Results analysis from Kepler Trust Intelligence

RNS Number : 2174I

Majedie Investments PLC

10 December 2020

 

Majedie Investments (MAJE)

10/12/20

Results analysis from Kepler Trust Intelligence

Today Majedie Investments announced its annual report for the year ending 30 September 2020. Over the period, the NAV fell by 11.7% on a total return basis, while the share price fell by 27.6% as the discount widened from 12.4% to 28.7%.

The interim dividend was maintained at 4.4p and the board is recommending a final dividend of 7.0p which is the same as last year.

Over the long term, the board continues to believe that the significant holdings in MAM and a broad exposure to MAM Funds will be beneficial to shareholders. This has been demonstrated in the improved performance of the trust in the second half of the year.

Kepler view

UK equities have performed poorly versus the wider world however, and this means the UK equity weighting in the trust - its largest exposure - was the biggest detractor to MAJE's performance overall versus competitors in its previous global peer group.

It is crucial at this point to consider the nature of the trust, however, and the position the UK may be in once the dust settles after the decision on Brexit and the COVID-19  vaccine becomes widespread.

The flexible investment process that MAM adopts, and the detailed fundamental analysis at its core, mean it is well placed in periods of uncertainty. In the market disruption that ensued following the lockdown the managers were able to obtain exposure to high quality companies that have significant competitive advantages that they believe will persist for several years to come, at attractive prices.

Their view is that while many companies have been badly affected in the short term, they will emerge from the crisis stronger and fewer competitors.

Poor investor sentiment toward the UK since the Brexit vote, as well as the low weighting of technology stocks in the index, are the main reasons behind the UK's relative underperformance.

However, the managers continue to believe that the UK market offers an attractive number of opportunities and point out that it is currently trading at its cheapest level in forty years relative to the global indices...

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