REG - Majedie Invs.PLC - Half-year Report

Majedie InvestmentsAnnouncement

22/05/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250522:nRSV6583Ja&default-theme=true

RNS Number : 6583J  Majedie Investments PLC  22 May 2025

22 May 2025

MAJEDIE INVESTMENTS PLC

HALF-YEAR FINANCIAL REPORT

 

Majedie Investments PLC ("Majedie" or the "Company") is pleased to present its
Half-Year Financial Report for the six months ended 31 March 2025.

 

The Half-Year Financial Report can be found on the Company's website at
www.majedieinvestments.com (http://www.majedieinvestments.com) or by
contacting the Company Secretary on telephone number 0131 378 0500.

 

Financial Highlights

                               Six months to 31 March 2025  Year to 30 September 2024

                                                                                       Change
 Net asset value per share     270.0p                       285.8p                     -5.5%
 Share price                   249.0p                       236.0p                     +5.5%
 Discount                      7.8%                         17.4%                      -
 Dividend per share            4.1p                         8.0p                       -
 Net asset value total return  (4.1)%                       21.5%                      -
 Share price total return      7.4%                         24.1%                      -
 Net assets                    £143.1m                      £151.5m                    -5.5%

 

Net asset value is calculated on a cum income basis and with debt at fair
value. Dividends are paid quarterly at 0.75% of NAV. The above dividend figure
of 4.1p reflects the two quarterly dividends declared in relation to the
financial year ended 30 September 2025 (2.1p for the quarter ended 31 December
2024 and 2.0p for the quarter ended 31 March 2025).

 

Highlights(1):

 

·      External Managers (61% of the portfolio) contributed +150bps to
overall performance. This was primarily due to strong returns from specialist
credit funds, with significant contributions from the Contrarian Emerging
Markets Fund and Context Partners Offshore Fund.

 

·      Direct Investments (19% of the portfolio) were the biggest drag
on performance, reducing overall returns by -250bps. Shares in SS&C
Technologies Inc. and Weir Group both performed well, whereas Evolent Health
Inc. and Basic-Fit NV detracted. Both positions have subsequently been sold.

 

·      Special Investments (15% of the portfolio) detracted by -170bps.
This was mainly due to weak mark-to-market performance from two
co-investments: Qena Capital LP, Class S, in the public equity of FTAI
Infrastructure Inc. and Engaged Capital Co-Invest XVI LP, in the public equity
of VF Corporation.

 

·      At the half-year end the Company announced that it has fully
repaid both the principal amount outstanding and the final interest payment of
the 7.25% Debenture stock due 31st March 2025, reducing the Company's ongoing
operating costs by approximately 1% per annum.

 

·      In keeping with the Company's policy to make quarterly dividend
payments of approximately 0.75% of NAV, during the period dividends totalling
4.1p were declared.

 

1 As at 31 March 2025. Past performance is no guarantee of future performance.
Returns are not guaranteed.

 

Christopher Getley, Chairman, commented:

 

"During a volatile and difficult period for markets, Majedie's Liquid
Endowment Strategy has given up some of the significant gains from the prior
twelve months; the NAV total return was -4.1% over the six-month period to 31
March 2025. The discount to NAV narrowed, ending the period at 7.8% and, as a
result, the shareholder total return was +7.4%. These returns include
quarterly interim dividends declared during the period which totalled 4.1p, a
5.1% increase on the period to 31 March 2024.

 

The NAV returns were similar in each quarter at -2.11% in the period to
December and -2.13% in the quarter to the end of March. During the
December-end quarter, the External Manager allocation added considerable
value, however a similar amount was given up by the Direct Equity portfolio
when excess investment returns concentrated around a very small number of
technology related stocks following the election of Donald Trump as the
President of the United States. Furthermore, the strong performance of the
absolute return focused External Managers in the March-end quarter was not
able to offset falls in equity focused External Managers and several Special
Investments.

