Manager's Comment for August 2014
The recent gyrations in European markets gave us the opportunity to invest in French holding company, Eurazeo. Its share price fell by 20% between June and mid-August and this pushed its discount up from mid-teen levels to close to 30%. There are two additional factors that make this particularly interesting. Firstly, the widening of the discount prompted comment from management about the absolute level of the discount, together with a statement regarding their intention to boost the level of share buybacks to 10% of the shares outstanding should the discount remain at these wide levels. And secondly, management confirmed the intention to sell two of their largest private equity holdings – Elis and Europcar – which together make up approximately one-third of total NAV. In early September, Elis confirmed its intention to proceed with an IPO. Both companies have performed strongly in operational terms over the past year and the prospect of successful disposals should provide support for further narrowing of the discount, as well as potential increases in NAV.
At Vivendi, the ongoing rationalisation continues with the company accepting a takeover bid for its Brazilian broadband business GVT. We used the strength in the share price to take partial profits on our holding. We had added to the position at the end of June on price weakness, and the recent strength allowed us to sell at a very narrow discount to our estimate of NAV.
Net cash levels increased very slightly to 5.6% and the weighted average discount increased marginally to 28.3%.
We continue to identify attractive opportunities on wide discounts at attractive valuation levels and with genuine catalysts for discount narrowing.
Retail Investors advised by IFAs
The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an authorised investment trust.
British Empire Securities and General Trust plc
British Empire Securities and General Trust p.l.c. (British Empire) is a closed-end investment trust with shares listed on the London Stock Exchange in the FTSE 250 Index. The investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value. British Empire shares can be purchased and held in a Stocks & Shares ISA or a Share Saving scheme through the investment managers, Asset Value Investors.
Asset Value Investors is an employee owned management company founded in 1985 to manage the assets of British Empire, which was a £6 million trust at that time. Today, British Empire has assets of over £856* million and is managed by John Pennink and Joe Bauernfreund.
- Newsletter September 2014
- Newsletter August 2014
- Newsletter July 2014
- Half Year Report 2014
- Annual Report 2013
- Half Year Report 2013
- Brochure Stocks & Shares ISA/Share Plan
- Key Features ISA/Share plan
- AIFMD Investor Disclosure Document
Price Performance December 2003 to December 2013 †
How a typical investment of £11,280 performed over the last five years ‡
British Empire Securities and General Trust has had an average annual NAV total return of 12.4%* since 1985.