Rit Capital Partners (RCP)

[yieldhog]

I bought some shares in RCP just under two years ago. They were already trading at a record discount to NAV but have since widened even further. I am currently down about 16% on my purchase price of 2076p. However, the latest RCP actual NAV is 2362. Is this a good time to double up at the current market price of 1788 and discount of around26% ?

In the last annual report (2022) the fund managers had this to say:

"We are all shareholders in RIT and firmly believe that
our tried and tested approach remains the best way to
manage money over the long term, balancing caution
with deploying risk capital to ensure that investors’
capital grows through the cycles. Over the last 10 years,
our NAV per share total return of approximately 140%
stands up well against other investments and often with
considerably less risk. Even on a shorter time horizon, we
believe our approach of combining capital preservation
with capital growth is a powerful one. Indeed, if we
consider the past 20 years of annual NAV returns, not
only have we never lost money on a rolling three-year
basis, but we have generated healthy growth averaging
10.2% per annum. It is this combination which sets us
apart from the majority of other trusts."

Y

[Dod101]

As it happens I just bought some more yesterday with some spare dividends. They seem well oversold to me. I have held them for some time and well in the money with them even at current prices.

Dod

[monabri]

As it happens I just bought some more yesterday with some spare dividends. They seem well oversold to me. I have held them for some time and well in the money with them even at current prices.

Dod

It might well indeed be that RCP are oversold..after all, over the last 5 years, the total return of "Company X" is significantly higher than that of RCP -(Company X revealed below).

From the data tabulated below the graph:
RCP (5 years TR) = 0.6%
Company X (5 years TR) = 7.3%

Looking at the graph ( a 10 year view), one might infer RCP has been 'out of favour' for the last 2 years (Dec 2021).


(On a basis of all dividends reinvested).




Of course, over a longer timescale.... https://www.itinvestor.co.uk/2020/06/20 ... -compared/

(sort the table by clicking on the table headings - specifically the "total" column)






(Company X being ....Lloyds Bank )

[yieldhog]

I should have mentioned that RCP is in my taxable account and hence the low yield is more suited to this fund rather than my SIPP or ISA. SMT is also in the taxable account but currently showing a profit, albeit over a different timeframe. Pleased to see they are the top two mentioned in the earlier table listed in this thread.

Y

[scotia]

I bought some shares in RCP just under two years ago. They were already trading at a record discount to NAV but have since widened even further. I am currently down about 16% on my purchase price of 2076p. However, the latest RCP actual NAV is 2362. Is this a good time to double up at the current market price of 1788 and discount of around26% ?

In the last annual report (2022) the fund managers had this to say:

"We are all shareholders in RIT and firmly believe that
our tried and tested approach remains the best way to
manage money over the long term, balancing caution
with deploying risk capital to ensure that investors’
capital grows through the cycles. Over the last 10 years,
our NAV per share total return of approximately 140%
stands up well against other investments and often with
considerably less risk. Even on a shorter time horizon, we
believe our approach of combining capital preservation
with capital growth is a powerful one. Indeed, if we
consider the past 20 years of annual NAV returns, not
only have we never lost money on a rolling three-year
basis, but we have generated healthy growth averaging
10.2% per annum. It is this combination which sets us
apart from the majority of other trusts."

Y

A lot has happened in 2023 since the last report in 2022
Looking at the total return over 5 years to the present we have

In the first 3 years the Blue graph of RCP (RIT Capital Partners ) climbed (with a substantial intermediate dip) to around 50%, then in the past two years it has dropped down to near zero, and it is not obvious that the decline has been halted. The total return of a developed world tracker (Vanguard VEVE) is shown in the Yellow graph - so it looks like the problem does not lie in the global equity market.
Much of the decline is due to a substantial increase in the discount. Why? The investment policy of RIT is complex, and not easily followed by the average (at least me!) investor. Is it possible that some well versed investors think that the NAV going forward is not as secure as it seems? Or is it simply your average investors piling out before things get worse?
I chose the 5 year period , because the KID suggests that this should be the minimum holding period - and I suppose that currently a 5 year investor can get out with no loss or gain.

