Shares Magazine – May 23, 2019

GREAT IDEAS UPDATES

xx Xxxxxxxx 2019 | SHARES | 15

DESPITE A year-to-date rebound, our ‘buy’ call

on ƌŝƟƐŚŵƉŝƌĞdƌƵƐƚ;dDͿ is modestly in the

ƌĞĚ͘tĞƌĞŵĂŝŶĐŽŶǀŝŶĐĞĚƚŚĞƚƌƵƐƚŽīĞƌƐŝŶǀĞƐƚŽƌƐ

plenty of value, both within the underlying assets of

ƚŚĞƉŽƌƞŽůŝŽĂŶĚǁŝƚŚƚŚĞƐŚĂƌĞƐƚƌĂĚŝŶŐĂƚĂε͘κй

discount to NAV (net asset value).

:ŽĞĂƵĞƌŶĨƌĞƵŶĚͲŵĂŶĂŐĞĚƌŝƟƐŚŵƉŝƌĞĂŝŵƐ

ƚŽĂĐŚŝĞǀĞůŽŶŐƚĞƌŵĂďƐŽůƵƚĞƌĞƚƵƌŶƐďLJŝŶǀĞƐƟŶŐ

in undervalued assets. Since Bauernfreund took

ƐŽůĞƌĞƐƉŽŶƐŝďŝůŝƚLJĨŽƌƚŚĞƉŽƌƞŽůŝŽŝŶϮϬϭρ͕ŚĞŚĂƐ

ĐŽŶĐĞŶƚƌĂƚĞĚƚŚĞƉŽƌƞŽůŝŽ͕ƐŚĂƌƉĞŶĞĚƚŚĞĨŽĐƵƐŽŶ

ŝĚĞĂƐǁŝƚŚĂŶŝĚĞŶƟĮĂďůĞƌĞͲƌĂƟŶŐĐĂƚĂůLJƐƚĂŶĚŝƐ

ƐĞĞŝŶŐŽƉƉŽƌƚƵŶŝƟĞƐǁŝƚŚĂƩƌĂĐƟǀĞĚŝƐĐŽƵŶƚƐ͘

ƌŝƟƐŚŵƉŝƌĞŝƐĂƵƐĞĨƵůƉŽƌƞŽůŝŽĚŝǀĞƌƐŝĮĞƌŐŝǀĞŶ

ƚŚĞŝĚŝŽƐLJŶĐƌĂƟĐŶĂƚƵƌĞŽĨƚŚĞƐƚƌĂƚĞŐLJĂŶĚƚŚĞ͚ǀĞƌLJ

ĚŝīĞƌĞŶƚƌĞƚƵƌŶĚƌŝǀĞƌƐ͛ĨƌŽŵŵĂŶLJŽĨŝƚƐƉĞĞƌƐ͕

according to research group Kepler.

Kepler argues the underlying holdings of each

ŝŶǀĞƐƚĞĞĨƵŶĚĂƌĞŽŌĞŶ͚ŚŝŐŚůLJĚŝǀĞƌƐŝĮĞĚ͕͛ŵĞĂŶŝŶŐ

ƚŚĞƉŽƌƞŽůŝŽŝƐŶ͛ƚĂƐĐŽŶĐĞŶƚƌĂƚĞĚĂƐŝƚůŽŽŬƐ͘

It points out that ‘the discount remains wide

ďŽƚŚŝŶĂďƐŽůƵƚĞƚĞƌŵƐ͕ďƵƚĂůƐŽƌĞůĂƟǀĞƚŽŽƚŚĞƌ

investment trusts’.

