 14 July. The 169p issue price represents a 3.1% discount to the 174.4p share price as at close of play on 7 July. The proceeds will go towards paying down HICL’s £400m credit facility of which c.£90m is currently drawn.
Scottish Mortgage Watch: big gains
From Scottish Mortgage (SMT) over the last week, both in terms of share price and NAV performance. Situation as at 1 July 2022 – SMT’s share price was 10.6% off the level it was on 8 June 2022, SMT’s NAV was nursing a 4.5% deficit, while the global IT sector was down 6.3%. Fast forward to 8 July 2022, the share price had recouped the lion’s share of its losses to close down 2.9% from 8 June’s level, the NAV finished the week virtually unchanged for the month at -0.2%. Finally, the global sector was off 3.2%.
Tip Watch: Seven days
Tips in the press over the last seven days:
AVI Global Trust (AGT)tipped in Shares Magazine (Buy at 180p)
Media Watch: listed infrastructure
MoneyWeek’s Max King ran the rule over “the original infrastructure funds” in his article “The best infrastructure funds to shelter your income from inflation”which was published on 8 July 2022.
King argues, infrastructure’s “diversified funds continue to prosper, delivering rising dividends and asset values from investment in cyclical businesses and facilities. These have little, if any, revenue risk, strong cash flows, inflation protection and, hopefully, the potential to add modestly to returns through active management.”
The article goes on to run through six funds: HICL Infrastructure (LSE: HICL), 3i Infrastructure (LSE: 3IN), International Public Partnerships (LSE: INPP), GCP Infrastructure Investments (LSE: GCP), BBGI Global Infrastructure (LSE: BBGI) and Pantheon Infrastructure (LSE: PINT) which floated last year.
King concludes: “With revenues either explicitly or implicitly linked to inflation…they are all well placed in current market conditions. The only caveat is that rising bond yields undermine the relative attractiveness of their yields. While real yields are strongly negative, the inflation protection more than compensates. However, when real bond yields turn positive again – which does not look imminent – the sector will be rowing against the current.”