January Commentary: Lowland Investment Company



​January was a good month for the Trust. Its net asset value rose 2.7% (on a total return basis) relative to the FTSE All-Share benchmark which fell 0.3%.

While it remains early in terms of companies reporting their full year results, so far we have found trading updates encouraging across a broad range of sectors. Examples include flooring distributor Headlam, retailers Shoe Zone and Moss Bros, and oil services company Cape. In many cases the strong cash generation exhibited means we are also confident in receiving special dividends.
Among the largest detractors from performance during the month was satellite operator Inmarsat. While we like the high barriers to entry in this market, earnings have been downgraded as a result of weak end markets in areas such as shipping. We have maintained our existing (small) position.
During the month we added a new position in Royal Mail following the disappointing trading update and subsequent share price fall. Following the trading update analyst expectations for future earnings have we think come down to a realistic level and the shares offer an attractive dividend yield. We continued to reduce holdings which have re-rated substantially on earnings multiples including Scapa, Avon Rubber and Weir Group.
While the outlook for the UK economy remains uncertain, we have begun adding (in small quantities) to domestically exposed companies including Shoe Zone, Conviviality Retail and Marshall Motors. These additions may prove in hindsight to be too early, but in our view these companies are well managed, cash generative and are trading on attractive multiples. The gearing remains relatively low by historic standards at approximately 10% so we have further scope to add when valuation opportunities arise. 

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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Lowland Investment Company plc

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Specific risks

  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • This trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this trust.
  • The trust could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the trust.
  • If a trust's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • The return on your investment is directly related to the prevailing market price of the trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the trust. As a result losses (or gains) may be higher or lower than those of the trust’s assets.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • The trust may use gearing as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incured by the trust can be greater than those of a trust that does not use gearing.
  • Some of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies.

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