Fund Information / Factsheet • Mar 10, 2023
Fund Information / Factsheet
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Menhaden Resource Efficiency Plc (the "Company") seeks to generate long-term shareholder returns, predominantly in the form of capital growth, by investing in businesses and opportunities that are demonstrably delivering or benefiting significantly, from the efficient use of energy and resources, irrespective of their size, location or stage of development. To reflect its non-benchmarked total return investment strategy, the Company uses RPI+3% as its primary long term financial performance comparator. In addition to this absolute return performance measure, the Company also uses a range of specialist, sectoral and peer group benchmarks to assess its relative performance.
| Name | Total |
|---|---|
| Microsoft | 11.6 |
| X-ELIO * | 10.3 |
| Alphabet | 10.1 |
| Canadian Pacific Railway | 9.9 |
| Safran | 9.8 |
| VINCI | 9.7 |
| Canadian National Railway | 6.8 |
| John Laing Group ** | 4.5 |
| Airbus | 4.4 |
| Amazon | 4.3 |
| Total | 81.4 |
| *investment made through Helios Co-Invest LP | |
| **investment made through Aqueduct Co-Invest LP |
Menhaden Resource Efficiency Plc conducts its affairs so that its shares can be recommended by independent financial advisers ("IFAs") to retail private investors. The shares are excluded from the Financial Conduct Authority's ("FCA's") restrictions which apply to non-mainstream investment products because they are shares in a UK-listed investment trust.
| Asset | Total |
|---|---|
| Public equities | 72.7 |
| Private investments | 16.4 |
| Liquidity | 10.9 |
| Total | 100.0 |
| Source: All portfolio information sourced from Frostrow Capital LLP |
| AIC Sector Environmental |
||
|---|---|---|
| Launch Date | 31 July 2015 | |
| Annual Management Fee (payable by the Company): Portfolio Management Fee 1.25% p/a on first £100m of AUM, 1.0% thereafter; AIFM Fee 0.225% p/a up to £100m, 0.20% p/a thereafter up to £500m, 0.175% in excess of £500m |
||
| Performance fee | See Annual Report for details |
|
| Ongoing charges* | 1.8% | |
| Continuation Vote | At AGM in 2025; every 5 years |
|
| Year / Half Year | 31 December / 30 June |
|
| Capital Structure | 79,575,001 Ordinary Shares of 1p |
*Calculated at the financial year-end, includes management fees and all other operating expenses.
* 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.
| Asset | Total |
|---|---|
| Europe | 34.8 |
| US | 30.0 |
| Canada | 16.7 |
| UK | 4.5 |
| Emerging Markets | 3.1 |
| Liquidity | 10.9 |
| Total | 100.0 |
| Source: All portfolio information sourced from Frostrow Capital LLP. Geographic classification |
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 | 5 Years | Since Inception |
|---|---|---|---|---|---|---|
| NAV | -1.0% | 4.3% | -9.8% | 17.8% | 50.1% | 39.3% |
| Share Price | 9.2% | 6.7% | -11.0% | 2.9% | 39.8% | -5.9% |
| Index^ | 0.2% | 0.2% | 16.8% | 35.6% | 51.5% | 73.1% |
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.
Source: Morningstar/Frostrow.
^ RPI +3%, and the data is quoted on a month lag.
During February, the Company's net asset value ('NAV') per share was down 1.0%, the share price was up 9.2%, while the RPI+3% was up 0.2%.
Our public equities portfolio decreased 2.0% over the month, detracting 1.4% from our NAV.
Alphabet declined 9% in US dollars, detracting 1.1% from our NAV. This was driven by concerns stemming from heightened competition in Search, following Microsoft's launch of its new Bing search engine. We believe that Alphabet is well positioned to fend off this new challenge, with Google remaining the default option and retaining a significant advantage in the more valuable structured and local searches. Nevertheless, we realise that the range of outcomes has widened. We opted to reduce our position by approximately one half, leaving the holding representing 9.8% of NAV and equal to the profit we made on our original holding.
We opened a new position in aircraft manufacturer, Airbus. Whilst China's reopening removes the last hurdle to air travel's full recovery, the industry's need to decarbonise and airlines' fleet renewal requirements remain unchanged. By upgrading the global fleet to Airbus' latest generation aircraft offer, the industry could reduce carbon emissions by 20- 30%. Furthermore, Airbus' aircraft are currently certified to operate on 50% sustainable aviation fuel (SAF), with a target to reach 100% by the end of the decade. SAF offers the opportunity to reduce emissions by up to 85%, according to the company.
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| Codes | ||
|---|---|---|
| Sedol | BZ0XWD0 | |
| ISIN | GB00BZ0XWD04 | |
| Legal Entity Identifier | ||
| 2138004NTCUZTHFWXS17 | ||
| Bloomberg | MHN LN | |
| Epic | MHN |
The Company's investment objective is pursued through constructing a convictiondriven 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 predominantly of a combination of listed equities and private equity investments. 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.
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Airbus recently received approval from the Science Based Targets initiative (SBTi) for its greenhouse gas emissions near-term reduction targets, which include plans to reduce scope 1 & 2 emissions by 63% by 2030 and reduce scope 3 emissions by 46% by 2035. We previously held the company's shares but exited in April 2021, believing that the post Covid recovery would take significantly longer than implied by the price. The position currently represents 4.2% of NAV.
We also added to our position in French infrastructure group, Vinci. The position now represents 9.3% of NAV.
Within our private portfolio, we marked up our position in X-Elio and marked down our position in John Laing according to the manager's latest valuations, contributing 0.9% to our NAV in aggregate. Recent press reports indicate that X-Elio co-owner, Brookfield, may be close to acquiring KKR's 50% stake in order to own the business outright. A sale by KKR would include our co-investment.
The value of Sterling against the US Dollar and Euro weakened slightly over the period, meaning the mark-to-market on our forward currency hedges detracted 0.7% on a standalone basis.
Frostrow Capital LLP 25 Southampton Buildings, London, WC2A 1AL
Tel.: 0203 0084910 Fax: 0203 0438889
Website: www.frostrow.com Email: [email protected]
This financial promotion is issued by Frostrow Capital LLP which is authorised and regulated by the Financial Conduct Authority ("FCA").
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.
Menhaden Resource Efficiency 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 2025).
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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