The fund industry is striving to provide better returns for investors, sometimes with help from activist investors. This was seen with Alliance Trust (ATST), whose activist investor Elliot Advisors managed to oust the trust’s chief executive Catherine Garrett-Cox last year. Alliance Trust’s share price shot up 36.4% in the space of a year after Elliott pushed through its other corporate actions.
Analyst Liberum says investors in asset managers are sick of poor performance, persistent discounts to the fund’s net asset value and illiquidity issues. The analyst looks at three property related funds; Vinaland (VNL:AIM), Macau Property Opportunities (MPO), and Fondul Proprietatea (FP.) and their efforts to benefit investors.
Emerging market opportunities
Conor Finn, analyst at Liberium, says his firm highlights the funds with potential for re-rating, with prices that shouldn’t go down. Vinaland has holdings in Vietnamese property so not the most liquid assets to say the least.
Since the Vietnamese property bubble burst in 2009, the fund has returned $135m to shareholders to date through an ongoing share buyback. The fund is divesting itself of assets and has ‘the potential to realise significant value as further projects are divested throughout 2017 and 2018’. Its share price has risen by 21% since June last year to $0.70.
Macau Property Opportunities has faced major problems due to government interventions in the real estate market (which make up the fund’s holdings) but is recovering well. Liberum says the recent investor update provides evidence of a real estate market recovery including the $5m sale of a One Central apartment at a 13% premium to book value.
Despite a slight slip in its share price today of 1.05% down to 176p, its price is up by 45.7% since the start of the year.
Compensation
Fondul Proprietatea is a Romanian restitution fund established in 2005 to compensate individuals who had lost assets through confiscation in the communist era. Fund manager Frankin Templeton has distributed $1.9b to shareholders since 2010. Liberum thinks this year could be good for Fondul as the new Romanian government may potentially finalise the initial public offering of Hidroelectrica, one of the largest power generators in the country.
The plant makes up for 29% of the fund and Fondul is expected to sell 5-10% into the IPO which Liberum thinks could be a boost to the value in Fondul's portfolio given the recovery in energy stocks. Its share price is slightly down today by 0.47% at $10.6 although has been fairly consistent despite repeated legal challenges over how the fund is managed.
