Fund Information / Factsheet • Jun 30, 2019
Fund Information / Factsheet
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Menhaden PLC (the "Company") seeks to generate long-term shareholder returns, predominantly in the form of capital growth, by investing in businesses and opportunities, irrespective of their size, location or stage of development, delivering or benefiting from the efficient use of energy and resources. Whilst the intention is to pursue an active, non-benchmarked total return strategy, the Company will be cognisant of the positioning of its portfolio against the MSCI World Index (Total Return, Sterling adjusted).
| Name | Total |
|---|---|
| X-ELIO * | 19.3 |
| Safran | 9.8 |
| Alphabet | 9.4 |
| Charter Communications | 8.0 |
| ADO Group ** | 7.0 |
| Brookfield Renewable Energy | 6.1 |
| Canadian Pacific Railway | 5.3 |
| Union Pacific Railway | 4.8 |
| Calvin Capital *** | 4.6 |
| Airbus | 4.4 |
| Total | 78.7 |
*investment made through Helios Co-Invest LP
** investment made through CGE Investments
***investment made through KKR Evergreen Co-Invest II LP
During June, the Company's net asset value ('NAV') per share was down 1.1%, the share price was unchanged, while the MSCI World Index (total return, sterling adjusted) was up 5.6%.
At the start of July, Brookfield Renewable Partners (in which Menhaden has a holding) and KKR announced an agreement to form a 50/50 joint venture for Spanish solar operator and developer, X-Elio. As a reminder, we are co-invested in X-Elio with KKR's infrastructure team and the position represents our largest portfolio holding, amounting to ~20% of our net asset value. Brookfield will acquire a 50% stake in X-Elio from existing investors for a total commitment in the region of \$500 million, with the deal expected to close in Q4 2019. We intend to sell 50-75% of our holding in the transaction. If the deal completes as expected, this will be the first significant successful realisation from our portfolio of private investments.
In terms of monthly performance, positive contributors were offset by a 27.1% decline posted by ADO Group, detracting 2.6% from the NAV, the Berlin real estate portfolio in which we are coinvested with Apollo. All of Germany's listed residential real estate owners were negatively impacted by the Berlin senate's approval of a draft bill to freeze rents on residential properties for five years. However, the proposed law will do nothing to end the current shortage of residential apartments in the city.
Although rents in Berlin have risen significantly in recent years, the city remains one of the most affordable in both Western Europe and Germany. These recent increases are mainly due to lack of supply (new constructions have averaged 9,000 p.a. since 2012, household formation is circa 20,000-25,000 p.a. since 2012). Capping or freezing rental rates would likely only exacerbate the problem, by removing the incentive for investors to build new stock. Meanwhile the scientific committee of the German Bundestag has concluded that the Berlin senate's current draft bill is probably unconstitutional and hence it will likely face significant legal barriers.
The commentary continues on page 2.
This document is for information purposes only and does not constitute an offer or invitation to purchase shares in the Company and has not been prepared in connection with any such offer or invitation. Before investing in the Company, or any other investment product, you should satisfy yourself as to its suitability and the risks involved, and you may wish to consult a financial adviser.
Any return you receive depends on future market performance and is uncertain. The Company does not seek any protection from future market performance so you could lose some or all of your investment. Shares of the Company are bought and sold on the London Stock Exchange. The price you pay or receive, like other listed shares, is determined by supply and demand and may be at a discount or premium to the underlying net asset value of the Company. Usually, at any given time, the price you pay for a share will be higher than the price you could sell it. For further information on the principal risks the Company is exposed to please refer to the Company's Annual Report or Investor Disclosure Document available at www.menhaden.com.
The Company currently deploys leverage using currency forwards. These are designed to partially protect/hedge the NAV from unfavourable movements in foreign exchange rates by reducing the Company's exposure to foreign currencies. The Company can borrow but does not currently.
