Fund Information / Factsheet • Jul 31, 2018
Fund Information / Factsheet
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Menhaden Capital 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 * | 19.6 |
| Airbus | 11.1 |
| Safran | 9.3 |
| Alphabet | 8.1 |
| Infigen Energy | 4.9 |
| Calvin Capital ** | 4.5 |
| Ocean Wilsons | 3.9 |
| Brookfield Renewable Energy | 3.9 |
| Terraform Power | 3.3 |
| Canadian Pacific Railway | 3.2 |
| Total | 71.8 |
*investment made through Helios Co-Invest LP
**investment made through KKR Evergreen Co-Invest II LP
During July, the Company's net asset value ('NAV') per share was up 4.3%, the share price was unchanged, while the MSCI World Index (total return, sterling adjusted) was up 3.8%.
Our private investments portfolio was up 8.6% in the month, adding 2.2% to the NAV, with strong contributions from X-Elio and the sale of our position in the Alpina Fund.
Following the sale of X-Elio's Japanese solar assets, as outlined in our June factsheet, the value of our holding in X-Elio has been written up by 10.5%, adding 2.0% to our total NAV. X-Elio's remaining operating solar assets have continued to perform strongly, and the Company has made significant progress in its development pipeline during the period.
Our interest in the Alpina Fund was successfully sold during July, at the Q1 2018 NAV, adjusted for the subsequent Dolan write-up. This sale brought us cash proceeds of around £2.3 million, in addition to the circa £1.6 million received during June from the sale of portfolio company Dolan. Moreover, the sale of this position releases the Company from the remaining drawdown commitment of circa £2.3 million.
The commentary continues on page 3.
Any opinions on individual stocks are those of the Company's Portfolio Manager and no reliance should be given on any such views. Any research in this document has been procured and may have been acted upon by Menhaden for its own purposes. The results are being made available to you only incidentally. The views expressed herein do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of Frostrow Capital LLP and no assurances are made as to their accuracy.
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 ('Menhaden'). Three of the partners of Menhaden, 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. Menhaden is authorised and regulated by the Financial Conduct Authority.
Graham Thomas is the non-executive chairman of the 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 Menhaden. Before co-founding Menhaden, 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 Menhaden. Before joining Menhaden, 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 Menhaden. Before joining Menhaden, Jessica was an Associate Director at UBS in the Research division, where she was a covering analyst in the UK Midcap team. Before UBS, Jessica was a Research Analyst in the Capital Goods team at Goldman Sachs.
Edward Pybus is a Research Analyst at Menhaden. Before joining Menhaden, 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 20 to 25 positions. Typically, the portfolio will not comprise fewer than 20 positions or more than 50 positions. For these purposes, an investment in an external fund is treated as one position.
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 at all times to any applicable investment restrictions contained in the Listing Rules, 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 | 49.2 |
| Private investments | 26.0 |
| Yield investments | 12.4 |
| Liquidity | 12.4 |
| Total | 100.0 |
Source: All portfolio information sourced from Frostrow Capital LLP
| Asset | Total |
|---|---|
| Europe | 43.8 |
| US | 24.9 |
| Asia | 5.4 |
| Emerging Markets | 4.7 |
| UK | 4.5 |
| Canada | 3.2 |
| Unquoted UK LPs | 1.1 |
| Liquidity | 12.4 |
| 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 | +4.3 | +4.0 | +8.6 | -1.9 | -1.9 |
| Share Price | 0.0 | +4.0 | +6.3 | -28.8 | -28.8 |
| Index ^ | +3.8 | +6.8 | +12.4 | +53.8 | +53.8 |
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.
| AIC Sector | Environmental | |||||
|---|---|---|---|---|---|---|
| Launch Date | 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 £500m |
||||||
| Performance fee | See Prospectus for details | |||||
| Ongoing charges* | 2.1% | |||||
| Continuation Vote | At AGM in 2020; every 5 |
| years | |
|---|---|
| Year / Half Year | 31 December / 30 June |
| Capital Structure | 80,000,001 Ordinary Shares of 1p |
| and all other operating expenses. | *Calculated at the financial year-end, includes management fees |
| Number of Holdings | 20 | |
|---|---|---|
| Total Net Assets (£m) | £76.7m | |
| Market Capitalisation (£m) | £57.0m | |
| Dividend Policy | are substantially invested | Target 2% per annum dividend yield once the Company's assets |
| Gearing (AIC basis) * | 0% | |
| Leverage**: Gross |
Commitment | 122.6% 99.9% |
| Share Price (p) | 71.25 | |
| NAV (p) | 95.82 | |
| (Discount) / Premium | (25.6%) | |
* 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 120% under the commitment method.
