Fund Information / Factsheet • Nov 9, 2017
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 * | 15.6 |
| Airbus | 9.7 |
| Volkswagen | 7.1 |
| Safran | 6.5 |
| Infigen Energy | 5.4 |
| Senvion | 5.2 |
| Calvin Capital ** | 4.8 |
| Terraform Power | 4.6 |
| Brookfield Renewable Energy | 4.5 |
| Terraform Global | 3.8 |
| Total | 67.2 |
| *investment made through Helios Co-Invest LP |
**investment made through KKR Evergreen Co-Invest II LP
During October, the Company's NAV per share was up 3.6%, the share price was unchanged, while the MSCI World Index (total return, sterling adjusted) gained 2.9%.
The biggest contributor during the month was private solar developer and operator X-ELIO, which we hold in partnership with KKR's infrastructure team. The holding value of X-ELIO was marked up by 10% at the end of the third quarter, which contributed 1.5% to our NAV. Since closing our investment in X-ELIO in December 2015 the company has hit a number of milestones. In particular, X-ELIO has delivered the commercial operation of a new 25 MW solar power plant in Japan, a 58 MW plant in Chile and is currently constructing 117 MW of new capacity in Japan. In addition, the operating performance of X-ELIO's operating assets came in significantly above expectations during 2016. X-ELIO's management team is working hard to capture further growth opportunities in solar PV globally.
The share price of Volkswagen also performed strongly during the month, adding 0.8% to our NAV. Volkswagen reported significantly higher revenues than the prior year, at €170.9 billion, representing 7.8 million cars sold, and an operating profit of €10.6 billion, vs €8.6 billion for the same period last year. Moreover, our thesis that Volkswagen has significant cost cutting possibilities is holding firm, with R&D expenses decreasing to €9.8 billion from €10.1 billion for the same period last year. Volkswagen reported EBITDA of €19.5 billion for the period, compared to €17.0 billion last year. Volkswagen has made a steady stream of announcements about the rapidly developing electrification of its fleet – which is ultimately the key reason for its inclusion in our portfolio.
Airbus also added 0.8% to our NAV during the period. Airbus delivers roughly the same number of planes as Boeing, but carries a substantially lower market value than its US duopoly rival. We believe that the market is starting to recognise this disparity. Airbus reported Q3 revenues of €43 billion, EBIT of €2.3 billion and EPS of €2.39 – roughly in line with last year.
Atlantica Yield (ABY) was the fourth significant contributor for October, adding 0.5% to our NAV. Our thesis has always been that a high quality new sponsor would take the place of Abengoa, which created ABY. So we were delighted by the announcement that Canadian utility Algonquin will be purchasing a 25% stake in ABY at a price of US\$24.25/share. Algonquin will also hold an option for the remaining 16% stake Abengoa holds in ABY exercisable in the next 90 days at the same price. This is good news, and similar to the take-over of Terraform Power by Brookfield Renewable Energy earlier this year.
The commentary continues on page 3.
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. Before co-founding Menhaden, Graham chaired RIT Capital Partners plc's Executive Committee, was a member of its investment committee and had direct responsibility for its private investments. Prior to this Graham was the head of the Standard Bank Group's US\$3 billion Principal Investment Management division, which was established in 2008 under his leadership. Graham is currently a non-executive director of Tamar Energy and Lesmoir-Gordon, Boyle & Co, and is on the investment committee of Apis Partners, a private equity firm.
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 Mid-cap team. Before UBS, Jessica was a Research Analyst in the Capital Goods team at Goldman Sachs. Jessica has a BSc in Economics from the University of Southampton and Masters in Finance from the London School of Economics. Jessica has also passed the CFA Level II.
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. Once substantially invested, 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 will be headquartered in the UK, USA or Europe, it should be noted that many of those companies will be 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 | 42.3 |
| Private investments | 26.5 |
| Yield investments | 19.2 |
| Liquidity | 12.1 |
| Total | 100.0 |
Source: All portfolio information sourced from Frostrow Capital LLP
| Asset | Total |
|---|---|
| Europe | 46.6 |
| US | 17.9 |
| UK | 7.7 |
| Asia | 5.4 |
| Emerging Markets | 5.2 |
| Unquoted UK LPs | 5.0 |
| Liquidity | 12.1 |
| Total | 100.0 |
Source: All portfolio information sourced from Frostrow Capital LLP
| Percentage Growth |
1 month | YTD | 1 Year | Since Inception* |
|---|---|---|---|---|
| NAV | +3.6 | +6.0 | +3.7 | -7.3 |
| Share Price | 0.0 | +2.4 | +0.7 | -32.0 |
| Index ^ | +2.9 | +10.0 | +12.9 | +41.7 |
Source: Morningstar/Frostrow.
