12th May 2016 07:00
Terra Capital Plc
Fund Manager's Update Regarding Q1 2016
Terra Capital Plc ('TCA' or the 'Fund'), the AIM quoted investment company focused on investing in value opportunities globally, primarily in frontier markets is pleased to report that it has received the latest report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q1 2016.
TCA's non-executive Chairman, Dirk Van den Broeck said "The strong relative outperformance of Terra Capital Plc in 2015 and 2014 has continued into Q1 2016. We are building a track record of generating positive returns in what have been volatile market conditions. The Board views this as an endorsement of our Fund Manager's proven investment process which combines robust financial evaluation by analysts on the ground with active risk and portfolio management. The Fund is delivering on its objective to generate high absolute returns for investors by investing in under-researched and under-valued companies across the globe while ensuring volatility is kept to a minimum and I look forward to providing further updates on our progress."
The Fund Manager's update covering Q1 2016 is reproduced below.
Terra Partners Asset Management Limited
Portomaso Tower, 8/5A
Portomaso Avenue
St Julian's STJ 4011 MALTA
Telephone +356 2371 7000
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
May 12, 2016
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its First Quarter 2016 Update to shareholders regarding the activities of Terra Capital Plc. ('TCA' or the 'Fund'), an AIM quoted investment trust investing globally in value opportunities, primarily in frontier markets.
The opinions expressed in this document represent the views of TPAM, the Fund Manager of TCA, at the time of its preparation. This document has been prepared from publicly available information, internally developed data and other sources believed to be reliable, and all reasonable precautions have been taken to ensure its accuracy; however, no representation or warranty about the accuracy of the information contained in, or of any omissions from, this document or any supplementary information made available to any interested party or its advisers is implied, and any liability in respect of such information or omissions is hereby expressly disclaimed. Note that the information herein is not all of the information TPAM had available, or which it relied upon, when making its initial and continuing investment decisions. TPAM reserves the right to amend the information provided herein, and its opinions, at any time, and undertakes no obligation (express or implied) to provide any recipient with any further information or to correct any inaccuracies or omissions which may subsequently become apparent. Readers are advised that a fund managed by TPAM, and some officers and employees of TPAM currently own positions in TCA.
Investments in Emerging and Frontier markets usually suffer from liquidity problems, and are often affected by governmental interference in the free market, local politics and vagaries in commodity and currency prices; therefore, their prices can be very volatile. This means that it can be difficult to acquire and subsequently sell the shares noted in TCA's portfolio. This document is for information purposes only and it is not intended as an offer or solicitation regarding the purchase or sale of any security or investment vehicle.
All solicitations or offers regarding TCA are made and transacted on the public market of the AIM Section of the London Stock Exchange and occur by reference to TCA's Offering Memorandum and the document titled "Tender Offer to Purchase Ordinary Shares at the Tender Price and Restructuring and Amendment to the Directors' Incentive Plan and Change of name to Terra Capital PLC and Notice of Extraordinary General Meeting" of the April 30, 2012 (the "Circular") as amended by subsequent resolutions, primarily the one passed at the January 26, 2015 EGM. Documents are accessible on TCA's website www.terracapitalplc.com in the "Investor Centre" tab under the Documents and Announcements section of the file "AIM Rule 26". This website contains important information which may supplement, modify or differ from the information contained herein and no prospective investment decision should be considered before careful reading of documentation found on TCA's website. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
By accepting this document, you agree to be bound by the foregoing limitations.
TCA's 1st Quarter 2016 Return & Portfolio
The Fund's NAV increased to $0.938 at March 31, 2016 from $0.925 as of December 31, 2015, a net total return of 4.91% for the quarter, which includes the dividend payment in February.
The Fund's investment level (equity, fixed income and hedging) increased from 85.23% at December 31 (including commitment to Terra Argentine Fund) to 89.31% at March 31.
Specific Areas of Investment:
Europe
The Fund's exposure to Europe decreased slightly from 24.67% to 24.19%, though it remained the largest regional allocation. The Fund increased its exposure in three positions (Italy and Russia), reduced its exposure in three other positions (Poland, Germany and Russia), while fully liquidating one position (Switzerland).
