Hawksmoor’s Vanbrugh fund is taking advantage of the discounts in two investment trusts that take different approaches to technology.
Vanbrugh holds the private equity investor trust, which invests in specialist venture capital funds and limited partnerships that invest mainly in early-stage to pre-flotation IT companies in the US. The trust recently announced a tender offer to buy back shares at net asset value, raising its share price by 10 per cent. The trust had been trading at a 30 per cent discount to NAV and Hawksmoor is keen to hold on to it. It believes that the discount is still wide enough to offer good value to investors who are prepared to wait.
Fund manager Daniel Lockyer says: “It is well advanced in winding down and paying cash back to shareholders at NAV. We are still holding it as we do not see where the downside is. It is a mature portfolio and it is going to take a while for cash to filter back to investors.
That is the reason for the discount – if you can wait, there is a decent return.”
Vanbrugh has also added a small position of around 0.5 per cent in the RCM technology trust, which invests globally in quoted technology firms. The investment was made through a placing at a 15 per cent discount to NAV and below the trading price.
Lockyer says: “If investment trust shareholders cannot find a way out by natural demand in the market, brokers have to speak to clients to try to place stock. People like us will say yes but it has got to be at a bit of a discount.”