Graphs from Hargreaves Lansdown
I hold VEVE but not RCP

[Dod101]

There are a lot of unquoted holdings in RCP and I suspect that that has a lot to do with the valuation. It relies very much on the managers to value the assets. Also some pretty obscure stuff. That is what attracts me though because there is no way I could access this stuff myself.

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

Dod

[Lootman]

There are a lot of unquoted holdings in RCP and I suspect that that has a lot to do with the valuation. It relies very much on the managers to value the assets. Also some pretty obscure stuff. That is what attracts me though because there is no way I could access this stuff myself.

Yes I had also assumed that it was the private equity holdings that are the cause of that discount and that could all be down to using conservative valuations. My pure play in that area is Blackstone (BX) and that is up 70% in the last year, so things may be looking up for private equity,

More generally RCP is quirky and goes its own way, making it is useful diversifier from more mainstream funds and trackers..

[bluedonkey]

RIT is worse over 1, 3, 5 and 10 years than many other ITs, such as MYI, F&C, Witan, etc. It just doesn't seem worth investing in. I might be missing something. Figures from AIC website.

[scotia]

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

Dod

The 5 year total return of Vanguard Developed World Tracker was 68.0%
Only one of the top ten in the list exceeded this value - JP Morgan Global Growth and Income returned 102.6%
The Alliance Trust (number 18 in the list) returned 68.4% - beating the tracker by a whisker
Why do I pay for skilled stock picking IT managers to be out-gunned by a tracker?

[Lootman]

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

The 5 year total return of Vanguard Developed World Tracker was 68.0%
Only one of the top ten in the list exceeded this value - JP Morgan Global Growth and Income returned 102.6%
The Alliance Trust (number 18 in the list) returned 68.4% - beating the tracker by a whisker
Why do I pay for skilled stock picking IT managers to be out-gunned by a tracker?

Apple is up over 400% in the last 5 years, has a market cap over $3 trillion and sits at an all-time high of just shy of $200 a share. You can see similar but slightly less impressive numbers from other US megacap tech shares like Nvidia, MicroSoft etc. And even "boring" old Berkshire Hathaway is up 90% in that period.

The average UK-centric IT probably under-weighted those, an error that is near impossible to compensate for. In fact the S&P 500 almost doubled in that period and, again, most UK ITs would have been under-weight the US.

[Dod101]

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

Dod

The 5 year total return of Vanguard Developed World Tracker was 68.0%
Only one of the top ten in the list exceeded this value - JP Morgan Global Growth and Income returned 102.6%
The Alliance Trust (number 18 in the list) returned 68.4% - beating the tracker by a whisker
Why do I pay for skilled stock picking IT managers to be out-gunned by a tracker?

If these numbers are correct I am happy with them since I hold both Alliance and JGGI. More interest than a boring tracker.

Dod

[monabri]

There are a lot of unquoted holdings in RCP and I suspect that that has a lot to do with the valuation. It relies very much on the managers to value the assets. Also some pretty obscure stuff. That is what attracts me though because there is no way I could access this stuff myself.

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

Dod

I answer to the question "how up to date " ..the report is 2020 (the date on tbe report in the link).

I've added ATST to the comparison...curve B ( red).

Source : https://www2.trustnet.com/Tools/Chartin ... O:GLBLGRTH



A cheap ETF ( eg Vanguard's VUSA with 0.07% costs beats all of the above...comfortably.

[monabri]

I am not sure how up to date monabri’s table is but I would have expected Alliance to be much higher. It has had good results for the last few years.

Dod

The 5 year total return of Vanguard Developed World Tracker was 68.0%
Only one of the top ten in the list exceeded this value - JP Morgan Global Growth and Income returned 102.6%
The Alliance Trust (number 18 in the list) returned 68.4% - beating the tracker by a whisker
Why do I pay for skilled stock picking IT managers to be out-gunned by a tracker?