^ MSCI World Index (Total Return, Sterling adjusted). The Company pursues an active, nonbenchmarked 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.
| 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 | December / June |
| Capital | 80,000,001 Ordinary Shares |
| Structure | of 1p |
| Number of Holdings Total Net Assets (£m) Market Capitalisation (£m) Dividend Policy substantially invested Gearing (AIC basis) Leverage Gross & Commitment Share Price (p) NAV (p) (Discount) / Premium |
|
|---|---|
| 19 | |
| £72.4m | |
| £54.4m | |
| Target 2% per annum dividend yield once the Company's assets are |
|
| 0% | |
| 0% | |
| 68.00 | |
| 90.49 | |
| (24.9%) |
| Sedol | BZ0XWD0 |
|---|---|
| ISIN | GB00BZ0XWD04 |
| Legal Entity Identifier | 2138004NTCUZTHFWXS17 |
| Bloomberg | MHN LN |
| Epic | MHN |
| *Calculated at the financial year-end, includes management fees and all other |
operating expenses.
Frostrow Capital LLP 25 Southampton Buildings, London, WC2A 1AL Tel.: 0203 0084910 Fax: 0203 0438889 Website: Hwww.frostrow.comU
Tel.: 0203 0084912 [email protected]
Tel.: 0203 4273835 [email protected]
This financial promotion is issued by Frostrow Capital LLP which is authorised and regulated by the Financial Conduct Authority ("FCA").
Continued from page 1..
There were two material detractors during the month. European wind turbine manufacturer Senvion cost us -0.3% of NAV for October, despite a solid order intake. It appears to us that Senvion's new management team is executing its strategic plan effectively. However the share price has been dragged lower as a result of recent negative sentiment surrounding the wind sector generally. Regulatory uncertainty in Germany, a dramatic profit warning from industry leader Gamesa and continued poor performance by Nordex have all contributed to this.
Australian wind power developer and operator Infigen also detracted 0.3% from our NAV during the month, in spite of the company's positive update for production and revenue. Infigen reported revenues that were up 16% year on year, to AUS \$72.7 million. Production generated was also up 14% at 500 GWh during the same period last year, the highest level the company has achieved during the last six years for the equivalent period. Continued regulatory uncertainty surrounding wind power in Australia, against the backdrop of the dual nationality political saga in Australia, further weakening the government of Prime Minister Malcom Turnbull, who has been supportive of wind, has put downward pressure on the Infigen share price. Given the positive performance of Infigen we have added to this position during October.
We are delighted that Jessica Kaur has joined our team as a research analyst. Before joining Menhaden, 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 within the Global Investment Research division at Goldman Sachs. Jessica has a BSc in Economics from the University of Southampton and Masters in Finance from the London School of Economics. Jessica has also passed the CFA Level II.
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.
Menhaden Capital PLC (the "Company") is a UK investment trust listed on the London Stock Exchange. As this Company may implement a gearing policy, investors should be aware that the share price movement may be more volatile than movements in the price of underlying investments. 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 not get back the original amount invested. Changes in the rates of exchange between currencies may cause the value of investments to fluctuate. Fluctuation in the share price may be particularly marked and the value of an investment may fall suddenly and substantially. There can be no assurance that the Company's investment objective will be achieved and investment results may vary substantially over time. 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. Investment trust share prices may not fully reflect underlying net asset values. There may be a difference between the prices at which you may purchase ("the offer price") or sell ("the bid price") a share on the stock market which is known as "bid-offer" or "dealing" spread. Net Asset Value per share is calculated in accordance with the guidelines of the Association of Investment Companies. Net assets are stated inclusive of income received. Any opinions on individual stocks are those of the Company's Investment Committee and no reliance should be given on any such views. 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. Before investing in an investment company referred to in this document, you should satisfy yourself as to its suitability and the risks involved, and you may wish to consult a financial adviser
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