Portfolio management services are provided by Menhaden Capital Management LLP ('MCM'). Three of the partners of MCM, Ben Goldsmith, Luciano Suana and Graham Thomas, form the Investment Committee, which makes all investment and divestment decisions in respect of the Company. Their investment philosophy is to assess all investment opportunities through a value lens, with the aim of acquiring investments with low downside risk, backed by identifiable assets and cash flows, at attractive valuations. The team seeks to invest with a long-term perspective and with high conviction. MCM is authorised and regulated by the Financial Conduct Authority.
Graham Thomas is the non-executive chairman of MCM's Investment Committee. Graham is the Chief Executive of Stage Capital, a private equity firm backed by Goldman Sachs Asset Management and Glendower Capital. Before Stage Capital, he chaired RIT Capital Partners plc's Executive Committee and was a member of its investment committee with responsibility for its private investments. Previously he held senior roles at Standard Bank Group, and was a partner at MidOcean Partners, having started his career at Goldman Sachs in London. Graham also serves on the investment committee of Apis Partners.
Ben Goldsmith is the Chief Executive Officer of MCM. Before cofounding MCM, Ben co-founded the WHEB group, one of Europe's leading energy and resource-focused fund investment businesses. Ben is a director of Cavamont Holdings, the Goldsmith family's investment holding vehicle and also chairs the UK Conservative Environment Network.
Luciano Suana is an investment manager at MCM. Before joining MCM, Luciano was a Director for Barclays Capital in the Capital Markets division where he ran the credit trading operations for Brazil out of São Paulo. Before Barclays, Luciano was a Director at Dresdner Kleinwort in London. There he focused mainly on Infrastructure, Utilities and Real Estate assets as head of the Illiquids Credit group.
Jessica Kaur is a Research Analyst at MCM. Before joining MCM, Jessica was an Associate Director at UBS in the Research division, where she was a covering analyst in the UK Mid-cap team. Before UBS, Jessica was a Research Analyst in the Capital Goods team at Goldman Sachs.
Edward Pybus is a Research Analyst at MCM. Before joining MCM, Edward was an Analyst at Exane BNP Paribas in the Research division, where he was a member of the Oil & Gas team and covered European integrated oil companies. Edward is a CFA Charterholder and qualified as a Chartered Accountant at Deloitte.
The Company's investment objective is pursued through constructing a conviction-driven portfolio consisting primarily of direct listed and unlisted holdings across different asset classes and geographies. The Company invests, either directly or through external funds, in a portfolio that is comprised of three main allocations: listed equity; yield assets; and special situations. The flexibility to invest across asset classes affords the Company two main benefits: 1) It enables construction of a portfolio based on an assessment of market cycles; and 2) It enables investment in all opportunities which benefit from the investment theme. It is expected the portfolio will comprise approximately 15 to 30 positions.
The portfolio will be predominantly focused on investments in developed markets, though if opportunities that present an attractive risk and reward profile are available in emerging markets then these may also be pursued. While many of the companies forming the portfolio are headquartered in the UK, USA or Europe, it should be noted that many of those companies are global in nature so their reporting currency may not reflect their actual geographic or currency exposures. Subject to any applicable investment restrictions contained in the Listing Rules from time to time, the Company will not make an investment if it would cause a breach of any of the following limits at the point of investment: 1) no more than 20% of the Company's gross assets may be invested, directly or indirectly through external funds, in the securities of any single entity; and, 2) no more than 20% of the Company's gross assets may be invested in a single external fund.
| Asset | Total |
|---|---|
| Public equities | 51.6 |
| Private investments | 34.4 |
| Yield investments | 12.1 |
| Liquidity | 1.9 |
| Total | 100.0 |
Source: All portfolio information sourced from Frostrow Capital LLP
| Asset | Total |
|---|---|
| US | 40.6 |
| Europe | 40.5 |
| Emerging Markets | 6.0 |
| Canada | 5.3 |
| UK | 4.6 |
| Unquoted UK LPs | 1.1 |
| Liquidity | 1.9 |
| Total | 100.0 |
Source: All portfolio information sourced from Frostrow Capital LLP. Geographic classification based on location of primary economic activity.
| Percentage Growth |
1 month | YTD | 1 Year | 3 Years | Since Inception* |
|---|---|---|---|---|---|
| NAV | -1.1 | 10.9 | 7.1 | 25.0 | 2.9 |
| Share Price | 0.0 | 25.0 | 17.5 | 35.0 | -17.0 |
| Index ^ | 5.6 | 17.1 | 10.3 | 46.6 | 63.5 |
Past performance is not a guide to future performance. The value of investments and the income from them may fall as well as rise and is not guaranteed. An investor may receive back less than the original amount invested.
