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November

This was a good month for us as markets continued to recover from their recent lows in mid-October. Importantly some of the key contributions to performance came from corporate events. The first was Forterra Trust, which although not a particularly large investment, nevertheless was able to inflict a fair amount of pain as its share price fell by 36% during the 2014 financial year. Since the end of September, it has jumped by 57% as its largest shareholder, Nan Fung, launched two attempts to take the company over. The first attempt was launched in October and was set at a price of $1.85. This received an unenthusiastic response and has since been followed by a second offer at $2.25. This won the support of the second largest shareholder and allowed Nan Fung to increase its ownership above the 50% level. Subsequent purchases in the market have taken their control to 90%, which includes the c. 4% stake held by AVI funds.

There were strong performances from Investor (up 6.6%), Tui AG (up 12.1%) and WM Morrison (up 15.3%).

The main detractor from performance was Aker, whose shares fell a further 7.3% during November, further compounding the sharp falls suffered by the company since the oil price started to fall in June. With a portfolio of assets dominated by oil related businesses it is unlikely that Aker’s share price will move in a different direction to that of the oil price in the near term. However, with a prospective dividend yield of over 9%, a discount of over 40% and financially sound assets there is a strong case to be made that Aker’s shares will at some point bounce very sharply from these very depressed levels.

We made two new investments over the month, and added to some of the recent investments we made in Europe.

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