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Robert D
Posted: 24 February 2023 15:33:16(UTC)
#909

Joined: 06/11/2016(UTC)
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A new 52-week low for RCP today.
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LondonYank84
Posted: 24 February 2023 19:09:26(UTC)
#910

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Annual report is due out next week. Hopefully should provide the detail to rebuild confidence In the shares, but let’s see…
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3 users thanked LondonYank84 for this post.
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Mr GL
Posted: 28 February 2023 07:04:07(UTC)
#911

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http://www.rns-pdf.londo...s/2166R_1-2023-2-27.pdf



28 February 2023

RIT Capital Partners plc

Results for the year ended 31 December 2022

RIT Capital Partners plc today published its results for the year ended 31 December 2022.

Summary:

·
2022 was one of the most difficult years for financial markets for more than a decade, and the first one in 150 years where US equities and government bonds both lost more than 10%
·
Our corporate objective and our investment approach are both long term in nature
·
Although our net asset value per share (NAV) total return for the year was down broadly in line with global equity markets, we continued to outperform over three and five years. Our three-year NAV return of 24.8% compares favourably to the MSCI ACWI at 17.7%, and our five-year return of 40.9% also outperformed the index at 35.5%
·
Over the longer term, our 10-year return of 140% compares favourably against many alternatives. Similarly, since RIT's inception, the NAV has compounded at almost 11% per annum, compared to the ACWI at 7%
·
This long-term success is attributed to maintaining a consistent approach. We combine active management and careful portfolio construction, with diversified and disciplined investment selection to target healthy returns over the long term and through the cycles
·
The Board has approved an increase in dividends for 2023, and expects to buy back shares accretively when in shareholders' interests

Financial Highlights:

·
NAV of 2,388 pence at 31 December 20221
·
NAV total return of -13.3% for the year, broadly in line with the ACWI at -12.9%
·
Share price ended the year at 2,125 pence representing an 11.0% discount

Performance Highlights:

·
Equity markets saw widespread declines over the year, with the S&P 500 down -18%, the NASDAQ down -32% and the FTSE 250 -17%. Government bonds also suffered, with long-term US bonds down -29% and UK bonds -40%
·
Our quoted equities and private investments saw declines, partially offset by gains from currency and with stable returns from absolute return and credit
·
Private investments remain a key feature of the overall approach and have cumulatively added around a 26% contribution to the NAV over the last three years. This portfolio is widely diversified across sectors and styles, with many investments showing strong performance, and the majority of the largest direct investments profitable
·
Outside of private investments, proactive portfolio management helped mitigate losses: maintaining low quoted equity exposure, and with well-timed shifts to more value and reflationary assets. Key performers included our exposures to Japanese and US value stocks, as well as one of our core credit managers. Weaker performance came from China, biotech and one of our external macro funds, which was redeemed
·
Returns benefited from ensuring a meaningful proportion of the currency exposure was outside of a weakening sterling

Dividends and Buybacks:

·
Dividends paid in April and October 2022 totalling 37 pence per share
·
The Board intends to pay a dividend of 38 pence per share in 2023 in two equal instalments, in April and October. This represents an increase of 2.7% over the previous year
·
Over the year, the Company continued to buy back shares accretively
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Mr GL
Posted: 28 February 2023 07:37:39(UTC)
#912

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comments specifically addressing the private equity part of their portfolio...


"A key driver of RIT's long-term track record has been private investments, which, whether direct investments or commitments to funds, have always been an essential part of our portfolio… Over 2020 and 2021 private investments added around 34% to total NAV; it is this growth in their value which has driven the increased proportion of NAV which they represent. In 2022, the sharp correction in public markets, and in particular tech markets, has meant that we have written down a portion of these significant gains… However, on a three-year basis, we estimate that our private investments added approximately 26% to total NAV - a strong return, and against the backdrop of both positive and negative years for markets…

While private investments are important, they represent only one part of our diversified multi-asset portfolio which is constructed and managed by JRCM on a holistic, top-down basis… Throughout 2022, your Board continued to review the strategy and portfolio composition in the context of our unchanging corporate objective. The fundamentals of the multi-asset diversified approach, and our long-term aims, have not altered. We continue to believe that, notwithstanding the declines we saw in 2022, this remains the right approach for our shareholders and is likely to generate the superior returns through the cycles that RIT is renowned for producing…"

and

"We believe that many high-quality companies in our private investment book as well as our quoted biotech exposure could benefit from the market taking a more discriminating view of long duration assets…"

