TIDMAIS

RNS Number : 5585B

Alternative Invest. Strategies Ld

05 March 2014

Alternative Investment Strategies Limited

(the "Company")

Interim Management Statement

This interim management statement relates to the period from 1 November 2013 to the date of publication of this statement and has been prepared solely to provide additional information in order to meet the relevant requirement of the UK Listing Authority's Disclosure and Transparency Rules, and should not be relied on by Shareholders, or any other party, for any other purpose.

Investment objective

Historically, the objective of the Company was to invest in a diversified portfolio of hedge funds on a worldwide basis with the aim of achieving superior absolute returns with low volatility. Since the Company's shareholders approved the Managed Wind-down of the Company on 12 June 2013, the revised investment objective and policy of the Company has been to seek to realise all existing assets in the portfolio with a view to maximising the return of invested capital to shareholders in an orderly manner.

Financial position and performance

In the period from 1 November 2013 to 28 February 2014 (the date of the latest available estimated weekly net asset value as at 21 February 2014), the Company's net asset value decreased by 2.8% to 135.86 pence and the shares were trading at a 4.1% discount to net asset value.

Investment Manager's review

The Company has now undertaken three compulsory partial redemptions as part of the Managed Wind-down, two of which were carried out during the period under review. On the 14 November 2013, 12,378,158 shares were redeemed at a redemption price of 139.44p while on the 14 February 2014, 17,089,501 shares were redeemed at a redemption price of 142.66p. At the close of business on the 13 August, prior to the first partial redemption on the following day, there were 108,171,052 shares in issue and as there are now 8,042,307 shares in issue as at 28 February 2014, it means that some 92.6% of the issued share capital has so far been compulsory redeemed during this wind-down process.

A large number of positions were redeemed out of the portfolio at the end of June 2013 with further sales made subsequently, such that by January, the Company only had one core manager holding. This was the Event Driven manager, Brevan Howard Credit Catalysts who has largely sourced gains from exposure to structured credits. The portfolio also contained illiquids without standard redemption frequencies with a weighting of 4.1% as at the end of January. The remaining other holdings were either cash or cash receivables.

The investment manager's review commentary covers the investment period from 1 November 2013 to 21 February 2014 and refers to the general environment and how it impacted the holdings of the Company during this period. November and December provided constructive months for most hedge fund managers with the highest gains being produced by the managers in the Long/Short Equity and Event Driven strategies. During November, rises were reported in US home prices and auto sales together with ongoing positive ISM data and this continued to help maintain investor interest in risk assets. Furthermore, the supportive accommodative monetary policy stance of central banks in the developed world was underlined by the confirmation in the US of the dovish Janet Yellen and by the interest rate cut in Europe from the ECB, as they were concerned over deflationary pressures. Equity market performance varied across geographies with good rises in China, the US and a particularly strong upward move in Japan compared with more mixed returns in Europe and wider spread losses in Developing Markets such as Russia, India and Brazil. The Long/Short Equity managers performed well in these market conditions as clear alpha generation was observable across the long books with a further small contribution, in aggregate, from short books. Positive returns were produced across the Event Driven strategy. Specialist Credit managers continued to source gains from structured credits while one of the managers sourced gains from more differentiated security selection and exposures to higher yields. The return provided by the equity special situation manager was also positive, albeit not as high. However, the Fixed Income Relative Value manager suffered from the movement of fixed income and money market curve positions and produced a small loss.

The decision by the Fed in December to reduce their monthly purchases by $10bn was well-received by markets with forward guidance indicating that base rates would be expected to stay low well past the time that the unemployment rate declined below 6.5%. Equity markets generally bounced strongly in the second two weeks of the month to produce positive figures across most developed markets with the US and Japan being at the higher end of the range. The Long/Short Equity managers performed well and produced positive returns. Gains were driven by strong stock selection on their long books while short positions generally proved to be costly. Market conditions remained fundamentally positive but with low levels of corporate activity in the traditionally quieter month of December. Gains were widespread for Event Driven managers in general and the two managers held in this portfolio were no exception. The Specialist credit manager sourced gains from structured credits and income related positions. However, the best performing manager in this area benefitted from their focus on equity special situations.

January provided a relatively dramatic start to the year in which the remaining Event Driven manager provided capital protection against the equity market weakness. The gains were impacted by a cash drag over this period as cash was accumulated prior to the third compulsory redemption of shares. The net asset value of Alternative Investment Strategies Limited returned 2.2% over the three month period from 1 November 2013 and rose from 139.79p to 142.80p.

Compulsory Partial Redemption of Shares

On 31 October, it was announced that GBP17,260,286.18 (equivalent to 46.0152p per share) would be returned to holders of shares on 13 November 2013 by way of a compulsory partial redemption of shares. This represented 33.0% of the Company's issued share capital at the time.

On 3 February, it was announced that GBP24,380,065.36 (equivalent to 97.0088p per share) would be returned to holders of shares on 13 February 2014 by way of a compulsory partial redemption of shares. This represented 68.0% of the Company's issued share capital at the time.

Compulsory Redemption and Total Voting rights

On 14 November 2013, the Board confirmed that 12,378,158 shares were redeemed at a redemption price of 139.44p and that the total number of shares in issue was then 25,131,808.

On 14 February 2014, the Board confirmed that 17,089,501 shares were redeemed at a redemption price of 142.66p and that the total number of shares in issue was then 8,042,307 and this remains the case as at the date of this announcement.

Removal of Currency Hedging

On 14 February, it was announced that in accordance with the proposals for the Managed Wind-down detailed in the circular to shareholders dated 15 May 2013 (the "Circular"), the currency hedging programme which had been maintained throughout the Managed Wind-down until the early part of February had been terminated. The Company's remaining underlying investments are denominated in US dollars so that, going forward, shareholders will be exposed not only to the investment performance of the Company's underlying portfolio holdings but also to fluctuations in the US dollar/Sterling exchange rate.

The Investment Manager is holding cash in Sterling and will be converting cash received by the Company as part of the Managed Wind-down into Sterling on receipt to help mitigate against potential future fluctuations.

From 1 November 2013 to 7 February 2014, the net asset value increased by 1.8% to 142.37p. By the 14 February, the currency hedge had been removed on the remaining assets and the net asset value had decreased to 135.86p by 21 February 2014, largely because of fluctuations in the US dollar/Sterling exchange rate.

Current Portfolio and Illiquid holdings

On the 21 February, it was announced that since the last investment update in respect of the portfolio as at 31 January, the Investment Manager had been able to realise all the remaining illiquid holdings (which accounted for 4.1% as at 31 January).

The Company's investments had the following breakdown as at 21February 2014:

24.5% Sterling cash

27.3% Brevan Howard Credit Catalysts

48.2% Cash receivables being US dollar amounts from former portfolio holdings

Source of data: International Asset Management Limited

Liquidation

The Board expects that the Company will be put into liquidation in May 2014, with a circular being despatched to shareholders in due course in order to convene the necessary general meeting to implement the liquidation. It is anticipated that a further distribution will be made to shareholders in May 2014 in the form of a first liquidation distribution shortly after the Company has been placed in liquidation.

Other than described above, the Board is not aware of any material events during the period from 1 November 2013 to the date of this announcement, which would have had a material impact on the financial position of the Company.

Investor Information

The latest available information on the Company can be accessed via www.aisinvest.com.

By order of the Board

Alternative Investment Strategies Limited

Enquiries:

Sean Molony Tel: 020 7734 8488

International Asset Management Limited

This information is provided by RNS

The company news service from the London Stock Exchange

END

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