MEDIA OUTFITƵƌŽŵŽŶĞLJ;ZDͿĐŽŶƟŶƵĞƐƚŽ
ũƵƐƟĨLJŽƵƌĨĂŝƚŚĂƐĂŬĞLJƉŝĐŬĨŽƌϮϬϭεĂƐƌĞƐƵůƚƐ
ĨŽƌƚŚĞƐŝdžŵŽŶƚŚƐƚŽϯϭDĂƌĐŚĐĂŵĞŝŶĂŚĞĂĚŽĨ
ĞdžƉĞĐƚĂƟŽŶƐĂƚƚŚĞĂĚũƵƐƚĞĚĞĂƌŶŝŶŐƐůĞǀĞů͘
Adjusted earnings before interest, tax,
ĚĞƉƌĞĐŝĂƟŽŶĂŶĚĂŵŽƌƟƐĂƟŽŶ;/dͿĐĂŵĞŝŶĂƚ
άκς͘ϮŵĂŐĂŝŶƐƚĂĨŽƌĞĐĂƐƚάκϬŵĂŵŝĚĂƌĞĚƵĐƟŽŶŝŶ
costs. The main driver of growth was the price and
ĚĂƚĂďƵƐŝŶĞƐƐǁŚŝĐŚŝƐƚŚĞŵĂŝŶƌĞĂƐŽŶǁĞĮŶĚƚŚĞ
investment case compelling.
The asset management arm, made up of
ƚŚĞƉƵďůŝĐĂƟŽŶ/ŶƐƟƚƵƟŽŶĂů /ŶǀĞƐƚŽƌ as well as
ŝŶǀĞƐƚŵĞŶƚƌĞƐĞĂƌĐŚ͕ƐĂǁƌĞǀĞŶƵĞĨĂůůϯй͕
ĐŽŵƉĂƌĞĚǁŝƚŚƚŚĞρйƐůŝĚĞƌĞƉŽƌƚĞĚĨŽƌƚŚĞƐĂŵĞ
period a year ago.
Finance director Wendy Pallot tells ^ŚĂƌĞƐ
ŵŽĚĞƐƚŝŶǀĞƐƚŵĞŶƚŽŶƚŚĞŵĂƌŬĞƟŶŐƐŝĚĞĨŽƌƚŚĞ
asset management business contributed to the
slowing decline.
As Pallot points out, if the company could
ƚƵƌŶƚŚŝƐďƵƐŝŶĞƐƐĨƌŽŵĂŶĞŐĂƟǀĞĐŽŶƚƌŝďƵƚŽƌƚŽ
performance to a point where it was holding steady,
ƚŚŝƐĐŽƵůĚŵĂŬĞĂďŝŐĚŝīĞƌĞŶĐĞƚŽƚŚĞǁĂLJƚŚĞ
group as a whole is perceived by the market.
EƵŵŝƐĂŶĂůLJƐƚ^ƚĞǀĞ>ŝĞĐŚƟŶŽƚĞƐ͚͗EŽǁĨƵůůLJ
independent, Euromoney can drive its focused
ŐƌŽǁƚŚƐƚƌĂƚĞŐLJǁŝƚŚĨƵůůĮŶĂŶĐŝĂůŇĞdžŝďŝůŝƚLJ͕Ă
broader more liquid shareholder base, and strong
management team. Net balance sheet cash and
ƐƚƌŽŶŐĐĂƐŚŇŽǁŐŝǀĞƐƚƌĂƚĞŐŝĐŽƉƟŽŶƐ͛͘

EUROMONEY

(ERM) £13.

BRITISH EMPIRE TRUST

(BTEM) 728p

Gain to date: 17.4%

Original entry point:

Buy at £11.72, 20 December 2018

Loss to date: 4%

Original entry point:

Buy at 758p, 24 May 2018

SHARES SAYS: È

Value investors should stick with British Empire

Trust at 728p with Bauernfreund continuing to

find bargains and given significant re-rating scope.

SHARES SAYS: È

Encouraging results. Keep buying.

660

700

740

780

BRITISH EMPIRE TRUST

2018 2019

FANTASTIC

STOCKS

FOR 2019

1100

1200

1300

1400

1500

EUROMONEY

2018 2019