Written by Victoria Harris, Senior Investment Analyst
August was a good month for the Global Fund, finishing up 1.6%. While most of our direct holdings performed well, the funds’ performance was helped by a currency tailwind from the weak NZD against the USD - a benefit as the majority of the fund’s cash and investments are held offshore.
Clean and green
We initiated a new position with NextEra Energy Partners which owns and operates renewable energy projects in North America. The company has a strong pipeline of projects and long-term stable cash flows that give good distribution visibility, and exposes the fund to clean energy. We think globally the environment for small caps remains attractive. I am off to North America in September to search for new investment ideas for the Global Fund.
Written by Daniel Sims, Investment Analyst
Full pockets in anticipation to buy
The Growth UK & Europe Fund ended the month up 0.4% in what is a seasonally quiet period for our holdings given the summer holidays in the Northern Hemisphere. We made no new investments but added to some existing holdings and participated in two corporate events over the month. We have also substantially reduced our exposure to a number of previously core positions in the fund as our investment theses played out successfully or changed. This transition period can be seen in the increased cash holding. The team is diligently assessing potential investment ideas and with half year reporting season coming up,
we are hopeful of finding some new opportunities to
deploy capital.
Good things take time
However, as we are absolute return focussed investors (because you can’t buy groceries with “relative” performance), we would prefer to hold cash as opposed to investing in a so-so opportunity. We invest the fund how we would want our own money to be managed, because our own money is in the fund alongside yours. This means that when we can’t find intelligent things to do, we don’t try to force it. Instead, we happily keep digging through the market, with sufficient firepower available for when opportunities present themselves.
Arbitrage advantage
Over the month we participated in the rights issue from FairFX Plc, taking advantage of an arbitrage between the current market price (~72p) and the rights price (58p). We will also be tendering our shares in another company we own to take advantage of another arbitrage – we purchased shares within the last 6 weeks at ~165p and will have the opportunity at the start of October to sell them back to the company at 200p. Given the difficulty we have had finding core investments, i.e. great companies at attractive prices, these arbitrage opportunities allow us to generate attractive rates of return on money that would otherwise be sitting in bank accounts. Chris Wright, myself and Mike are off to Europe this month, and hope to return with some new investment ideas.
Past performance is not an indicator for future performance. This is not intended to be financial advice and does not take into account any particular person’s circumstances. Before relying on this information, please speak to an independent financial adviser.