Ask me one on sport? However, as we see from the above, like Manchester Utd, past performance is no guide....etc. ( but it might be good enough to qualify for the European Cup which will be ok).

[scotia]

The 5 year total return of Vanguard Developed World Tracker was 68.0%
Only one of the top ten in the list exceeded this value - JP Morgan Global Growth and Income returned 102.6%
The Alliance Trust (number 18 in the list) returned 68.4% - beating the tracker by a whisker
Why do I pay for skilled stock picking IT managers to be out-gunned by a tracker?

Apple is up over 400% in the last 5 years, has a market cap over $3 trillion and sits at an all-time high of just shy of $200 a share. You can see similar but slightly less impressive numbers from other US megacap tech shares like Nvidia, MicroSoft etc. And even "boring" old Berkshire Hathaway is up 90% in that period.

The average UK-centric IT probably under-weighted those, an error that is near impossible to compensate for. In fact the S&P 500 almost doubled in that period and, again, most UK ITs would have been under-weight the US.

Yes - its a good number of years ago since it became obvious that the FTSE 100 was lagging seriously behind other indices, and the US was forging ahead. So I also hold an SP500 tracker (CSP1) which has a 5 year total return of 91.6%, and a Nasdaq 100 tracker (CNX1) which has a 5 year total return of 152.1%. But does every dog have its day? Could the US market be overblown, and could investors see an untapped value in the FTSE 100? I keep a sizeable spread in my investments - just in case.

[Lootman]

Apple is up over 400% in the last 5 years, has a market cap over $3 trillion and sits at an all-time high of just shy of $200 a share. You can see similar but slightly less impressive numbers from other US megacap tech shares like Nvidia, MicroSoft etc. And even "boring" old Berkshire Hathaway is up 90% in that period.

The average UK-centric IT probably under-weighted those, an error that is near impossible to compensate for. In fact the S&P 500 almost doubled in that period and, again, most UK ITs would have been under-weight the US.

Yes - its a good number of years ago since it became obvious that the FTSE 100 was lagging seriously behind other indices, and the US was forging ahead. So I also hold an SP500 tracker (CSP1) which has a 5 year total return of 91.6%, and a Nasdaq 100 tracker (CNX1) which has a 5 year total return of 152.1%. But does every dog have its day? Could the US market be overblown, and could investors see an untapped value in the FTSE 100? I keep a sizeable spread in my investments - just in case.

The mean reversion idea that "surely next year is the year that the UK finally starts to out-perform the US" has been wrong for a good 30 years now. Sterling has been declining against the dollar for most of my lifetime.

At some point one might start to suspect that this is more structural than cyclical.

[Jam2Day]

Yes - its a good number of years ago since it became obvious that the FTSE 100 was lagging seriously behind other indices, and the US was forging ahead. So I also hold an SP500 tracker (CSP1) which has a 5 year total return of 91.6%, and a Nasdaq 100 tracker (CNX1) which has a 5 year total return of 152.1%. But does every dog have its day? Could the US market be overblown, and could investors see an untapped value in the FTSE 100? I keep a sizeable spread in my investments - just in case.

The mean reversion idea that "surely next year is the year that the UK finally starts to out-perform the US" has been wrong for a good 30 years now. Sterling has been declining against the dollar for most of my lifetime.

At some point one might start to suspect that this is more structural than cyclical.

Hardly surprising when you consider the UK has vacillated between US and the EU for far too long with no end in sight of the idiotic politics in this country. I think we could learn a few things from some of our smaller former colonies on how to actually run a productive economy starting with Singapore.

[bruncher]

New CEO

After an extensive international search, the Board of RIT Capital Partners plc ('RIT') is delighted to announce the appointment of Maggie Fanari as the CEO of its investment manager J Rothschild Capital Management Limited ('JRCM'). Maggie will take up the role of CEO in March 2024.

