AVI GLOBAL TRUST
PLC
Monthly Update
AVI Global Trust plc (the "Company")
presents its Update, reporting performance figures for the month
ended 31 May
2024.
This Monthly Newsletter is available
on the Company's website at:
https://www.assetvalueinvestors.com/content/uploads/2024/06/AGT-MAY-2024.pdf
Performance Total Return
This investment management report
relates to performance figures to 31 May 2024.
Total
Return (£)
|
Month
|
Calendar Yr
to date
|
1Y
|
3Y
|
5Y
|
10Y
|
AGT NAV
|
2.5%
|
8.6%
|
27.2%
|
32.3%
|
77.0%
|
172.2%
|
MSCI ACWI
|
2.3%
|
9.0%
|
20.3%
|
29.7%
|
72.0%
|
195.1%
|
MSCI ACWI ex US
|
1.2%
|
5.9%
|
13.6%
|
12.6%
|
37.6%
|
95.5%
|
Manager's Comment
AVI Global Trust (AGT)'s NAV increased +2.5% in
May
News Corp was the top contributor
over the month, adding +92bps as the shares rose +14%, benefitting
from both NAV growth (+8%) and narrowing of the discount (to 39%
from 42%). Schibsted and Oakley were also meaningful contributors
adding +51bps and +35bps apiece.
Entain was the weakest performer,
shaving - 43bps off NAV as the shares have continued to
underperform since we wrote it up in the
February newsletter. We provide
a short update on the position below.
Further to
last month's newsletter, during
May we completed the sale of our position in Hipgnosis. This
generated proceeds of £91m. We have been redeploying this into a
number of new positions which we will discuss in future letters.
Although discounts have generally narrowed as equity markets have
rallied since October 2023, we continue to find a wide variety of
interesting opportunities across all parts of our universe. We keep
this month's newsletter relatively short (and hopefully sweet) and
look forward to updating you on portfolio activity in the near
future.
Entain
Entain was the most significant
detractor, with the shares declining -14% in May. During the month
the company's capital allocation committee provided an update to
the market. For investors expecting major asset sales or changes
this was something of a damp squib, with Crystal Bet in Georgia the
only asset to be sold. We believe patience is needed as steps taken
over the last year start to pay off, and that improved fundamentals
- both for Entain's wholly owned assets and at BetMGM - will open
up numerous paths to unlock and grow value. Other investors are
seemingly losing patience, and we have been modestly adding to the
position. We note that several board members have been buying
shares in the market and like our alignment of interest with
several thoughtful and engaged shareholders.
KKR
During the month we exited the
position in KKR. Since the position entered the portfolio in 2020,
it has been a very strong source of returns for AGT. Our thesis was
simple: that the listed alternative asset management sector was
systematically undervalued, and that KKR (and Apollo, which we also
own) was itself undervalued relative to peers.
The market perception of alternative
asset managers was - and to an extent still is - that they are high
beta plays on risk assets. While we concede that both KKR and
Apollo have more on-balance sheet risk than peers, our contention
was that the market underestimates the defensive characteristics of
scale-advantaged managers that earn fees on long-dated committed
capital, and the powerful tailwinds for structural growth across
the industry. Evidence for this has been borne out in results and
was clearly articulated at the recent investor day we attended in
New York City in April.
Over time the market has come closer
to our way of thinking and the shares have re-rated significantly
to reflect the company's attractive long-term growth prospects.
Over the course of the investment, KKR generated an ROI of +217%
and an IRR of +59%, which compares to returns of +40% and +14% for
the MSCI AC World Index (all in GBP).
Contributors / Detractors (in GBP)
Largest Contributors
|
1- month
contribution
bps
|
% Weight
|
News Corp
|
93
|
8.8
|
Schibsted ASA 'B'
|
51
|
2.3
|
Oakley Capital
Investments
|
36
|
6.7
|
Nihon Kohden
|
26
|
2.9
|
Princess Private Equity
|
25
|
5.6
|
Largest Detractors
|
1- month
contribution
bps
|
% Weight
|
Entain
|
-43
|
2.5
|
Symphony International
Holdings
|
-26
|
2.0
|
Hipgnosis Songs
|
-20
|
0.0
|
FEMSA
|
-18
|
4.1
|
Kyocera Corp
|
-13
|
1.3
|
Link Company Matters Limited
Corporate Secretary
11 June 2024
LEI: 213800QUODCLWWRVI968
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