For one of the UK’s oldest listed vehicles, Bankers Investment Trust remains rather adept at shifting around its portfolio in response to modern market shocks.
Shortly before the onset of Covid-19 early last year, the share price was trading at record highs, only to drop like a stone in late February as lockdowns were imposed.
It moved swiftly in response, though, jettisoning its holdings in travel-related stocks such as airports and transport companies and cutting back its weighting in financials.
A deft move to build up exposure to technology stocks helped it to capitalise on the rally around the beneficiaries of working from home. And after another rethink late last year, again shifting the balance of tech and financial stocks, the share price has once more been trading at record highs in recent days, beyond where it was before the pandemic.
Bankers Investment Trust was established in 1888 and was named because of the preponderance of directors who were involved in the financial sector. Its aim is to achieve capital and dividend growth for shareholders by investing in companies listed around the world, though almost a third of its holdings are in North American equities.
Its investments are managed by Janus Henderson and it benchmarks its performance against the FTSE World Total Return index.
The top of the portfolio is dominated by companies in the financial sector, including stalwarts such as the credit card providers Mastercard, American Express and Visa. Go back to the end of October, however, and the technology titans of Apple, Alphabet, owner of Google, and Facebook would also have been in its top ten investments. Microsoft has consistently been the biggest holding over the past couple of years.
What this rejig has meant in practice is that the trust has been buoyed by the boom in tech shares that took hold late last year and, having since reduced its positions, been shielded to an extent from the recent market sell-off.
That positioning has also helped to offset relative weakness elsewhere in the portfolio, specifically investments in Asia, excluding Japan and China.
The trust has been delivering solid, if not spectacular, investment returns. Taken over six months and a year, it has marginally undershot its benchmark in net asset value terms. While it has lagged the index by 4.5 per cent over three years, it has strongly outperformed it over five and ten-year periods.
So there is much to commend the trust. It is highly diversified, with a total of about 172 holdings, no one of them exceeding more than a small percentage of the portfolio.
It has a 54-year unbroken record of dividend increases. A recent decision to split the shares, effective as of yesterday, should also bolster liquidity. And at 0.5 per cent, the management fee is competitive.
However, the performance is safe rather than racy. Bankers Investment Trust sits in the Association of Investment Companies’ global sector along with a sizeable number of other vehicles, some of which have potentially more appealing metrics.
Taken against Witan, for example, which is larger, Bankers Investment Trust’s share price has delivered a better return over short and long periods. However, its dividend yield is lower and the payout has grown more modestly over the past five years, according to the AIC.
The shares, up ¾p or 0.8 per cent to 107p yesterday, carry a yield of just under 2 per cent, against 2.4 per cent for Witan, whose shares also trade at a discount to the net value of its assets against Bankers Investment Trust’s modest premium. While it’s not compelling for a prospective buyer, there’s no reason for existing owners not to hold on.
ADVICE Hold
WHY Recent performance has not been stellar but returns over the long term are strong and the dividend reliable
Lamprell
After a painfully loss-making start, could Lamprell’s push into the renewable energy sector finally be paying off? If so, it’s been a long time coming.
Lamprell was founded in Dubai in 1976 and for decades its mainstay activity was to build and refurbish oil rigs from yards in the United Arab Emirates. It listed on Aim in 2006 but later moved on to the main market, where it sits with a valuation of just under £257 million.
Having been spurred to diversify after work dried up in the wake of the oil price crash in 2014, the company won a contract two years later to build foundations and stands for Scottish Power’s East Anglia One wind farms in the North Sea.
The construction work for sub-sea wind farms is not entirely dissimilar to the oil rig facilities Lamprell was used to, but when it came to it not only was its bid priced too low, but the company also failed to deliver on time. That led it to book an $80 million hit on the contract and widened already high pre-tax losses for its 2017 financial year.
The outcome with its second big renewables venture has been happier. The group was contracted in 2018 to build 45 wind turbine stands for the Moray East farm, also in the North Sea, for $200 million.
Not only was the project completed on time and to budget by the end of September, but Lamprell managed to pick up additional work for the Seagreen wind farm off the Scottish coast along the way as well.
As a result, 60 per cent of revenues for the first half last year came from the renewables sector, though in part that reflects how the oil market has been struggling.
The outlook looks encouraging. With Lamprell’s growing expertise, it should win further work on wind farms. It has also just won a long-term engineering and construction contract from Saudi Aramco, which should generate regular work.
Shares in Lamprell, which last year consolidated three yards into one, remain linked to the oil price and yesterday gained 2¾p or 3.7 per cent to 78p on gains for Brent crude.
With the group likely to be loss-making until 2022 at the earliest and with no foreseeable dividend in sight, however, they are too risky a proposition for this observer.
After a painfully loss-making start, could Lamprell’s push into the renewable energy sector finally be paying off? If so, it’s been a long time coming.
Lamprell was founded in Dubai in 1976 and for decades its mainstay activity was to build and refurbish oil rigs from yards in the United Arab Emirates. It listed on Aim in 2006 but later moved on to the main market, where it sits with a valuation of just under £257 million.
Having been spurred to diversify after work dried up in the wake of the oil price crash in 2014, the company won a contract two years later to build foundations and stands for Scottish Power’s East Anglia One wind farms in the North Sea.
The construction work for sub-sea wind farms is not entirely dissimilar to the oil rig facilities Lamprell was used to, but when it came to it not only was its bid priced too low, but the company also failed to deliver on time. That led it to book an $80 million hit on the contract and widened already high pre-tax losses for its 2017 financial year.
The outcome with its second big renewables venture has been happier. The group was contracted in 2018 to build 45 wind turbine stands for the Moray East farm, also in the North Sea, for $200 million.
Not only was the project completed on time and to budget by the end of September, but Lamprell managed to pick up additional work for the Seagreen wind farm off the Scottish coast along the way as well.
As a result, 60 per cent of revenues for the first half last year came from the renewables sector, though in part that reflects how the oil market has been struggling.
The outlook looks encouraging. With Lamprell’s growing expertise, it should win further work on wind farms. It has also just won a long-term engineering and construction contract from Saudi Aramco, which should generate regular work.
Shares in Lamprell, which last year consolidated three yards into one, remain linked to the oil price and yesterday gained 2¾p or 3.7 per cent to 78p on gains for Brent crude.
With the group likely to be loss-making until 2022 at the earliest and with no foreseeable dividend in sight, however, they are too risky a proposition for this observer.
ADVICE Avoid
WHY Risks in big construction projects are unappealing
