Interim Management Statement

RNS Number : 6173G

Jupiter US Smaller Companies PLC

08 May 2014

 



Jupiter US Smaller Companies PLC

Interim Management Statement for the three months ended 31 March 2014

The Board of Jupiter US Smaller Companies PLC (the "Company") is pleased to announce its interim management statement for the quarter ended 31 March 2014.

Performance Summary

                                                31 March 2014                     31 December 2013

Net assets                             £161.26m                              £160.97m              +0.2%

NAV per share                      670.98p                                 669.77p                 +0.2%

Russell 2000 Index             703.62                                   702.58                   +0.2%

(sterling adjusted)

Share price                           633.0p                                   699.0p                   -5.4%

Premium/(Discount)           -5.7%                                      6.8%

Investment Manager's Report for the Quarter Ended 31 March 2014

During the three months to 31 March 2014 the NAV per share rose 0.2%. This compared to a rise of 0.2% in the Company's benchmark, the Russell 2000 Index (sterling adjusted). The market saw bouts of profit taking during the quarter, not helped by rising international tension. During the quarter, the rally in biotech and internet-related stocks, which had led the market for much of the year, seemed to come to an end. This resulted in a return at the end of the quarter to market conditions more favourable to value stocks, the kind favoured by the Company's conservative investment approach.

During the quarter, as a result of the transfer of management of the Company to Jupiter Asset Management from F&C Investment Management Ltd, the Company no longer qualified for inclusion in the F&C Savings Plan. This Scheme was the largest shareholder in the Company and selling by plan holders resulted in the shares moving from a premium to a discount.

The Board and its advisers believe that the remaining shares from the F&C Savings Plan were placed after the quarter end, thus removing the overhang created by the Plan's sales.

The best performing stocks that had most impact were pharmaceuticals manufacturer, Pernix Therapeutics, which experienced a turnaround as new management was put in place and fresh financing received; oil & gas contractor, Willbros Group, which announced good results; and Atlantic Tele-Network, where brokers raised their forecasts. Disappointing performance came from Conn's, where credit losses rose unexpectedly, and Chefs' Warehouse, after its recent acquisition disappointed.

There were a number of new stocks acquired, of which the largest position was in Goodrich Petroleum, an oil and gas exploration company focusing on oil shales. Significant additions were made to Conn's and LKQ. Several stocks were sold in their entirety, including GATX, ICF International and Willbros Group.

The company is not currently geared.

There has been no share buyback or share issuance during the period.

Outlook

The recent correction in the market is healthy. The long-term outlook for the American economy looks relatively bright given the impact of cheap energy, its superior demographic profile and renewed manufacturing competitiveness.

Robert Siddles

Fund Manager, Jupiter Asset Management Limited

Industrial Classification as at 31st March 2014

	%			%
Producer Durables	25.2		Energy	6.6
Financial Services	20. 0		Utilities	5.2
Consumer Discretionary	14.4		Material & Processing	4.0
Technology	11.7		Consumer Staples	2.8
Healthcare	10.1		Total	100

Portfolio Distribution on 31 March 2014.

                                                Percentage of Total Assets

	%
United States	96
Cash	4
	100

The Company's exposure to other UK listed investment companies was nil on 31 March 2014.

Top Ten Holdings on 31 March 2014

Company	Sector	Percentage of Total Assets
Premiere Global Services	Utilities	2.7
Atlantic Tele-Network	Utilities	2.4
Rex Energy	Energy	2.3
Conn's	Consumer discretionary	2.2
Granite Construction	Producer durables	2.2
Alere	Healthcare	2.2
ViaSat	Technology	2.2
FTI Consulting	Producer durables	2.2
Universal Truckload Services	Producer durables	2.2
Astec Industries	Producer durable	2.2
	Total	22.8

Investment Objective of the Company

The Company's investment objective is to achieve long-term capital growth by investing in a diversified portfolio primarily of quoted US smaller and medium sized companies.

The Board believes that this sector is a diverse and dynamic part of the North American market and continues to provide opportunities for capital growth over the long term. At the same time it considers the structure of the Company as a UK listed investment trust, with a fixed capital and an independent Board of Directors, to be well suited to investors seeking longer-term returns from this sector.

The Board recognises that by its nature the US smaller companies sector can be a risky asset class in which to invest. The sector is highly diversified with a great many companies from which to choose. Many companies are relatively immature, whether financially or operationally or in terms of management or market position, highly geared to growth and are particularly vulnerable to market and other changes. This investment objective is achieved through diversification of holdings across a variety of economic/industrial sectors. A list of top ten investments by sector is shown above

Investment Strategy and Policy

Against this background, the Company has adopted a disciplined and relatively conservative investment style that focuses on companies with;

·      a strong franchise

·      free cash flow

·      insider ownership by management and

·      shares which are considered by the Manager to be cheap at the time of investment.

Whilst the shares in these companies will not always be the best performing, the Directors believe that this is an excellent approach to long-term investment in this sector and one which has produced good results since the Company was launched in 1993.

Material Events

Following the recruitment of the Company's longstanding portfolio manager, Robert Siddles, by Jupiter Asset Management Ltd earlier in 2014 the management of the Company was transferred to Jupiter Asset Management Ltd on 21 February 2014 from F&C Investment Management Ltd.

At a General Meeting held on 8 April 2014 a resolution was passed to change the name of the company from F&C US Smaller Companies Plc to Jupiter US Smaller Companies Plc, effective 9 April 2014.

Availability of Monthly Fact Sheets

Monthly fact sheets for the Company are available for download from www.jupiteronline.com and by post or fax on request from the company secretarial department.

The Company's Ordinary shares are listed on the London Stock Exchange and the prices are published in the Financial Times and The Times under `Investment Companies'.

The Net Asset Values of the Company's ordinary shares are calculated weekly and can be viewed on the London Stock Exchange website at www.londonstockexchange.com (under the heading 'Market News').

Issued on behalf of the Board

Jupiter Asset Management Limited, Secretaries

8 May 2014

For further information, please contact:

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited

[e-mail] 

020 7314 4822

www.jupiteronline.com/JupiterUSSmallercompanies

The Company's Registered office is at 1 Grosvenor Place, London SW1X 7JJ.

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

 

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