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September

Our two largest closed-end fund positions, NB Private Equity Partners and Harbourvest Global Private Equity, were also our two largest contributors over the month. Both companies reported strong monthly NAVs up 3% on the receipt of H1 2014 valuation reports, and our positions in both also benefitted from a strong US dollar. NBPE’s discount also moved in by 150bps over the month to 16%, while HVPE started and finished the month on a 19% discount.

The third largest contributor to performance during the month was our investment in Hudson’s Bay, the North American retailer. Our original thesis was the monetisation of their real estate portfolio, which we believe is assigned very little value in the share price. Their Q2 results mentioned an expectation to announce details of their real estate review no later than April 2015, giving a much clearer time frame for investors. The company has high end real estate on its balance sheet which includes Saks 5th Avenue in New York and Beverley Hills, the Lord & Taylor flagship store in New York, as well as properties in Vancouver, Calgary, and Montreal, and we believe the sale of these assets could provide significant upside.

Shares in Dogan Holding, our sole investment in Turkey, were weak over the month falling 15% on no news, underperforming a weak Turkish market by 8%; a 3% fall in the Turkish Lira against Sterling exacerbated the loss. Dogan’s market cap barely covers the cash on its balance sheet, and we expect the recent buy-out of minorities and subsequent delisting of Dogan Yayin Media to increase group efficiency. Aker ASA and Dundee Corp were also weak on little news-flow.

We added to Eurazeo, and made three new investments during the month: Westgrund, JP Morgan Private Equity, and Fondul Proprietatea.

Net cash levels came down from 5.6% to 1.7% as we took advantage of attractive opportunities and the weighted average discount increased by 30bps to 28.6%.

 

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