and

"A key driver of RIT's long-term track record has been private investments, which, whether direct investments or commitments to funds, have always been an essential part of our portfolio. These are, by design, multi-year investments, which we are not forced to sell to fund redemptions; we held an investment in the Economist for 22 years, realising 27x our capital. More recent investments such as Coupang - one of our most successful ever private investments - materially boosted returns. Over 2020 and 2021 private investments added around 34% to total NAV; it is this growth in their value which has driven the increased proportion of NAV which they represent. In 2022, the sharp correction in public markets, and in particular tech markets, has meant that we have written down a portion of these significant gains. During the course of the year, the lower value of our private direct investments and fund holdings detracted from the NAV by some 6%. However, on a three-year basis, we estimate that our private investments added approximately 26% to total NAV - a strong return, and against the backdrop of both positive and negative years for markets. Over this period, we also received in the order of £500 million of distributions from this portfolio.
A key feature of private investments is, of course, the challenge in valuing positions which lack a daily traded share price. Our independent Valuation Committee has devoted significant time to ensuring that our investments are marked at levels which reflect both changes in market conditions and underlying operating performance. I highlighted the rigorous efforts we made in the first half of the year to ensure our direct investments were fairly valued, and we have continued this approach at the year end. For our private fund investments, we are more naturally reliant on the external managers or 'GPs'. While there is a well-understood, industry wide time-lag in their reporting, our NAV will always reflect the latest available information. As importantly, our Manager undertakes rigorous due diligence before committing to these funds - all of which are required to provide us with fair value.
Critically, the majority of our direct portfolio companies continue to exhibit strong operating performance. Our funds exposure is also targeting areas uniquely positioned to capture some of the most innovative and transformative structural trends that are underway, and the great bulk of our investments in funds are with managers with outstanding track records with whom we have long standing relationships developed over many years. Deploying our permanent capital in a diversified portfolio in these profitable areas has been, and remains to this day, a core ingredient in RIT's long term performance track record."

and

"While private investments are important, they represent only one part of our diversified multi-asset portfolio which is constructed and managed by JRCM on a holistic, top-down basis. For example, a higher allocation to the digital transition theme in our private investments was deliberately offset with a reduction within our quoted equity portfolio. Furthermore, our pessimistic outlook for markets also led us to run with the lowest quoted equity exposure for more than a decade. Within this book, we were more proactive than usual, with a continued shift from a bias towards long‑duration growth assets, to more value and reflationary assets."
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Mostly Rational on 28/02/2023(UTC), Big boy on 28/02/2023(UTC), mdss68 on 28/02/2023(UTC), Johan De Silva on 28/02/2023(UTC), dlp6666 on 28/02/2023(UTC), Logic Prophets on 28/02/2023(UTC), bill xxxx on 28/02/2023(UTC), Vind on 28/02/2023(UTC), Rocca Billy on 28/02/2023(UTC), Low Returns on 28/02/2023(UTC), Phil 2 on 28/02/2023(UTC), Auric on 01/03/2023(UTC)
Mr GL
Posted: 28 February 2023 07:44:02(UTC)
#913

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regarding discount...

"Share capital and dividend
Throughout your Company's history, the discount or premium at which our shares have traded relative to our NAV has seen wide variations. During 2022, we saw the discount widen, in part perhaps reflecting the monthly nature of our reporting during times of volatility, and also perhaps some more widespread concerns around private equity generally. Where not precluded by being in a closed period or approaching an imminent publication of NAV, we have continued seeking to capture value for shareholders by buying back shares as we approached a high single-digit discount. Over the year, we bought back some 515,000 shares accretively at a cost of £11.0 million and by the year end, we held some 690,000 shares in treasury. In addition, we have enhanced our reporting, providing additional commentary outside of our main six-monthly cycle."

- they have been precluded from buybacks recently due to the closed period ahead of their results...

***using 1917p at close this is a 21% discount to most recent NAV
a share price of 2196p is exactly 10.00% discount... so 'high single digits' implies buybacks could be made up to 2197p... if you see what I mean!
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Big boy on 28/02/2023(UTC), Mostly Rational on 28/02/2023(UTC), mdss68 on 28/02/2023(UTC), MartynC on 28/02/2023(UTC), dlp6666 on 28/02/2023(UTC), Logic Prophets on 28/02/2023(UTC), bill xxxx on 28/02/2023(UTC), Vind on 28/02/2023(UTC), Rocca Billy on 28/02/2023(UTC), Low Returns on 28/02/2023(UTC), Phil 2 on 28/02/2023(UTC), Auric on 01/03/2023(UTC)
Big boy
Posted: 28 February 2023 07:57:57(UTC)
#914

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Mr GL;259039 wrote:
regarding discount...

"Share capital and dividend
Throughout your Company's history, the discount or premium at which our shares have traded relative to our NAV has seen wide variations. During 2022, we saw the discount widen, in part perhaps reflecting the monthly nature of our reporting during times of volatility, and also perhaps some more widespread concerns around private equity generally. Where not precluded by being in a closed period or approaching an imminent publication of NAV, we have continued seeking to capture value for shareholders by buying back shares as we approached a high single-digit discount. Over the year, we bought back some 515,000 shares accretively at a cost of £11.0 million and by the year end, we held some 690,000 shares in treasury. In addition, we have enhanced our reporting, providing additional commentary outside of our main six-monthly cycle."