 

The Board notes both the resilience of this performance during times of great
market uncertainty and that market moves are fully expressed in the NAV
calculation in a timely fashion due to the liquidity of the underlying
investments in the portfolio. Core to the strategy is a clear focus on those
investment ideas where Marylebone Partners' analysis has determined the
greatest conviction of strong returns over time, together with resilience to
unforeseen events and low correlation between portfolio positions.

 

Consistent with the comments in the 2024 Annual Report, the Debenture was
repaid at the end of March and so the Company now has no structural gearing.
The Board concurs with Marylebone Partners that the best way to capitalise on
the opportunities that will be created during this period of change is to
invest with discipline and require a margin of safety and that structural
leverage is not required in pursuit of inflation beating total returns."

 

Dan Higgins, Partner at Marylebone Partners and Investment Manager of Majedie,
commented:

 

"We have anchored Majedie Investment's portfolio in bottom-up ideas sourced
from less-crowded areas, where fundamentals are sound and have room to exceed
expectations. The investments sit on reasonable valuations, with resilient
cash flows and strong balance sheets. Equities remain central to the strategy
and, as liquid assets, they will experience price fluctuations, and we have
the liquidity to reallocate as new ideas emerge. Amid a more complex and
volatile backdrop, the merits of a well-constructed portfolio of idiosyncratic
ideas has become more apparent."

 

 

 For further information please contact:
 Marylebone Partners LLP                           +44 (0)7880 528774

 William Barlow

 J.P. Morgan Cazenove                              +44 (0)20 7742 4000

 William Simmonds

 Rupert Budge

 Cardew Group (PR Adviser to Majedie Investments)  +44 (0)20 7930 0777

 Tania Wild                                        +44 (0)7425 536903

 Luke Bramwell                                     +44 (0)7467 992924

 

 

About Majedie Investments (https://www.majedieinvestments.com/) PLC:

Majedie Investments PLC is an investment trust whose objective is to deliver
long-term capital growth whilst preserving shareholders' capital and paying a
regular dividend. The performance target is to achieve net annualised total
returns (in GBP) of at least 4 per cent. above the UK CPI, over rolling
five-year periods.

 

The Majedie Investments PLC portfolio features a combination of hard-to-access
special investments, allocations to funds managed by boutique third-party
managers, and direct investments in public equities.

 

LEI: 2138007QEY9DYONC2723

 

About Marylebone Partners (https://www.marylebonepartners.com/) :

Marylebone Partners LLP ("Marylebone") is an independent investment manager,
owned by its principals. It helps families, charities, endowments, trusts and
private investors to protect and grow their wealth in real terms.

Marylebone's defining characteristic is its ability to access differentiated
fundamental investments, many of which never come onto the radar screen of
other allocators. This capability is the key to delivering superior
performance outcomes over the years ahead.

 

The partnership was founded in 2013 with the vision of bringing a distinctive
investment approach to clients who sought a relationship based on trust and
transparency. This remains Marylebone's sole purpose today.

 

Marylebone Partners LLP is authorised and regulated by the Financial Conduct
Authority.

 

Investment Manager's Report

 

Review of markets

 

The optimism that lifted U.S. equity markets following Donald Trump's election
evaporated in the days following his inauguration. A bullish mood predicated
on the promise of tax cuts, deregulation and cheaper energy reversed as the
new President embarked on dismantling the established rules of global trade.
We now know this was only a precursor to the onslaught of the Trump tariffs
announcement on April 3(rd), which has sent shockwaves through the global
economy and financial markets.

 

Two further developments combined to create unease and accelerate a rotation
out of US assets.

 

First, threats emerged to the presumed supremacy of America's technology
giants. In January, the Chinese AI startup DeepSeek unveiled its R1
large-language model, which matched the performance of leading US players at a
fraction of the cost. Nvidia saw US$ 590 billion wiped from its value in a
single day. Later in the quarter, Chinese electric vehicle manufacturer BYD
unveiled a new battery capable of delivering 250 miles of range with only five
minutes of charging, sparking a notable decline in Tesla's stock.

