July Commentary: Lowland Investment Company



​July was a good month for the Trust; the net asset value rose 1.5% on a total return basis (with debt at fair value) relative to a 1.2% rise in the FTSE All-Share.

We have seen a resumption in M&A activity within the Fund and this month two of our holdings received cash bid approaches – Cape, which is a services provider primarily to the energy industry, and Novae, which is a non-life insurer. These two were both among the largest contributors to performance. Also among the best performers was Conviviality Retail, one of the largest alcohol distributors in the UK. This had encouraging results in which the management team have managed to successfully integrate two sizeable acquisitions in a short amount of time and return the business to organic growth.
The largest individual detractor from performance was contractor and supports services provider Carillion. Within their contracting division they have found a number of problematic contracts for which they have had to take a sizeable provision. Having met with Keith Cochrane (who was a Non-Executive Director but is currently interim CEO) we have decided to maintain the position. While the scale of the provision is extremely disappointing, we are awaiting the outcome of a review into the business that Keith is conducting, the results of which will likely be announced in September.
During the month we continued to be a modest net seller and the gearing on the Trust has come down to 10%. We reduced both Cape and Novae following the bid approaches. The biggest purchases included Strix, which is an IPO of a company that makes safety controls for kettles that should pay an approximately 7% dividend yield, and AstraZeneca, which we added to following the disappointing trial results for one of its key cancer products.

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.

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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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