April Commentary: Lowland Investment Company

09/05/2017

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​April was a good month for the Trust, which rose 3.0% (using fair value NAV) relative to the FTSE All-Share which fell 0.4% (both on a total return basis).

Following the unexpected announcement of a UK general election, sterling rose relative to currencies such as the US Dollar. This caused the large capital FTSE 100 Index, which is highly international in terms of its end market exposure, to underperform as its international earnings are now worth less when translated back into sterling. In contrast more domestically orientated small and medium sized companies in the UK materially outperformed. This benefitted the performance of the Trust as we hold approximately two thirds outside of the FTSE 100 Index.
 
The best performers during the month tended to be domestically orientated smaller companies including Conviviality Retail (an alcohol wholesaler and owner of ‘Bargain Booze’ stores), textile rental company Johnson Service Group and building materials company Epwin.

Among the weakest performers was IP Group, which aims to commercialise technologies from UK and US universities. One of its peer group, Allied Minds, materially wrote down its assets and therefore IP Group fell in sympathy. We do not, however, think there is relevant read across from Allied Minds as IP Group’s portfolio is largely listed (and therefore is more transparent in terms of its valuation). We therefore added to the position in IP Group on share price weakness.
 
During the month we reduced the positions in mining companies BHP Billiton and Rio Tinto. In both cases while the companies have good quality assets the shares have re-rated considerably.  We added on weakness to a number of our existing holdings including 4D Pharma (an early stage pharmaceutical company), International Personal Finance (an emerging markets consumer credit company) and Redde (which provides services such as car hire for the motor insurance industry).
 
NAV - The total value of a fund's assets less its liabilities.
Total Return - The total return on a portfolio of investments takes into account not only the capital appreciation on the portfolio, but also the income received on the portfolio. 
Re-rated - When the market changes its view of a company so that fundamental ratios return to long-term averages or higher.
 
Stock examples are for illustrative purposes only not advice.

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.


Important information

Please read the following important information regarding funds related to this article.

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), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (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. Telephone calls may be recorded and monitored.

Specific risks

  • 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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