 

Second, the new administration's  public rebuke of Ukraine prompted an
uncharacteristically swift and convincing policy response from Europe. In a
marked departure from its traditionally conservative financial approach,
Germany enacted fiscal policy reforms when Chancellor-elect Friedrich Merz
secured borrowing for investments of up to €1 trillion in the military and a
special fund for infrastructure.

 

Collectively, these events precipitated the largest quarterly underperformance
of US stocks since 1987.(1) The S&P 500 fell by -5% and the NASDAQ by
-10%, with the Magnificent Seven plunging by -15%, on average. Meanwhile,
European bourses received their second largest inflows in a quarter of a
century.(2) China's stock market gained by +20%.

 

With markets now in the grip of a trade war and allocators contending with the
possibility of a global recession, tectonic plates are shifting in a way that
could redefine financial markets for a generation. The period has been
characterised by a shift away from US momentum and growth strategies (as
demonstrated by the recent underperformance of the Magnificent Seven) towards
international stocks and those with a more defensive profile.

 

1 Source: MarketWatch.

2 BofA Global Research.

 

The portfolio

 

We have anchored Majedie Investment's portfolio in bottom-up ideas sourced
from less-crowded areas, where fundamentals are sound and have room to exceed
expectations. Equities remain central to the strategy and, as liquid assets,
they will experience price fluctuations. Amid a more complex and volatile
backdrop, the merits of a well-constructed portfolio of idiosyncratic ideas
become apparent, while the Company's closed-ended structure lets us stay
focused on the long term.

 

External Managers

 

The portfolio includes fourteen allocations to funds managed by external
managers, which collectively make up 61% of total net assets.

 

Of these, 31% of total net assets is to eight funds in the equity-centric
category and the remaining 30% is to six funds with an absolute return profile
(all of them specialist credit managers). Overall, this segment of the
portfolio contributed +150bps in the first half of the financial year.

 

Within the equity-centric category, each manager is a specialist in extracting
alpha from a structurally inefficient sector or region and/or operates with a
distinctive style. The position overlap between these funds and with our
direct investment book is minimal and statistical cross-correlation remains
low, suggesting we have achieved risk diversification without diminishing
return potential.

 

These managers were broadly flat over the period. Those who specialise in
Europe (e.g. The Helikon Long Short Equity Fund ICAV) and China (e.g.
Perseverance DXF Value Fund) performed best. In contrast, US focused managers
(Paradigm BioCapital Partners Fund, Praesidium Strategic Software
Opportunities Offshore Fund LP, Engaged Capital Flagship Fund Ltd) were not
immune to the sell-off since the start of the calendar year.

 

We continue to build a position in the Japan‑Up Limited Partnership II,
managed by a small-midcap activist manager based in Tokyo called Strategic
Capital.

 

Alongside equity-centric managers, the portfolio has substantial targeted
exposure to specialist credit strategies, which we consider more attractive as
a source of uncorrelated absolute returns than government bonds. These
managers specialise in situation-specific high-yield bonds and distressed
debt, where absolute returns come from combination of carried interest and
bond-price appreciation.

 

This component of the portfolio contributed +160bps for the period. All funds
contributed, with the Contrarian Emerging Markets Fund leading the way thanks
to gains in Latin American credit investments. This was supported by Context
Partners Offshore Fund Ltd, Silver Point Capital Offshore Fund Ltd and the
Eicos Fund SA SICAV-RAIF. As spreads have tightened in recent weeks and the
economic outlook has deteriorated, we have pared back the portfolio's exposure
to some specialist credit funds.

 

Direct Investments

 

The portfolio includes nine positions in publicly listed stocks and one ETF
holding, which collectively account for 19% of total net assets.

 

We believe the positive change within these listed companies is under
appreciated by the market, whilst the position in Global X Copper Miners ETF
(COPX) expresses our positive view on the metal.

