1st Sep 2009 12:54
Factsheet July 2009
Bramdean Alternatives Limited (the "Company")
This Factsheet contains commentary and news for the month ended 31 July 2009, unless otherwise stated.
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Overview Bramdean Alternatives Limited is a Guernsey closed-ended investment company listed on the London Stock Exchange. The Company invests in a diversified portfolio of Private Equity Funds, Hedge Funds and other Specialty Funds. |
July Estimated Net Asset Values Sterling shares: 80.53 pence U.S. Dollar shares: US$ 0.7757 As described in the Company's prospectus and as has been the case since its launch, the net asset value ("NAV") and the NAV per share are both calculated monthly by the Company's administrator based on the latest published NAV for each underlying fund. Investments in underlying funds for the month ended 31 July 2009 are valued using the values (whether final or estimated) as advised by their managers, general partners or administrators. The Company has therefore relied on valuation and reporting methods used by the managers, general partners or administrators of the underlying funds in deriving the 31 July 2009 NAV and NAV per share. For the avoidance of doubt the Directors have not exercised their discretion to depart from the above valuation policy with regard to the July 2009 NAV. |
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KEY FACTS |
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Market Capitalisation |
£70.85 million |
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Investment Manager |
Bramdean Asset Management LLP |
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Annual Management Fee |
1.5% |
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Performance fee |
10% subject to an 8% return and a high watermark |
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Company Brokers |
Matrix Corporate Capital LLP JPMorgan Cazenove |
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Sterling class share price on 31 July 2009 |
46.75 pence |
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Sterling class issue price (9 July 2007) |
100.00 pence |
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Number of Sterling shares in issue |
90,715,319 |
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U.S. Dollar class share price on 31 July 2009 |
US$ 0.60 |
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U.S. Dollar class issue price (9 July 2007) |
US$ 1.00 |
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Number of U.S. Dollar shares in issue |
78,573,876 |
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Minimum investment |
N/A |
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Dealing |
Daily |
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Valuation |
Monthly |
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NAV publication |
Monthly |
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July Sterling Estimated NAV per share |
80.53 pence |
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July U.S. Dollar Estimated NAV per share |
US$ 0.7757 |
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Total common net assets |
US$ 182,280,643.58 |
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Total Estimated Net Asset Value |
US$ 182,052,792.77 |
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Half-year end |
30 September 2009 |
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Financial year end |
31 March 2009 |
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Company Secretary and Administrator |
RBC Offshore Fund Managers Limited |
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Registrar |
Capita Registrars (Guernsey) Limited |
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Stock Exchange code (Sterling shares) |
BRAL |
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Stock Exchange code (U.S. Dollar shares) |
BRAU |
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Sedol code (Sterling shares) |
B1XCHB9 |
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Sedol code (U.S. Dollar shares) |
B1XCLF1 |
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ISIN code (Sterling shares) |
GG00B1XCHB94 |
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ISIN code (U.S. Dollar shares) |
GG00B1XCLF11 |
JULY MARKET COMMENTARY
After drifting lower in the first half of July, stock markets rallied strongly in the second half of the month owing to a US corporate results season that exceeded investors' expectations. Around three-quarters of the S&P 500 companies that reported first-half results beat market expectations. There was a similar picture in Europe, with around two-thirds of reporting companies beating consensus; only oil and gas companies generally underperformed. Motor manufacturers recovered in the US as the Obama Administration extended industrial aid.
The S&P 500 rose 7.4% in July while the Dow Jones Industrial Average rose 8.5%. This was the best July for US equity markets in 20 years. European equities were comparably strong, with the FTSE 100 also up 9% in the month. In Germany the DAX rose 11%, and in France the CAC 40 rose 9%. In Japan, the Nikkei was more subdued, but still rose 4% on the month. Commodity prices were also strong, with oil prices almost reaching US$70 a barrel. Gold, silver and copper prices gained as investors discounted an end to the recession and a return to growth. The main story in the currency markets was the weakness of the dollar, as the Federal Reserve persisted with its programme of quantitative easing.
Economic and survey data in the G5 regions suggested to investors that the economy remained weak but that the pit of the recession had been reached. The US economy recorded its fourth successive quarter of negative growth, with weak consumer and business spending, but the figure was still less pronounced than markets had expected. Germany's IFO survey rose for the fourth month and the expectations component reached its highest level since the summer of 2008. The European Central Bank kept rates on hold against this background of modest economic optimism. The small signs of improvement also led to a diversification out of safe low-yielding US Treasuries.
PORTFOLIO NEWS
General
The underlying unaudited performance in July was +1.58% for the Sterling Share class and +2.25% for the US Dollar Share class. There were 23 holdings in the Company's overall Portfolio as at 31 July 2009.
