29th Apr 2015 12:35
LONDON (Alliance News) - Global Resources Investment Trust PLC is likely to see "further rationalisation" of its portfolio as it awaits a recovery in commodity markets, its investment managers said on Wednesday.
Low commodity prices have hurt the trust, which was set up to invest in small and medium sized stocks, and its net asset value has taken a big hit as a result of impact on natural resources companies.
Global Resources Investment Trust's net asset value fell to 52.01 pence from 100p in the year ended February 28. It was 67.22p on August 31, 2014. Chairman Lord St John said the trust's net asset value has found a "measure of stability" over recent months but lamented the wide discount at which the shares trade to net asset value.
"Commodity markets appear to have stabilised with anticipation of more infrastructure development programs in China and speculation of consolidation in the sector. We are considering several options both to support our portfolio of companies and to pro-actively rationalise and consolidate the portfolio in anticipation of a return to a growth cycle," the chairman said.
Investment managers David Hutchins and Kjeld Thygesen of RDP Fund Management LLP said they are assisting the trust's portfolio companies with "corporate activity in advancing projects and adding value where possible".
"There is likely to be further rationalisation of the portfolio with increasing focus on core holdings with sound growth prospects," the managers said.
"The AIM Basic Resources Index declined 22.6% although this index does not include as wide a range of companies as that to which the Company is exposed," Hutchins and Thygesen said.
"The sector has now entered into its fourth year of a bear market which is undoubtedly one of the severest over the past four decades. The worst affected have been the pre-production development companies, which are in the process of developing new projects, necessary to replace declining reserves that are steadily being mined out by the majors," Hutschins and Thygesen added.
"In many cases quality projects are being developed, but the smaller companies are struggling to raise equity capital, putting undue pressure on their share prices. Market capitalisations are unduly depressed in relation to the value of resources in the ground for better quality companies," the investment managers added.
Global Resources Investment Trust shares were untraded on Wednesday. The stock last traded at 14 pence.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Grit Inv Tst