Herald Investment Trust PLC on Wednesday reported a slight decrease in its net asset value and mixed investee performances, but said its portfolio remains generally sound overall.
The London-based investment trust, which specialises in technology, media and communications companies, said NAV per share at June 30 was 2,094.4 pence, down 0.2% from 2,099.1p at December 31.
The stock was up 2.6% at 1,813.99p in London on Wednesday morning.
Chair Andrew Joy said the NAV decline was ‘disappointing’, but reassured investors that ‘underlying trading across the diverse portfolio of investee companies has generally been sound and met expectations.’
Herald also reported a £8.3 million pretax loss for the six months ended June 30, compared with a £440.5 million loss for the same period in 2022.
The trust declared no interim dividend, unchanged from last year, and said it does not anticipate any payouts ‘for some time.’
Results from Herald’s investee companies varied considerably by region. Its UK portfolio showing a negative 11.5% internal rate of return, which Joy called ‘particularly poor’; North America by contrast was ‘particularly good’ with a positive 21.4% return. The Asia Pacific portfolio’s return was positive 7.5% while that of Europe, the Middle East & Africa was negative 3.0%.
In each region, returns were ‘both positive and significantly better’ from companies with market capitalisations over $3 billion.
‘Although there is some success bias, this difference largely reflects the collapse in liquidity in the smaller companies market,’ Joy commented.
Herald said its best performing investee was California-based Super Micro Computer Inc, whose ‘stellar performance’ contributed £47.1 million or 77% of the North America return.
Overall, Joy said the poor UK performance ‘reflects stock market conditions more than poor investee company fundamentals.’ However he claimed the latter does apply to WANdisco PLC, IQE PLC and NCC Group PLC which yielded a £19.0 million total negative return. Next 15 Group PLC, Telecom Plus PLC and Zoo Digital Group PLC meanwhile yielded a negative £18.9 million return.
Herald ‘continues to view the medium-term prospects with confidence.’ However, Joy acknowleged that ‘The geopolitical and economic environment remains disturbing, which the weight of government debt to be financed globally overhangs.’
‘Nevertheless, in an environment of limited global growth with the probability of recession as major economies adjust to higher interest rates, our manager continues to believe that the [technology, media and telecom] sector has strong relative attractions.’
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