As previously noted, the Company's redemption notice to Aarkad Plc ("Aarkad") has been suspended. The Company is working with the manager and other investors on a restructuring proposal designed to restore liquidity to the fund.
The Company has largely completed its programme of tactically reducing its allocation to hedge funds - a strategy that the Investment Manager started to implement in December 2007. The Company expects part of these proceeds will be redeployed by the Investment Manager into new investments, with the remainder held in cash to fund Private Equity & Specialty draw-downs.
The stand-out performers during July were Paulson Advantage Plus Ltd and Lansdowne UK Equity Fund Ltd. Positive returns were also reported by D.E. Shaw Oculus International Members Interest, Deephaven Global Multi-Strategy Fund Ltd and King Street Capital Ltd.
The Company benefited substantially from upward revaluations of some of its private equity holdings. The portfolios of underlying holdings with substantial mark-to-market securities will continue to benefit from upward revaluations if the current market recovery is sustained.
Private Equity & Specialty Funds
The Company has now made commitments to 18 Private Equity & Specialty Funds amounting to approximately US$227 million, taking into account the US Dollar's depreciation over the month. No new commitments have been made during July. One commitment, the LimeTree Emerging Beachfront Land Investment Fund II, L.P., was sold by the Company to reduce the overall level of over-commitment. The Company now has 17 Private Equity & Specialty Funds amounting to approximately US$222 million in commitments.
The total amount that has been drawn-down on the commitments made is approximately US$99.7 million, with about US$166,000 of capital having been received in July. The Company has now received total distributions of US$4.2 million since inception, with no distributions received in July.
Revaluations were received from nine managers of the Company's Private Equity & Specialty Funds and these have been incorporated into the July NAV calculations; five revaluations were upward revaluations to reflect recovering values in the underlying portfolios, while four revaluations were downwards revaluations, reflecting falls in the values of market comparables, adverse currency movements and the J-curve effect. As stated in previous communications, downward valuations in the initial years of private equity investing are to be expected given the J-Curve effect, and it is likely that the Company will receive further fair market valuation write-downs from some of its managers.
Transitional portfolio
The portfolio held one fund, Aarkad, during July. The Transitional portfolio returned +0.02%, including cash, but excluding currency movements, during July.
Strategic Hedge Funds portfolio
The portfolio registered a positive return of +2.51% as buoyant market sentiment boosted equity and credit markets and provided opportunities for all managers in the portfolio to profit. Year to date the portfolio has returned +6.83%.
PORTFOLIO HIGHLIGHTS
Equity Hedged - In a month where equity markets recorded large upward moves (especially in emerging markets and Asia), the UK-focused manager was able to capture a portion of the upside in European share values. The manager has been bullishly positioned, so the relative return was slightly positive, however profits came from the utility and technology sectors, as well as from long positions in financials and mining stocks.
Event Driven - Both managers were up during the month, as credit and equity markets strengthened. The distressed manager's three core strategies all contributed to performance, particularly long positions in stressed high-yield names. The special situations manager benefitted by adding to its long book through exposure to financials, real estate and gold, although has also retained some short positions to individual bank names.
Global Macro - Performance was positive for the global trader, who posted strong returns from the macro discretionary portion of the book. Within this book, fixed income trading worked particularly well and an example of profitable trades included Japanese inflation-linked bonds and option strategy positions across the European yield curve.
Relative Value - The multi-strategies manager posted strong performance during the month, driven by the carry from the credit book as well as performance in the convertible book. Convertibles have continued to outperform other assets within the relative value space, as the massive credit rally more than compensated for the lower volatility, allowing theoretical convertible valuations to increase.
Outlook - Given increased market sentiment which has boosted liquidity, risk levels across the portfolio have increased. While recognising there are excellent opportunities across many strategies, there may be potentially higher portfolio volatility in the coming months if there is renewed market volatility.
