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Fears over a Trump-provoked trade war rocked markets in March. BTEM’s portfolio discount widened further (from 25.4% to 27.6%) and contributed to a decline in NAV of -4.1% with local currency losses exacerbated by continued strength in the Pound. The few positive contributions came from Digital Garage, Adler Real Estate, GP Investments, and Riverstone Energy, but these were dwarfed by (unrealised) losses in Wendel, Pershing Square Holdings, Cosan Ltd, Tokyo Broadcasting System, Symphony International, and the Japanese Special Situations Basket.

Digital Garage’s NAV increased by 4% and its discount narrowed from 15% to 9% over March. We first purchased shares in Digital Garage in early-2016, with our investment returning +74% since then against the TOPIX return of +37%.  Our investment thesis was predicated on the market’s undervaluation of Digital Garage’s unlisted assets (payments and online marketing businesses, and other venture capital investments), with investors seemingly only focussed on its stake in listed Kakaku (Japan’s largest online price comparison and restaurant-review company).  Given the growth rates of Digital Garage’s unlisted assets, we believed the valuation anomaly was unlikely to persist and, indeed, the discount has narrowed from 33% since our first purchase while the earnings of the two major unlisted assets have grown by +58%.  Given the inadequate prospective returns from the current valuation level, we continued to sell our position into this strength and exited the last of our holding in early April.