Something like half of DSM’s portfolio is ripe to be acquired or otherwise realised. The Manager’s Report will take you through the prospect of further advantageous realisations. There has already been successful M&A activity within the portfolio since the year end. Its constituent companies have generally sorted themselves. More to the point, the constituents of the portfolio remained largely strong and adequately financed. Your company’s portfolio demonstrated that resilience and during 2023 to date DSM has been a good performer amongst micro-cap investment trusts with a 10% increase in NAV.Īlthough NAV per share declined in the financial year, from 85.43p to 77.99p, that better than most investment company comparators. The worst was through the summer and autumn of last year and companies had to be resilient and determinedly managed, not highly indebted, to cope with that economic environment. Markets have been largely inactive and depressed. 2023 is proving almost impossible to assess as central banks tussle to bring down inflation, the IMF sees no growth at all for the UK and inflation continues to dictate interest rates. That follows last year’s performance when the company’s NAV was up 5.3% compared to the FTSE AIM All-Share’s decline of 21%. Nevertheless, even though ending 8.7% down over the year, DSM outperformed the AIM index comfortably and has eventually beaten the FTSE Small Cap. Looking back over 2022, it was a difficult year for almost all markets and portfolios, marked by steep declines for small-cap and micro-cap investing entities. Net asset value (‘NAV’) per Ordinary Share We believe the market headwinds could in fact be DSM tailwinds once combined with the strategicĬatalysts playing out in the portfolio.” Financial highlights CapitalĪllocation, buybacks and self-help are features of the DSM portfolio, as is the focus on organic growth versus Which is a feature of the DSM portfolio where the majority of positions hold cash on the balance sheet. As the cost of capital increases, there will be investor focus on real assets and real earnings (cash) – Inflation isn’t great for larger monolithic companies but favours smaller companies that can grow faster than More generally, we think the focus of the market is likely to play to DSM’s favour. “Despite what we think will be volatile markets over the coming 12 months, we believe the catalysts put in placeīy management within this portfolio should provide non-index correlated returns, with value creation playing out Improving market conditions favour the Company’s active, value style.Optionality of a liquidity event in May 2024.c.£1.5 million of cash to deploy as at 28 February 2023 and a strong list of potential new investments which will be executed during the right conditions and at attractive valuations.The majority of investee companies are well-financed, and resilient in the face of the macro headwinds.Most of the investments have progressed through the ‘J curve’ and are now in either late-stage turnaround or value realisation phase.Focused portfolio of actively managed investments with exciting catalysts in play, which should prove reliable in volatile markets.8.7% decrease in NAV per share and 9.7% decrease in the share price, compared to a 17.4% decrease in the FTSE AIM All-Share TR index over the 12 months to 28 February 2023, driven by increasing negative sentiment towards UK smaller companies given the macro-economic headwinds. The Directors of Downing Strategic Micro-Cap Investment Trust plc announce the company's results for the year ended 28 February 2023. Downing Strategic Micro-Cap Investment Trust plc
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