 

Our selection criteria are stringent and unchanged, notably healthy top-line
growth prospects, strong business profitability, solid balance sheets and
management teams with proven track records. In aggregate (ex COPX), this
component of the portfolio trades at a multiple of 12.1x current year earnings
with a significant upside to our estimates to fair value.(3)

 

The direct investments component of the portfolio detracted by -250bps over
the period. Holdings in SS&C Technologies Inc, Weir Group plc, Breedon
Group plc, IMI plc, and Westinghouse Air Brake Technologies Corp all made a
positive contribution over the period. Evolent Health Inc. performed poorly
following the issuance of a profit warning, citing challenges related to
higher medical costs. Global X Copper Miners ETF slipped on tariff and growth
concerns. We used the weakness to add to the position as we expect a shortfall
in supply to meet demand, partly driven by increased demand from China, as its
economy responds to government's efforts to reignite growth.

 

We reduced our exposure to more economically sensitive equities such as
Westinghouse Air Brake Technology Corp and sold positions in Evolent Health
Inc and Basic Fit NV outright. Proceeds were re-invested in a new position in
Stabilus SE at what we believe to be an attractive entry point. The company is
a global leader in control solutions for a range of industries including
automotive, aerospace and industrial applications and we believe the market
underestimates recovery potential due to better pricing, higher margin
products and operational efficiencies. A shift in business mix towards
industrials and higher quality offerings is expected to support a rerating
from a low valuation multiple.

 

3 Source: Marylebone Partners LLP. As at 31 March 2025.

 

Special Investments

 

The portfolio owns thirteen Special Investments totalling 15% of the
portfolio.

 

Although performance in the category overall was lower in the first half of
the financial year, several positions recovered from mark to market losses
incurred towards the end of 2024. These include the portfolio's co-investment
in the public equity of Orizon Valorizacao de Residuos SA Warrants (a Waste
Management company based in Brazil), a co-investment in the public equity of
Portillo's Inc. and a co-investment in the public equity of CVS Health
Corporation.

 

The largest detractor to performance over the period was the investment in the
public equity of FTAI Infrastructure where weak results at its subsidiary
Transtar offset otherwise steady progress elsewhere.

We received partial returns from a tax-credit strategy (Marblegate Partners II
Overflow Fund), and the final tranche of the portfolio's investment in Metro
Bank's senior non‑preferred bonds.

 

We added three new Special Investments in the first half of the financial
year. The first is a litigation finance opportunity (Project Galicia) brought
to us by Bow Street Capital, whose TransAtlantis platform seeks to pursue
claims against Spanish banks and retailers who have issued credit cards at
either usurious rates or failed to meet transparency obligations. The
situation has limited jurisprudence or credit risk, and we believe it can
deliver attractive returns with zero correlation to financial markets.

 

The second (Project Philadelphia) marks JB Investment Management LLC's first
special purpose vehicle in over five years. The manager's six prior
investments have achieved outstanding returns, always by targeting a sector
undergoing structural change as the result of a 'catastrophic exit of supply'.
As distressed, high-cost producers are forced out, this should set the stage
for a pricing recovery that benefits the more resilient survivors.

 

The third new Special Investment (Project Zeno) is a co-investment in the
public equity of Bank of Cyprus, brought to us by Caius Capital. The bank is
healthy, profitable and over-capitalised and the strategy targets the expected
release of excess capital via increased dividends and share buybacks, driven
by greater shareholder engagement to unlock value and rerate the stock.

 

Currency

 

At a time when the dominance of the US Dollar is beginning to come into
question, it is also important to remind investors that a shareholding in
Majedie should be seen as a Sterling-denominated asset; gyrations in exchange
rates should not significantly affect its Net Asset Value. Except for Special
Investments and the portfolio's position in the Global X Copper Miners ETF, we
generally seek to neutralise the impact of currency fluctuations using
currency forwards.

 

Outlook

 

The second Trump administration believes that America's medium-term prosperity
depends on reducing the federal deficit and lowering the national debt as a
share of GDP. Alongside efforts to slash government spending, a cornerstone of
its economic policy is the imposition of tariffs on trading partners whom the
President and his advisors believe have treated the U.S. unfairly.

