Two Investment Trusts Stocks Trending on LSE: JPMorgan Smaller Companies Investment Trust & Augmentum Fintech

Summary

  • JPMorgan Smaller Companies Investment Trust underperformed the benchmark index in June 2020.
  • JPMorgan Smaller Companies Investment Trust had NAV of 276.4 pence as on 6 August 2020.
  • Augmentum Fintech was included in the FTSE Smallcap index and FTSE All-Share index.
  • Zopa, a company in Augmentum Fintech's portfolio, received a full-baking license.

Based on 1-year performance, JMI and AUGM were up by about 11.26 percent and 1.35 percent, respectively. JMI was down by about 0.44 percent, whereas AUGM was up by about 0.88 percent from the previous closing price (as on 7 August 2020 before the market close at 10:15 AM GMT+1). Let's skim the financial and operational updates to understand the stock better.

JPMorgan Smaller Companies Investment Trust PLC (LON: JMI) – Net assets of £250.9 million as on 31 January 2020

JPMorgan Smaller Companies Investment Trust PLC is a UK based trust that invests money in smaller companies. The Company track the portfolio performance against the benchmark Numis Smaller Companies plus AIM (excluding Investment Companies) Index. JMI is included in the FTSE All-Share index.

NAV and Gearing of JMI

As on 6 August 2020, the Company had net asset value (NAV) of 276.4 pence, including income with debt at fair value. The NAV has declined by about 14.0 percent from 31 January 2020, which was 321.5 pence. As on 24 July 2020, JMI had a net gearing of 7.7 percent.

Investment in Companies

Sector-wise Investment Breakdown as reported on 30 June 2020

(Source: Company Website)

As reported on 30 June 2020, the Company's ten largest investments contribute close to 31.1 percent of the total portfolio. Game Workshop, Future, Dunelm Group, Team17 and Judges comprise approximately 4.3 percent, 4.2 percent, 4.1 percent, 3.2 percent and 3.0 percent respectively of the total assets. Based on sector-wise investment, the Company was overweight in Consumer Goods and Consumer Services sector, and it was underweight on the Oil & Gas and Basic Materials sector when compared to the benchmark index.

Portfolio Performance in June as reported on 30 June 2020

The Company's portfolio underperformed the benchmark in June 2020, mainly due to the overweight exposure to household good and home construction that was partly offset by the positive return from investments in general retailers and support services. Based on an individual stock, the overweight position in UK homeware retailer, Dunelm, contributed good performances.

H1 FY2020 results (ended 31 January 2020) as reported on 25 March 2020

JMI generated a total return on net assets of 24.1 percent after reinvesting dividends. The performance was above the Numis Small Cap plus AIM index that generated a return of 8.9 percent. It has a loan facility with Scotiabank of £25 million, and it has an option to increase the borrowing facility to £35 million by increasing in two tranches of £5 million based on conditions. As in January 2020, close to £30 million was drawn from the loan facility. The Company's gearing ranged between 6.1 percent and 10.2 percent during H1 FY20. The Company completed buyback of 514,217 shares into Treasury. In H1 FY20, the Company divested the holdings in EI Group, Eland, Ferrexpo, Hochschild, Marstons, Fevertree and Vitec. The Company made a new investment in companies such as CVS, Bank of Georgia and Pebble Group. As on 31 January 2020, JMI had net assets of £250.9 million and the investment portfolio of the Company was 10 percent overweight to the UK investment as compared to the benchmark index.

Share Price Performance Analysis

1-Year Chart as on August-7-2020, before the market close (Source: Refinitiv, Thomson Reuters)

JPMorgan Smaller Companies Investment Trust PLC's shares were trading at GBX 240.93 down by about 0.44 percent from the previous closing price (as on 7 August 2020 before the market close at 10:15 AM GMT+1). Stock 52-week High and Low were GBX 325.92 and GBX 126.00, respectively. The Company had a market capitalization of £184.59 million.

Business Outlook

JMI highlighted that the economic uncertainty due to the pandemic had a negative impact on the markets and worsened the energy demand. It also eroded the NAV of the Company; however, the current situation also poses as an opportunity along with risk. The Company would seek the opportunity to make a good quality investment. Companies two major concern remains the Brexit and the coronavirus that can move the market either way.

Augmentum Fintech PLC (LON: AUGM) - NAV per share increased by 5.9 percent year on year in FY20

Augmentum Fintech PLC is a UK based investment company that invests in Fintech companies. The Company invests in companies across the UK and Europe, and some of the companies that are in the portfolio include Interactive investors, Tide, Bullion Vault, Zopa and Receipt Bank.

FY2020 Annual results (ended 31 March 2020) as reported on 16 July 2020

(Source: Company Website)

In FY20, the NAV per share was 116.1 pence, which increased by 5.9 percent year on year from 109.6 pence per share. The Company earned an unrealized annualized IRR on invested capital of 18 percent, and it had an unrealized gain of £12.7 million. During FY20, Augmentum invested £33.0 million in the portfolio as it made a new investment of £17.8 million in Habito, Grover and Receipt Bank, and it invested £15.0 million in existing companies of the portfolio. The Company raised £25.8 million in FY20, and it had cash of £14.4 million as on 31 March 2020. At the end of FY20, the total fair value of the Company's investment was £123.1 million, and the fair value of the top ten investment was £104.7 million. On 4 June 2020, the Company was included in the FTSE Smallcap index and FTSE All-Share index.

Zopa received a full banking licence

On 24 June 2020, Zopa received a full banking license in the UK from the Prudential Regulatory Authority. Zopa is a peer-2-peer lending company, and Augmentum Fintech holds a 6.1 percent stake in the Company. Zopa received £140 million funding from IAG Silverstripe following which it received the banking license. The fair value of the investment in Zopa is approximately £7.9 million as on 31 March 2020.

Share Price Performance Analysis

1-Year Chart as on August-7-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Augmentum Fintech PLC's shares were trading at GBX 114.00 up by about 0.88 percent from the previous closing price (as on 7 August 2020 before the market close at 10:15 AM GMT+1). Stock 52-week High and Low were GBX 114.00 and GBX 55.00, respectively. The Company had a market capitalization of £130.30 million.

Business Outlook

The Company stated that the European market has started to recover slowly from the lows. The impact on the companies in the portfolio was limited when compared to the other financial service companies. The Company expect the market to be in turmoil, although the companies in the portfolio have a cushion to sustain the uncertainty. The Company is confident about the long-term prospect of investment.

Comment


Disclaimer