- they have been precluded from buybacks recently due to the closed period ahead of their results...


At the moment DCM is not a problem but do we know when and if the “Woodford” effect will come into play as we are seeing with SMT etc. Also the controlled Trust issue is maybe an issue as well.. could they move to CLDN size discounts as net sellers flood out and buyers hold off. Sorry to sound negative but IMO
DCM doesn’t solve all the issues.
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Mr GL
Posted: 28 February 2023 08:12:09(UTC)
#915

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Big boy;259041 wrote:
Mr GL;259039 wrote:
regarding discount...

"Share capital and dividend
Throughout your Company's history, the discount or premium at which our shares have traded relative to our NAV has seen wide variations. During 2022, we saw the discount widen, in part perhaps reflecting the monthly nature of our reporting during times of volatility, and also perhaps some more widespread concerns around private equity generally. Where not precluded by being in a closed period or approaching an imminent publication of NAV, we have continued seeking to capture value for shareholders by buying back shares as we approached a high single-digit discount. Over the year, we bought back some 515,000 shares accretively at a cost of £11.0 million and by the year end, we held some 690,000 shares in treasury. In addition, we have enhanced our reporting, providing additional commentary outside of our main six-monthly cycle."

- they have been precluded from buybacks recently due to the closed period ahead of their results...


At the moment DCM is not a problem but do we know when and if the “Woodford” effect will come into play as we are seeing with SMT etc. Also the controlled Trust issue is maybe an issue as well.. could they move to CLDN size discounts as net sellers flood out and buyers hold off. Sorry to sound negative but IMO
DCM doesn’t solve all the issues.


I am not sure if it is helpful tagging 'the Woodford effect' on a trust that has been doing what it says on the tin for so long ... IF your concern is the inherent illiquidity in private equity just say that... and then remember that Rit capital is an investment trust with permanant capital and so the Woodford effect should not specifically effect RIT... (remember Woodford started to dump holdings from his unit trust into Woodford permanent capital as his unit trust faced overwhelming liquidity issues - he made the problem for WPCT worse through bad risk management)

Re 'controlled trusts'

Caledonia is 48% owned by the Cayzer family
versus
The total interests notified to the Company that directly relates to, and is overseen by, the family offices of Lord Rothschild and Hannah Rothschild (including shares in which Lord Rothschild and Hannah Rothschild do not have voting rights conferred through a direct or indirect holding) is 20.94%

an approx 30% of NAV difference between controlled ownership or another way CLDN has 2.5x more controlled block (50 = 20*2.5) than RIT...
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Logic Prophets
Posted: 28 February 2023 08:30:10(UTC)
#916

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From all of the above.. for me, this is what stands out:

“Equity markets saw widespread declines over the year, with the S&P 500 down -18%, the NASDAQ down -32% and the FTSE 250 -17%. Government bonds also suffered, with long-term US bonds down -29% and UK bonds -40%”

Question… how can PE get through this unscathed when all other areas got hit quite badly? Does PE operate in a totally different universe?

Also:
“However, on a three-year basis, we estimate that our private investments added approximately 26% to total NAV - a strong return, and against the backdrop of both positive and negative years for markets”

“We estimate” ! Full year figures and they “estimate” ?
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Big boy on 28/02/2023(UTC)
Big boy
Posted: 28 February 2023 08:35:02(UTC)
#924

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Sorry my comments came over badly re Woodford and as we know it was also shareholders that didn’t
help with the herd as they started to stampede which caused problems of liquidity. It seems that SMT have a somewhat similar problem hence the high discount which again is caused by investors net selling but do management have a responsibility . Do we know why so many are selling (RCP) on what looks like a high and unjustified discount. Sometimes this shareholder momentum is difficult to control once started.
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Big boy
Posted: 28 February 2023 08:41:43(UTC)
#917

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Logic Prophets;259043 wrote:
From all of the above.. for me, this is what stands out:

“Equity markets saw widespread declines over the year, with the S&P 500 down -18%, the NASDAQ down -32% and the FTSE 250 -17%. Government bonds also suffered, with long-term US bonds down -29% and UK bonds -40%”

Question… how can PE get through this unscathed when all other areas got hit quite badly? Does PE operate in a totally different universe?

Also:
“However, on a three-year basis, we estimate that our private investments added approximately 26% to total NAV - a strong return, and against the backdrop of both positive and negative years for markets”

“We estimate” ! Full year figures and they “estimate” ?


Does any of this help you make a decision ie Buy/sell/hold. Many thanks..
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