 

Back to the Great Depression era

 

As tends to be the case with Trump, there is a kernel of intuitive logic to
his actions. The instinct that persistent fiscal imbalances pose a long-term
threat to prosperity is not unfounded. However, by upending the global trading
system and traumatising the domestic economy, the manner of his actions is
potentially damaging and counterproductive.

 

Even before 'Liberation Day' the new administration's policies were hurting
business sentiment and making long term planning challenging for companies.
M&A activity stalled, and capital expenditure decisions were put on hold.
US consumer confidence wobbled, with expectations dropping well below the
threshold that usually signals a recession ahead.(4)

 

What is most unsettling for markets is that a self-inflicted slowdown may be
accompanied by resurgence of inflation.(5) JP Morgan economists had projected
that tariffs will result in a full-year GDP decline of -0.3%, down from an
earlier estimate of +1.3%, and they put the odds of a recession at 60%.
Following Trump's announcement of a 90-day pause for 'non-retaliatory
countries', those projections will presumably have to be revisited.

 

Aside from the daily tariff circus, trouble is brewing between Trump and Fed
Chair Jerome Powell, who will demur from easing when inflation is on the rise.
We also expect Congress to enact fiscal measures in due course, to mitigate
the impact of tariffs on voters' pockets before the midterm elections at the
end of 2026.

 

Over the medium term, the Trump presidency may (ironically) have galvanised
the other G7 countries into focusing on their shared priorities such as
security, industry and trade. Europe, especially Germany, is meanwhile
considering stimulus actions of its own. The ECB and Bank of England have more
scope to ease monetary policy because the strength in their currencies is
disinflationary at the margin.

 

Recent developments are, on balance, negative for risk assets. They do nothing
to change our view that the best long-term opportunities are in the some of
the over-looked out-of-consensus areas that already feature prominently in
Majedie's portfolio. Most reside outside of the United States.

 

While Trump sees the long-standing trade deficits as symptomatic of an abusive
relationship, the global flow of capital has been hugely beneficial to the
United States over many years. Since the Global Financial Crisis. Investors in
Europe, the U.K., Japan and Canada have bought substantially more U.S. assets
than Americans have invested abroad. Consequently, the U.S. Net International
Investment Position (NIIP) has widened from -$2.6 trillion to -$23.6 trillion
since 2009, while the Dollar index has risen from 93 to 121.(6)

 

4 Source: the Conference Board's Expectations index, which dropped 9.6 points
to 65.2, the lowest level in 12 years.

5 Treasury Secretary Scott Bessent does not concur, seeing them as a 'one time
price adjustment'.

6 Source: 13D Research.

 

Previously, we highlighted the stretched valuations of many U.S. financial
assets, a result of America's prolonged economic and market outperformance, as
well as the dominance of a handful of expensive mega-cap growth stocks within
the market-cap-weighted indices. Even after the recent rout, U.S. stocks
appear relatively expensive because the outlook for their earnings has
deteriorated alongside falling share prices. Regardless of whether the Trump
administration is following the usual tactic of taking an aggressive opening
posture to negotiate from a position of strength, lasting damage has been
done.

 

China has some room to manoeuvre. Roughly 20% of its GDP comes from exports,
so tariffs will undoubtedly hurt. However, the US takes only 15% of China's
exports. Importantly, we expect stimulus to ramp-up following last month's
Twin Sessions, at which a package was announced that included a higher budget
deficit (4% of GDP), 1.3 trillion Yuan in special treasury bonds, 4.4 trillion
in local government bonds, and 500 billion for bank recapitalisation to
support infrastructure, public services, and economic stability. For now,
fiscal stimulus is preferred to a destabilising outright currency
depreciation, especially as China seeks to build new regional trading
alliances.

 

Meanwhile, last year's measures are gaining some traction. Funds raised by
real estate developers have turned positive, and new home sales in Tier-1
cities rose by +20% year-over-year. The latest PMI showed that factory orders
expanded, suggesting exports were resilient in the face of initial tariffs. If
only a portion of China's vast domestic savings is channelled into consumption
and equities, it would have major positive effects on a market where
valuations are depressed, and allocators are underweight. There is no change
to our (selectively) constructive stance on Chinese equities.