Portfolio Highlights
Geographical Allocation
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North America 71.48% |
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Europe 16.59% |
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Global 9.21% |
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Asia & Other 2.72% |
Portfolio Holdings Asset Allocation
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Cash 42.66% |
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Private Equity 23.99% |
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Strategic Hedge Funds 14.34% |
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Specialty 15.96% |
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Transitional 3.05% |
PORTFOLIO HOLDINGS (INVESTED CAPITAL) ON 31 July 2009
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Manager |
Type |
Portfolio Weighting |
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Cash |
Cash |
42.6% |
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Oaktree OCM Opportunities Fund VIIb LP |
Specialty |
7.0% |
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Greenpark International Investors III LP |
Private Equity |
6.7% |
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D.E. Shaw Oculus International Members Interest |
Strategic Hedge Funds |
5.0% |
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Thomas H Lee Fund VI LP |
Private Equity |
3.4% |
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Coller International Partners V LP |
Private Equity |
3.4% |
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SVG Strategic Recovery Fund II LP |
Specialty |
3.2% |
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Aarkad Plc |
Transitional |
3.0% |
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Deephaven Global Multi-Strategy Fund |
Strategic Hedge Funds |
2.7% |
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Lansdowne UK Equity Fund |
Strategic Hedge Funds |
2.6% |
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Paulson Advantage Plus Ltd. |
Strategic Hedge Funds |
2.5% |
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DFJ Athena LP |
Private Equity |
2.1% |
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Goldman Sachs Capital Partners VI LP |
Private Equity |
1.9% |
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MatlinPatterson Global Opportunities Partners III LP |
Specialty |
1.9% |
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Terra Firma Capital Partners III LP |
Private Equity |
1.8% |
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HIG Bayside Debt & LBO Fund II LP |
Specialty |
1.8% |
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King Street Capital Ltd. |
Strategic Hedge Funds |
1.7% |
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Tenaya Capital V, L.P. |
Private Equity |
1.3% |
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Silver Lake Partners III LP |
Private Equity |
1.1% |
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Resonant Music L.P. |
Specialty |
1.0% |
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Pine Brook Capital Partners LP |
Specialty |
1.0% |
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AIG Brazil Special Situations II LP |
Private Equity |
0.9% |
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Thoma Bravo Fund IX LP |
Private Equity |
0.7% |
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Rho Ventures VI LP |
Private Equity |
0.7% |
Cash: The Company currently has six approved cash deposit accounts.
Transitional Investments: The Company will seek to avoid return dilution caused by holding amounts that are not committed or are committed, but not yet drawn-down, on both underlying private equity funds and underlying specialty funds by investing such amounts in a range of transitional investments, which may include equity hedge, senior debt, mezzanine and market neutral funds. At present, the Investment Manager favours holding cash and so the Transitional portfolio represents a small part of the overall portfolio.
Strategic Hedge Funds: The part of the Company's portfolio which is managed by RMF Investment Management, Nassau branch.
DISCLAIMER
This Factsheet update has been produced by Bramdean Asset Management LLP (the "Investment Manager"), which is authorised and regulated by the Financial Services Authority ("FSA"). Bramdean Alternatives Limited (the "Company") has appointed Bramdean Asset Management LLP as the investment manager of the Company.
This material constitutes a financial promotion for the purposes of the Financial Services and Markets Act 2000 (the "Act") and the handbook of rules and guidance issued from time to time by the FSA (the "FSA Rules").
This material is provided for information purposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. This material has been provided specifically for the use of the recipient only and must be treated as proprietary and confidential information. It may not be passed on, nor reproduced in whole or in part under any circumstances without express written consent from the Investment Manager. The material provided is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material have been obtained or derived from sources believed by the Investment Manager and its affiliates to be reliable, but the Investment Manager makes no representation as to their accuracy or completeness. The Investment Manager accepts no liability for loss arising from the use of this material. The Investment Manager gives no representations or warranty that any indicative performance or return will be achieved in the future or that the investment objectives and policies from time to time of the Company will be achieved.
You should note that, if you choose to invest in the Company, your capital will be at risk and you may therefore lose some or all of any amount that you choose to invest. This material is not intended to constitute, and should not be construed as, investment advice.
Potential investors in the Company should seek their own independent financial advice. The Investment Manager neither provides investment advice to, nor receives and transmits orders from, investors in the Company nor does it carry on any other activities with or for such investors that constitute "MiFID or equivalent third country business" for the purposes of this FSA Rule.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE RESULTS.
Please note that up-to-date information on the Company, including its monthly NAV and share prices, factsheets, Annual Report and Financial Statements, Prospectus and portfolio information can be found at www.bramdeanalternatives.com or via a link from the Investment Manager's website www.bramdean.com.
Capita Registrar's helpline is 0871 664 0300 (Calls cost 10 pence per minute plus network extras). For callers outside the UK, please dial: +44 (0)20 8639 3399.
Registered Office: Canada Court, Upland Road, St. Peter Port, Guernsey, GY1 3QE, Channel Islands.
CONTACT DETAILS
Loretta Murphy, or [email protected]
Bramdean Asset Management LLP, 35 Park Lane, London W1K 1RB, United Kingdom
T: +44 (0)20 7052 9272 F: +44 (0)20 7052 9273 W: www.bramdean.com
Related Shares:
APEF.L