| Sedol | BZ0XWD0 |
|---|---|
| ISIN | GB00BZ0XWD04 |
| Legal Entity Identifier | 2138004NTCUZTHFWXS17 |
| Bloomberg | MHN LN |
| Epic | MHN |
Email: [email protected]
Frostrow Capital LLP 25 Southampton Buildings, London, WC2A 1AL Tel.: 0203 0084910 Fax: 0203 0438889 Website: Hwww.frostrow.comU
This financial promotion is issued by Frostrow Capital LLP which is authorised and regulated by the Financial Conduct Authority ("FCA").
Menhaden Capital 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.
Our public equities portfolio also performed particularly strongly, ending the month up 5.9%, which added 2.9% to our total NAV.
Our new position in ports operator Ocean Wilson has got off to a great start, gaining 25.7% during July and adding 0.8% to our NAV. The market favourably received news of the Board's initiation of a strategic review of the container terminal and logistics assets, which may pave the way to unlocking the value in these assets for shareholders.
Airbus gained a further 6.8% during July, adding 0.7% to our NAV, following both strong order intake at the Farnborough air show and solid H1 2018 results. Airbus reported revenues of €25 billion reflecting the strong improvement on delivery of the A350 programme and the A320 neo ramp-up transition. 2018 guidance was maintained and the company reiterated their commitment to meet the target of 800 deliveries on the A320 neo for the full year 2018, albeit with some risks as a result of the engine delays.
Alphabet gained 9.4% during July, adding 0.7% to our NAV, on the back of well-received Q2 2018 results. Total revenues were 23% higher in 1H 2018 relative to the same period last year with strong momentum in both of Alphabet's core businesses. Advertising revenues were up 24% and revenues from other activities grew 35% year-on-year, driven predominately by Cloud, with contributions from Play and Hardware.
Our North American rail freight operators, Canadian Pacific and Union Pacific, generated positive returns, gaining 6.5% and 9.0% respectively, and adding 0.5% to our NAV together. Volumes and pricing contributed to mid-to-high single digit revenue growth at Q2 across the freight railroad sector. We expect this trend to continue as operators seek to renegotiate freight contracts. It helps that the North American trucking market remains tight due to robust economic activity and the recent imposition of new, tougher regulations in the US.
Terraform Power was the only meaningful detractor during month, losing 12% which cost us 0.5% of NAV. Concerns around the upcoming renewal of the regulated rate in Spain, which will be effective for the next 6 years, has been weighing on the stock following the recent Saeta acquisition in Spain. The initial proposals released towards the end of the month indicated a 40bps decline in the rates relative to the expectations of 100-200bps, which provided some relief.
We initiated a new position in Veolia at c.0.2% of the portfolio. Veolia is a global leader in environmental services, offering water and waste management and energy solutions. As such, Veolia is a key beneficiary of the secular trend of increasing investment in the water and waste infrastructure globally. With 54% of revenues coming from municipal clients and 46% from industrial clients, the majority of Veolia's revenues are under long-term contracts providing good visibility on revenues. Following years of operational improvements, Veolia is now uniquely positioned to drive growth through its exposure to fast growing emerging markets and bolt-on acquisitions.
We feel happy with the overall quality of the holdings in the portfolio today, comprising companies with strong competitive positioning, protected by real barriers to entry. With the sale of our interest in the Alpina Fund, our exposure to legacy private equity fund positions is reduced to circa 1% of the portfolio. Our remaining portfolio of private investments are all co-investments in high-quality established businesses with identifiable and predictable cash-flows. In each case we have been able to access these off-market investments alongside some of the best investment management firms in the world, including KKR, TCI and Alupar (in Brazil).
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