 

Conclusion

 

The portfolio is well-diversified across equities, specialist credit, and
commodities. Our investments sit on reasonable valuations, with resilient cash
flows and strong balance sheets. Portfolio liquidity is good, providing us
with the flexibility to reallocate as new ideas emerge. For now, our focus
remains on capital preservation until visibility improves.

Portfolio as at 31 March 2025

                                                               Market Value (£000)   % of Total Assets less Current Liabilities
 Direct Investments
 Global X Copper Miners ETF                                    6,244                 4.4%
 Computacenter plc                                             3,316                 2.3%
 KBR Inc.                                                      2,916                 2.0%
 Weir Group plc                                                2,893                 2.0%
 SS&C Technologies Holdings Inc                                2,764                 1.9%
 Breedon Group plc                                             2,485                 1.7%
 IMI plc                                                       2,458                 1.7%
 Heineken NV                                                   1,978                 1.5%
 Stabilus SE                                                   1,297                 0.9%
 Cancom SE                                                     1,272                 0.9%
                                                               27,623                19.3%
 External Managers
 Contrarian Emerging Markets Offshore Fund Ltd                 10,864                7.6%
 Helikon Long/Short Equity Fund ICAV                           8,566                 6.0%
 Perseverance DXF Value Feeder Fund Ltd                        7,905                 5.5%
 Silver Point Capital Offshore Fund Ltd                        7,821                 5.5%
 Millstreet Credit Offshore Fund Ltd                           7,280                 5.1%
 Praesidium Strategic Software Opportunities Offshore Fund LP  6,132                 4.3%
 Eicos Fund SA SICAV-RAIF                                      6,051                 4.2%
 CastleKnight Offshore Fund Ltd                                6,045                 4.2%
 Context Partners Offshore Fund Ltd                            5,533                 3.9%
 CQS Credit Multi-Asset Fund                                   5,185                 3.6%
 Paradigm BioCapital Partners Fund Ltd                         5,164                 3.6%
 Briarwood Capital (Offshore) Ltd                              5,061                 3.5%
 Japan-Up Limited Partnership II                               3,169                 2.2%
 Engaged Capital Flagship Fund Ltd                             2,361                 1.7%
                                                               87,137                60.9%
 Special Investments
 Bank of Cyprus Holdings Ord                                   2,973                 2.1%
 Sprott Uranium Miners ETF                                     2,435                 1.7%
 Engaged Capital Co-invest XVII LP                             2,363                 1.7%
 GCM Suggestivist I Offshore Partners LP                       2,328                 1.6%
 JB Investments Offshore Fund IV Ltd                           2,060                 1.4%
 Orizon Valorizacao de Residuos SA Warrants                    2,056                 1.4%
 Engaged Capital Co-invest XVI LP                              1,963                 1.4%
 Qena Capital LP Class T                                       1,588                 1.1%
 Impactive Balentine Fund LP                                   1,122                 0.8%
 Marblegate Partners II Overflow Master Fund LP                1,011                 0.7%
 Sachem Cove Special Opportunities Fund LP                     991                   0.7%
 Other Special Investments                                     375                   0.2%
                                                               21,265                14.8%
 Other Investments (including current assets investments)      58                    0.1%
 Total Investments                                             136,083               95.1%
 Cash and Cash Equivalents                                     6,387                 4.5%
 Net Current Assets                                            637                   0.4%
 Total Assets less Current Liabilities                         143,107               100.0%

 

 

Dan Higgins

Marylebone Partners LLP

21 May 2025

 

 

FURTHER INFORMATION

A copy of the Half-Year Financial Report will be submitted shortly to the
National Storage Mechanism ("NSM") and will be available for inspection at the
NSM, which is situated at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) , in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.

 

END

Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.

 

LEI: 2138007QEY9DYONC2723

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  IR PKDBNPBKDCPB