^ MSCI World Index (Total Return, Sterling adjusted). The Company pursues an active, non-benchmarked strategy but is cognisant of the positioning and returns of its portfolio against the MSCI World Index. *NAV performance calculated after IPO costs. Share price returns based on issue price of 100p.
Whilst the current volatility is painful, we continue to believe in the plan laid out by Apollo and do not believe there has been a material change in the intrinsic value of ADO's real estate portfolio. With Ran Laufer, formerly Chief Marketing and Sales Officer at Airport City and Deputy CEO at Grand City Properties, now officially installed as CEO, clear progress internally is being made and we expect further legislative developments over the second half of this year.
Meanwhile, Safran and Airbus enjoyed strong showings at the Paris Air Show. Safran shares ended the month up 10.8%, adding 1% to our NAV, on the back of new orders and commitments for >1,150 LEAP engines and long-term services agreements equivalent to USD 50.2 billion at list prices. Airbus was up 9.9%, adding 0.4% to our NAV, with new business for 363 commercial aircraft, including 149 firm orders and 214 commitments. Airlines and lessors also switched a number of orders to the larger A321neo and new A321XLR. Finally, Brookfield Renewable Partners also continued its recent strong positive performance in the face of lower US treasury yields, with a total shareholder return of 6.5% over the month also adding 0.4% to our NAV.
| Environmental 31 July 2015 Annual Management Fee (payable by the Company): Portfolio Management Fee 1.25% p/a on first £150m of AUM, 1.0% thereafter; AIFM Fee 0.225% p/a up to £150m, 0.20% p/a thereafter up to £500m, 0.175% in excess of See Prospectus for details 2.1% At AGM in 2020; every 5 |
||
|---|---|---|
| years | |
|---|---|
| Year / Half Year | 31 December / 30 June |
| Capital Structure | 80,000,001 Ordinary Shares of 1p |
| *Calculated at the financial year-end, includes management fees | |
| and all other operating expenses. |
| Number of Holdings | 18 | |
|---|---|---|
| Total Net Assets (£m) | £79.8m | |
| Market Capitalisation (£m) | £66.4m | |
| Dividend Policy | are substantially invested | Target 2% per annum dividend yield once the Company's assets |
| Gearing (AIC basis) * | 0% | |
| Leverage**: Gross Commitment |
132.8% 130.6% |
|
| Share Price (p) | 83.00 | |
| NAV (p) | 99.78 | |
| (Discount) / Premium | (16.8%) | |
* Calculated as borrowings / by Net Assets
** Calculated as exposures (as defined in the AIFMD) / Net Assets. The Gross method takes the absolute exposure of all instruments, including hedging arrangements, whilst the commitment method takes the net exposure. The Board has set a maximum leverage level of 200% under the gross method and the commitment method.
| Sedol | BZ0XWD0 |
|---|---|
| ISIN | GB00BZ0XWD04 |
| Legal Entity Identifier | 2138004NTCUZTHFWXS17 |
| Bloomberg | MHN LN |
| Epic | MHN |
25 Southampton Buildings, London, WC2A 1AL Tel.: 0203 0084910 Fax: 0203 0438889 Website: Hwww.frostrow.comU Email: [email protected]
This financial promotion is issued by Frostrow Capital LLP which is authorised and regulated by the Financial Conduct Authority ("FCA").
Menhaden PLC (the Company) is a public limited company whose shares are premium listed on the London Stock Exchange (LSE) and is registered with HMRC as an investment trust.
The Company has an indeterminate life although shareholders consider and vote on the continuation of the Company every five years (the next such vote will be held in 2020).
The Company may, but does not currently, borrow to purchase investments. Borrowing could potentially magnify any gains or losses made by the Company.
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