Maggie has long experience of leading successful teams investing across asset classes and geographies in one of the largest and most respected investment companies in the world. She is currently Senior Managing Director and Global Group Head High Conviction Equities at Ontario Teachers' Pension Plan ('OTPP') and has been with OTPP since 2006.

James Leigh-Pemberton, Chairman of RIT said "We are delighted to appoint Maggie to the role of CEO of JRCM. The track record of the team she has led at OTPP has been outstanding. She knows RIT and JRCM well, and we look forward to working with her to deliver the exceptional long term returns to our shareholders which have been the hallmark of RIT over the years."

Maggie Fanari said "I am delighted to be joining JRCM and look forward to leading an exceptional team to deliver significant value for shareholders. Having been a director on the board over the past four years, I believe there is tremendous potential to further scale and grow the firm by building on its strong foundation of active management. The firm's strategy of investing across asset classes and geographies, with a unique network of tier one partners, and world-class brand sets the firm apart from its peers to deliver enhanced returns through a globally diversified portfolio over the long term."

https://markets.ft.com/data/announce/de ... GP6S57JHOO

[Jam2Day]

New CEO

After an extensive international search, the Board of RIT Capital Partners plc ('RIT') is delighted to announce the appointment of Maggie Fanari as the CEO of its investment manager J Rothschild Capital Management Limited ('JRCM'). Maggie will take up the role of CEO in March 2024.

Maggie has long experience of leading successful teams investing across asset classes and geographies in one of the largest and most respected investment companies in the world. She is currently Senior Managing Director and Global Group Head High Conviction Equities at Ontario Teachers' Pension Plan ('OTPP') and has been with OTPP since 2006.

James Leigh-Pemberton, Chairman of RIT said "We are delighted to appoint Maggie to the role of CEO of JRCM. The track record of the team she has led at OTPP has been outstanding. She knows RIT and JRCM well, and we look forward to working with her to deliver the exceptional long term returns to our shareholders which have been the hallmark of RIT over the years."

Maggie Fanari said "I am delighted to be joining JRCM and look forward to leading an exceptional team to deliver significant value for shareholders. Having been a director on the board over the past four years, I believe there is tremendous potential to further scale and grow the firm by building on its strong foundation of active management. The firm's strategy of investing across asset classes and geographies, with a unique network of tier one partners, and world-class brand sets the firm apart from its peers to deliver enhanced returns through a globally diversified portfolio over the long term."

https://markets.ft.com/data/announce/de ... GP6S57JHOO

My concern is that RIT along with a growing number of investment houses appear to be wilting under PC pressure and gradually morphing into something that is seen as more acceptable. This concerns me. We don't want to get into the gender thing but it has been my experience that men and women each have their strengths and weaknesses. I suspect most of us are a little more interested in strategy, relative performance, management transparency and the basic ingredient that astute investing requires incisive thinking and nerves of steel. Let's hope Maggie fits the bill.

[Dod101]

You write with what seems to be a firm belief that men make better fund managers than women, otherwise I do not see how you could have any concerns, or at last any more than if instead of a Maggie, we had a Hamish appointed.

Let’s see how she does.

Dod

[Jam2Day]

You write with what seems to be a firm belief that men make better fund managers than women, otherwise I do not see how you could have any concerns, or at last any more than if instead of a Maggie, we had a Hamish appointed.

Let’s see how she does.

Dod

Just to reinforce my original comment, and for perspective, 'it has been my experience that men and women each have their strengths and weaknesses'. Women are generally more conscientious but it has been my experience that pressure does not suit the majority of women and responsibility under pressure even less so. It's not a criticism, it's an observation and it goes back to the dawn of man so that is a fair chunk of statistical form . There are exceptions, of course. Either way, I am sure she has been appointed to a role for which she is well suited and has a good track record to match.