Investment opportunities and trends

Investment Trusts offer lots of opportunities

You will recall the special opportunities I mentioned recently in several Investment Trusts? Triple Point Social Housing has been reading my missives. It has announced a small buy-back to cancel up to £5million of its shares at these seriously deep discounts and that has floated many of the similar boats. We don’t have that one but had you bought-in already you’d be sitting pretty… such action, albeit the snake eating its own tail, can have an exponential benefit in the right conditions.
Now read below why the opportunities on closed-ended funds are superior to what most investors out there possess… you only need some – not necessarily all your pot and what a difference it can make. These technical trading opportunities to act when the discount widens (unrelated to what the stocks and shares and underlying assets are doing themselves) are simply taking advantage of the headlesschickenism of some investors – which often means institutions which are beset by compliance teams making the calls as they react to yesterday’s news.

What else? The ex-Woodford Patient Capital Trust renames to the Schroders Capital Global Innovation Trust and the shares bounce 28% despite the net asset value slipping a tad… hmmmm – if investment management was as easy as a new name! Whilst we are losing here overall, we did buy some at the bottom.

More good news? One extra opportunity with ‘value investing’ is that invariably if the market won’t reflect the inherent value of something, then the whole company or fund will be acquired by someone else. We are pleased to report one of our AIM stocks has just received a bid – Sureserve Plc which was trading far too lowly for what it does. Indeed, we felt it was good enough to have in some mainstream ISAs too. We shall now have to recycle that money into tomorrow’s targets!  

Chartered Corporate Membership of the CII secured again

Thank you for the publicity relating to our renewed membership! Humbling but thank you!  
North Devon business retains ‘gold standard’ for a sixth year (

Investment trends – have you been caught?  

At that ‘moment’ it is easy to assume that what seems totally rational, as everyone else is believing it, is the right thing to do. That can often be the case with investment too. You (or your adviser with your money) buy the trendy stock, market or sector and then a little while later, things have changed. It doesn’t matter what great investing name is fronting the cause – you have to be somewhat contrarian (meaning independently minded) to consider whether what is being said is indeed sensible.

Take the Covid pandemic. We entered a new paradigm – suddenly working from home was imperative and a company called ‘Zoom’ saw its shares rocket as it was ‘the future’ and of course, no one would want physical work buildings any more. Add to that exercise bikes by Peloton and what magnificent investments you had. Meantime, at the same time add in the explosion in anti-fossil fuel and big institutions dumping oil stocks to pretend they were environmentally friendly, at the same time oil demand fell from the pandemic and a perfect storm was concocted. Of course, with hindsight, the great and the small can all look back and say ‘of course it was preposterous, it could never have endured’ but at the times, they were all on the band wagon and to not be was an uncomfortable place to be. Where was your investment manager…?

So in the middle of 2020, BP and Shell employed 155,000 people and saw $200billion of sales. Zoom employed 2,700 and had $620million of sales. In October 2020, Zoom was worth $160billion on the US Stockmarket. BP and Shell were worth $150billion – together.
Now, Zoom has collapsed to being worth $20billion and BP and Shell are worth $300billion and guess which ones have paid chunky dividends too. This is nothing about climate change nor emotions and yes, these subjects are very important but we shall be continuing to use fossil fuels for many years to come despite the need to invest even more in green alternatives and better energy efficiency. As for us, we avoided the tech hype and stocked-up on the old economy favourites which were being dumped, including energy. Of course we were not unscathed but the lack of missing those significant losses and the benefit of being in the places which regained poise meant we won twice – a rarity however hard any investor may try.

And of course you can be ‘caught’ without realising it; over calendar 2022 our performance of standing-still or slipping just a tad was significantly better than the vast majority and even those reliant upon apparently ‘low cost’ and ‘simple’, ‘low risk’ models lost-out. For example, Nest Pensions lost just under 10%, the People’s Pension 12% and ‘Now Pensions’ 20%. If you weren’t with us, how did you fare?      

