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North Atlantic has cash to take advantage of opportunities

North Atlantic has cash to take advantage of opportunities – North Atlantic Smaller Companies Trust posted a return on NAV of 18.2% for the year ended 31 January 2020, well ahead of Uk indices and almost matching the return on the S&P500 (+18.4%). The dividend was maintained at 30p.

The manager says that “The major standout success stories were Augean and Renalytix which collectively created nearly £35m of value for our shareholders during the twelve month period. Against this the holding in Goals Soccer was written off costing shareholders approximately £4m over the twelve month period as a result of fraud.”

Within the UK private equity portfolio, the largest investment is Harwood Private Equity IV which has since the end of the period sold a major holding Inspecs at a good uplift which will result in a return of capital. The fund is now fully drawn down. A commitment to Harwood Private Equity V has recently been made amounting to £40m. The largest direct investment during the period was Spring Investment LP. The company provides pharmaceutical products to the NHS.

In the US, Performance Chemicals continued to recover well after the defection of key employees and is expected to further increase profits in the current year. The valuation on Jaguar had to be written down following the loss of a major contract with American Airlines.

Cash balances fell from £122m to £82m as the company bought back shares and made some new investments.

Regarding the impact of COVID-19 on the portfolio, the manager said “To date we have helped refinance Ten Entertainment so that it can now withstand a shutdown of fifteen months at a cost of less than £1m. We would expect that no more than two or three other investments will require funding with an estimated cost to the Company of no more than £5m….  I anticipate that the next few months will present some good opportunities and therefore remain confident that the Company will continue to provide positive returns once a degree of normality is restored.”

NAS : North Atlantic has cash to take advantage of opportunities

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