Americas
The Americas increased in concentration from 16.93% to 18.90%. There were no changes to positions in the quarter.
Asia
The Fund's exposure to Asia increased from 16.83% to 18.55%. There were four new positions added (Philippines) and the fund increased one position (Kazakhstan). There were no position reductions or liquidations in the period.
Middle East
The Fund's exposure to the Middle East rose on the quarter from 16.56% to 17.14%. The Fund initiated one new investment (UAE) and increased four positions (Qatar, Bahrain, and UAE). The Fund decreased one position (Oman) in the period.
Africa
The allocation to Africa was increased slightly from 10.23% to 10.54%. The Fund decreased two positions (Nigeria and Burkina Faso). There were no other changes in the quarter.
Fund Details
The following page details the Fund's holdings, changes from the prior quarter, and the total return of each company's shares over the quarter in both U.S. dollars and local currency. The numbers provided are based on TPAM's internal calculations.
Region | Country | Security | Shares | Market Value | % of Fund | Position Change | 1Q US$ Total Return | 1Q LC$ Total Return | |
AFRICA | Burkina Faso | Onatel BF | 47,577 | 1,018,895 | 1.59% | No Change | 2.36% | -3.33% | |
Morocco | Residences Dar Saada | 69,843 | 1,127,179 | 1.76% | No Change | 25.04% | 21.33% | ||
Tunisia | Automobile Reseau Tunisien et Services | 246,934 | 1,016,567 | 1.58% | No Change | 38.10% | 36.51% | ||
Tunisia | One Tech Holding | 248,305 | 842,401 | 1.31% | No Change | -1.15% | -2.29% | ||
Tunisia | Tunisie Leasing | 87,818 | 736,118 | 1.15% | No Change | 3.56% | 2.36% | ||
South Africa | Holdsport | 202,501 | 836,786 | 1.30% | No Change | 13.93% | 8.08% | ||
Uganda | Umeme | 2,940,000 | 479,822 | 0.75% | No Change | -12.65% | -12.70% | ||
South Africa | Onelogix | 2,281,292 | 510,062 | 0.80% | No Change | 3.84% | -1.49% | ||
Nigeria | UAC of Nigeria | 1,839,351 | 189,248 | 0.30% | Decrease | -1.18% | -1.30% | ||
Nigeria | Global X MSCI Nigeria ETF - SHORT | - | - | 0.00% | Liquidated | ||||
6,757,078 | 10.54% | ||||||||
AMERICAS | Argentina | Terra Argentine Fund LP - Outstanding Commitment | 2,040,000 | 3.18% | No Change | 0.00% | 0.00% | ||
Jamaica | National Commercial Bank Jamaica | 5,431,719 | 1,843,268 | 2.87% | No Change | 3.01% | 4.38% | ||
Jamaica | Scotia Group Jamaica | 5,429,031 | 1,367,586 | 2.13% | No Change | 2.07% | 3.43% | ||
Argentina | IRSA Inversiones y Represent. SA GDR | 81,433 | 1,218,238 | 1.90% | No Change | 21.63% | 21.63% | ||
Peru | Ferreycorp SAA | 2,150,387 | 954,170 | 1.49% | No Change | 11.71% | 8.89% | ||
Jamaica | Jamaica Money Market Brokers | 8,500,000 | 699,272 | 1.09% | No Change | -4.10% | -2.82% | ||
Peru | Refineria La Pampilla SA | 17,808,102 | 1,386,848 | 2.16% | No Change | 130.17% | 124.35% | ||
Panama | Copa Holdings | 11,165 | 756,429 | 1.18% | No Change | 41.44% | 41.44% | ||
Argentina | Terra Argentine Fund LP - Series 2 | 510,000 | 733,824 | 1.14% | No Change | 4.12% | 4.12% | ||