BH Macro  

Readers will remember I mentioned this quoted Hedge Fund recently but the merger of Rathbones and Investec will result in the new company owning 35% of all the shares and above the level where a bid is required. Whilst that will be circumvented, the company won’t be able to buy more shares (only sell them) so does that mean that the share price is likely to fall to a discount as short sellers could push the stock down and its biggest supporter can do nothing about it as it can’t buy more shares?
This is an interesting new risk for these firms’ clients and indeed, it shows the liquidity risk issue too – if the combined firms’ new investment committee decided it didn’t like the Fund anymore, how could it possibly sell it or certainly at a fair price? It will have £100billion under management and if its compliance team and investment managers need to streamline how it manages its clients’ assets there will be consequences. Indeed with regulatory responsibilities and risks, how can the new firm possibly ensure that every client participates in each investment opportunity it may wish to pursue – even 1% of that is £1billion for example and a very chunky sum which precludes it from investing in many funds as they would be too small. It is not alone there – its size is a burden and not a benefit compared to smaller dynamic managers without that constraint.

Of course I am not commenting on its model and some of its individual brokers may have different ways of managing different clients’ assets but no firm can have an unmanaged morass of maverick managers all doing their own things either, good or bad. Will this suggest many of the brokers in each firm will look to depart for smaller boutiques so they can continue being more unique…? Is this the regulatory tail wagging the body of the dog and inadvertently ending-up with poorer consumer outcomes as a result?      

Outdoor theatre Lynton 1-12 August  

Outdoor summer theatre at Valley of Rocks, Lynton. Credit: John Spurr

We are pleased to be sponsoring this year’s production at the Valley of Rocks. See if you can support the performances! Appeal to keep outdoor theatre tradition going at Lynton’s Valley of Rocks   It’s apt – clients of ours know that they have found their own ‘Treasure Island’ to best look-after their capital after all! The troupe does need further financial support so if you can help, every pound would be most gratefully received.      

Investment funds trading on the stock exchange versus investment ‘funds’ which buy things on the stock exchange

Readers will know we like the former and there are many reasons for that and thus why they and we can generate better returns for our clients, including ‘technical’ reasons such as them being accessible at discounts to the underlying value of all the assets they own.
Stifel, broker researchers, have concluded that the discounts of the ‘sector’ generally have reached their highest levels since the financial crisis – 2008. This happens when investors sell their shares for prices lower than the value of the transparent pot of assets the company owns and when the demand for those shares is not as strong as it was/could be.

We like those times. Yes, it can mean ‘we’ underperform in the short-term as our own investments may not match the market in which these companies operate but conversely, the bigger the individual discount, the greater the likelihood that corporate action will unlock that – as we have enjoyed with announcements from four of our funds this year already. In theory, if that 16% discount evaporated to zero, it would mean we bank a gain of 19% without anything happening to the underlying investments at all and whilst we wait, our 84p enjoys the capital and income on £1’s worth of invested assets. What is there not to like? Whilst this figure is simply an ‘average’; even a reduction in the discount gives our investors a capital gain beyond what the value of their funds’ underlying investments achieve, which is on top.
If you are not with us, ask your adviser why they don’t use quoted Investment Funds/Trusts. It makes no difference to us – aside from using what is best for our clients.      


So the regulator has announced a payment of up to £235million should be made and a maximum 77p in the £1 for patient investors. The settlement is contentious – the administration company denies culpability and includes a voluntary payment by the parent company but the Regulator notes a fine would follow if it didn’t, albeit contested by the company. Some may still ask ‘where was the ‘oversight’ when the issues were arising; if early-on, novices like me in North Devon had raised eye-brows (if I had some!) from some of the things which were happening, is it too much to imagine that others with powers to intervene likewise were not reviewing what was going-on? However, it was indeed why we didn’t have any exposure to Mr Woodford, despite many advisers and investors chasing after his past results.
If you want to know who we are not chasing now… then you need to be a client and let us look after your money!

My best wishes

Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers