REG - AVI Global Trust PLC - Monthly Factsheet

AVI Global TrustAnnouncement

10/05/2023 16:00

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RNS Number : 9962Y  AVI Global Trust PLC  10 May 2023

 

AVI GLOBAL TRUST PLC

 

Monthly Update

 

AVI Global Trust plc (the "Company") presents its Update, reporting
performance figures for the month ended 30 April 2023.

 

This Monthly Newsletter is available on the Company's website at:

https://www.assetvalueinvestors.com/agt/content/uploads/2023/05/AGT-April-2023.pdf
(https://www.assetvalueinvestors.com/agt/content/uploads/2023/05/AGT-April-2023.pdf)

 

Performance Total Return

 

This investment management report relates to performance figures to 31 March
2023.

 

 Total Return (£)   Month  Calendar Yr  1Y     3Y     5Y     10Y

                           to date
 AGT NAV            0.2%   0.5%         -0.6%  61.0%  41.6%  119.1%
 MSCI ACWI Ex US    0.1%   4.1%         2.9%   32.6%  24.0%  82.8%
 MSCI ACWI          -0.2%  4.2%         1.9%   41.2%  53.9%  165.1%

( )

 

Manager's Comment

 

AVI Global Trust (AGT)'s NAV increased by +0.2% in April.

 

Oakley Capital Investments (+4%) and Godrej Industries (+11%) were the most
significant contributors to returns, whilst Symphony International (-8%) and
Aker (-1%) were the largest detractors.

 

News Corp:

 

Over the last few months, we have built a position in News Corp - the Murdoch
family-controlled holding company.

 

Whilst the current structure was established in 2013, the relevant history
dates back to 1952, when a 21-year-old Rupert Murdoch returned to Australia
from Oxford to take over what was left of his father's newspaper business,
which had been much diminished by death duties and taxes. From this he built
one of the most dominant media empires of the 20th - and indeed 21st -
century, amassing vast wealth and notoriety in the process.

 

Today we believe that News Corp is one of the most misvalued and misunderstood
companies in our investment universe, trading at a 52% discount to our
estimated NAV. The NAV is principally comprised of the following assets: a 62%
listed stake in REA Group (36% of NAV), the Australian real estate classified
marketplace, and unlisted assets Dow Jones, HarperCollins and Move accounting
for 37%, 13%, and 8%, respectively.

 

In particular, Dow Jones is a crown jewel asset that has successfully evolved
the Wall Street Journal into a thriving digital consumer business, whilst both
organically and inorganically building a high-quality Professional Information
business that warrants a premium multiple, reflective of its sticky growing
revenues, high margins, and minimal capex requirements. The 2021 acquisition
of OPIS for $1.1bn marks a step-change in the importance and materiality of
Dow Jones' Professional Information business. The value and quality of this
business is misunderstood by the sell side and ignored by the market.

 

We estimate that Dow Jones alone is worth 2.5x News Corp's stub value. The
stub trades at just 3.1x EBITDA, with EBITDA expected to grow at high
single-digit to low double digit rates in the years ahead. This compares to
the S&P Communication Services sector median multiple of 10.1x, the New
York Times at 16.7x and Information Services peers at 22.3x.

 

Management is highly aware of, and dissatisfied with, the current valuation.
Although not consummated, the recent proposed sale of Move (8% of NAV)
indicates a willingness to make structural changes to unlock value, with
multiple potential levers. These include the sale of Move, a monetisation of
Foxtel, increased disclosure at Dow Jones - or, most tantalisingly, some form
of value unlock at REA Group, which accounts for 75% of News Corp's market
cap. Whilst timing is uncertain, the attractive underlying nature of the NAV
means that we can afford to be patient and makes time our friend. Returns from
NAV growth and discount narrowing appear attractive.

 

VNV Global:

 

During the month we exited VNV Global.

 

As way of reminder, we initially built the position in 2020 following the
COVID selloff when the company was trading on an excessively wide discount. In
turn we exited c.98% of the holding over the course of late 2021 and early
2022 at prices north of 100 SEK per share, when the company was on a narrow
discount / premium. We then rebuilt the position in the summer of 2022 when
the share price was in the SEK 20s and the discount had blown back out, as
part of our PE/VC-basket.

 

Our decision to sell comes following the announcement of a rights issue at a
~65% discount to NAV, with the intended proceeds being used to buy a secondary
stake in BlaBlaCar. Notwithstanding the extent to which they are buying
BlaBlaCar on a discount to its reported carrying value, an unforced discounted
rights issue alters what we consider to be the fair level of discount and
should be penalised. Over the course of our investment, we were impressed by
VNV's management team, however the rights issue raises questions of judgement,
and we did not feel adequate explanations for their actions were given.

 

Overall, it was a relatively successful investment for AGT, with a +38% ROI /
+61% IRR. This compares to an ROI of +12%/+10% for the MSCI ACWI ex-US and
MSCI ACWI respectively (all figures in Sterling).

 

Contributors / Detractors (in GBP)

 

 Largest Contributors        1- month contribution  % Weight

                             bps
 Oakley Capital Investments  31                     8.8
 Godrej Industries           25                     2.7
 Princess Private Equity     17                     3.3
 Pantheon International      16                     2.7
 Digital Garage              11                     2.1

 

 Largest Detractors               1- month contribution  % Weight

                                  bps
 Symphony International Holdings  -30                    2.8
 Aker ASA                         -29                    5.9
 Wacom                            -14                    3.1
 Pershing Square Holdings         -12                    6.0
 D'Ieteren                        -12                    2.4

 

 

Link Company Matters Limited

Corporate Secretary

 

10 May 2023

 

LEI: 213800QUODCLWWRVI968

 

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than the content of the Newsletter referred to above, is neither incorporated
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