Argentina | Terra Argentine Fund LP - Series 3 | 510,000 | 641,095 | 1.00% | No Change | 4.12% | 4.12% | ||
Argentina | Terra Argentine Fund LP - Series 1 | 340,000 | 478,776 | 0.76% | No Change | 4.12% | 4.12% | ||
12,119,505 | 18.90% | ||||||||
ASIA | Bangladesh | Square Pharma | 629,734 | 2,014,345 | 3.14% | No Change | -1.09% | -1.18% | |
Vietnam | Imexpharm Pharmaceutical JSC | 802,158 | 1,701,973 | 2.65% | No Change | 27.22% | 26.13% | ||
Bangladesh | Brac Bank Ltd | 2,710,489 | 1,545,887 | 2.41% | No Change | -8.13% | -8.21% | ||
Philippines | RFM Corporation | 11,003,750 | 993,377 | 1.55% | No Change | 9.27% | 7.04% | ||
China | Qingling Motors | 3,042,615 | 957,007 | 1.49% | No Change | 1.17% | 2.09% | ||
Georgia | Bank of Georgia Holdings PLC | 31,280 | 911,319 | 1.42% | No Change | 4.05% | 6.51% | ||
Australia | Ardent Leisure Group | 372,606 | 654,115 | 1.02% | No Change | 6.62% | 1.33% | ||
Korea | Lotte Chilsung Beverage Co - PFD | 749 | 566,618 | 0.88% | No Change | -3.54% | -6.49% | ||
Kazakhstan | KCELL | 147,922 | 533,998 | 0.83% | Increase | -3.73% | -3.73% | ||
Korea | Kumho Petro Chemical Co - PFD | 17,850 | 455,841 | 0.71% | No Change | -12.19% | -14.87% | ||
Korea | Shinyoung Securities LTD | 8,370 | 437,743 | 0.68% | No Change | 21.42% | 17.72% | ||
Korea | Hyundai Motor Co. Ltd. - PFD | 2,580 | 234,663 | 0.37% | No Change | 4.15% | -0.48% | ||
Philippines | Emperador | 1,292,000 | 213,038 | 0.33% | New Position | -13.51% | -15.31% | ||
Philippines | Century Pacific Food Inc. | 388,500 | 160,572 | 0.25% | New Position | 17.73% | 15.29% | ||
Philippines | Belle Corporation | 2,954,500 | 192,168 | 0.30% | New Position | 8.20% | 6.01% | ||
Philippines | Travellers International Hotels | 4,000,000 | 326,300 | 0.51% | New Position | -12.97% | -14.77% | ||
11,898,963 | 18.55% | ||||||||
EUROPE | Hungary | Any Security Printing | 553,679 | 2,192,709 | 3.42% | No Change | 11.47% | 7.06% | |
Italy | QF Polis Fund | 1,789 | 1,975,413 | 3.08% | Increase | 14.33% | 9.60% | ||
Serbia | Galenika-Fitofarmacija DP | 82,744 | 1,842,335 | 2.87% | No Change | 4.89% | 1.09% | ||
Russia | JSC Acron S GDR | 160,521 | 866,813 | 1.35% | Decrease | 6.93% | 6.93% | ||
Macedonia | Komercijalna Banka A D Skopje | 28,845 | 1,214,986 | 1.89% | No Change | 3.12% | -1.14% | ||
Ukraine | Kernel Holding SA | 86,323 | 1,233,566 | 1.92% | No Change | 15.89% | 10.83% | ||
Montenegro | Crnogorski Telecom A.D. | 222,624 | 968,080 | 1.51% | No Change | 2.59% | -2.05% | ||
Slovenia | Gorenje Velenje | 175,399 | 884,518 | 1.38% | No Change | 0.45% | -3.70% | ||
Russia | X5 Retail GDR | 57,416 | 1,217,219 | 1.90% | Increase | 11.87% | 11.87% | ||
Croatia | Hrvatski Telecom DD | 36,228 | 792,146 | 1.24% | No Change | 6.50% | 0.56% | ||
Poland | PKP Cargo | 16,830 | 193,539 | 0.30% | No Change | -34.45% | -37.32% | ||
Italy | QF BNL Portfolio IMM | 845 | 522,315 | 0.81% | Increase | -0.81% | -4.90% | ||
Bulgaria | Monbat | 115,000 | 480,684 | 0.75% | No Change | -6.35% | -10.22% | ||
Estonia | Silvano Fashion Group AS | 267,000 | 461,988 | 0.72% | No Change | 23.87% | 18.75% | ||
Germany | Vib Vermoegen O.N. | 10,932 | 215,164 | 0.34% | Decrease | 5.50% | 1.14% | ||
Bulgaria | Speedy | 16,818 | 362,204 | 0.56% | No Change | -2.06% | -5.13% | ||
Switzerland | U-Blox AG | - | - | 0.00% | Liquidated | -11.05% | -13.85% | ||
Serbia | Komercijalna Banka Serbia | 7,231 | 91,196 | 0.14% | No Change | -13.11% | -14.03% | ||
15,514,875 | 24.19% | ||||||||
MIDDLE EAST | Lebanon | Blom Bank | 144,872 | 1,579,105 | 2.46% | No Change | 12.84% | 12.84% | |
Qatar | Al Meera Consumer Goods | 21,218 | 1,206,065 | 1.88% | No Change | -1.83% | -1.82% | ||
Oman | Oman Refreshment | 175,000 | 1,022,727 | 1.59% | No Change | 5.85% | 5.86% | ||
Lebanon | Solidere - GDR | 89,508 | 962,211 | 1.50% | No Change | 2.38% | 2.38% | ||
Bahrain | Gulf Hotel Group | 444,273 | 919,112 | 1.43% | No Change | 0.62% | 0.62% | ||
Qatar | Doha Bank | 83,692 | 853,765 | 1.33% | Increase | -9.79% | -9.78% | ||
Oman | Oman Cement | 720,950 | 861,395 | 1.34% | No Change | 6.52% | 6.52% | ||
Bahrain | Seef Properties | 1,414,577 | 667,837 | 1.04% | No Change | -5.88% | -5.94% | ||
UAE | Air Arabia | 2,947,000 | 986,853 | 1.54% | Increase | -2.95% | -2.94% | ||
Oman | Bank Sohar | 1,237,811 | 456,543 | 0.71% | Decrease | -6.37% | -6.37% | ||
Bahrain | Bahrain Commercial Facilities Company | 200,000 | 397,846 | 0.62% | No Change | 3.92% | 3.92% | ||
Qatar | Gulf Warehousing Company | 40,750 | 656,843 | 1.02% | Increase | 5.79% | 5.80% | ||
UAE | Abu Dhabi Commercial Bank | 232,000 | 423,185 | 0.66% | New Position | 8.49% | 8.50% | ||
1 0,993,488 | 17.14% | ||||||||
Total Equity Holdings | 57,283,909 | 89.31% | |||||||
Cash | 6,853,900 | 10.69% | |||||||
Hedging | 0.00% | Liquidated | |||||||
Total Fund | 64,137,809 | ||||||||
Fund Manager Organisation Update
One of the founders of the Fund Manager, Mr. Howard Golden, has opted for semi-retirement. In the end of April, Mr. Golden reduced the number of hours he participates in TPAM's operations, but continues to serve on TPAM's board of directors and investment committee. In connection with this situation, it was agreed that it would be appropriate for Mr. Golden to sell his shares in TPAM to the other partners, and therefore, Mr. Filip Montfort and Mr. Yarden Mariuma have now become equal owners of TPAM following Mr. Golden's sale of his shares to them in equal parts.
RESPECTFULLY SUBMITTED BY:
Terra Partners Asset Management Limited
Portomaso Tower, 8/5A, Portomaso Avenue,
St. Julian's ž STJ 4011 ž MALTA
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
Contact: Galileo Fund Services Limited (Administrator)
Ian Dungate or Suzanne Jones
+44 1624 692600
Panmure Gordon (Nominated adviser and corporate broker)
Paul Fincham or Jonathan Becher
+44 20 7886 2500
St Brides Partners Ltd
Elisabeth Cowell / Frank Buhagiar
+44 (0) 20 7236 1177
NOTES:
Terra Capital Plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Fund Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.
Related Shares:
TCA.L