New York (HedgeCo.Net) – $230 million fund of hedge funds ALTIN saw its share price perform well last year, thanks to investment performance and the effect of certain discount reduction measures that took place in 2013.
In 2013 ALTIN more than accomplished its investment mandate, both in terms of NAV appreciation and especially in terms of share price increase. The NAV increased by +10.17%2, ahead of peers and industry benchmarks, as investment decisions taken over the last 18 months added close to 3% to the 2013 performance. Despite a modest increase in leverage, ALTIN has maintained a relatively contained beta to equity markets, which should provide adequate downside protection in case of a correction in risk assets. More importantly, ALTIN’s share price rose by +24.65%1, fuelled by a partial closing of the discount and, to a lesser extent, by the two capital reductions that were undertaken in 2013. Firstly, the company paid a 4% dividend in the form of a tax-free return from the share premium account and secondly, in September, it bought back a further 10% of its capital through an innovative put option strategy. 2013 has also been a successful year from a corporate governance standpoint, as the company appointed Roger Rüegg as a new independent non-executive director and Tony Morrongiello to a newly created position as the CEO of the company.
Despite these good returns and the measures put in place in 2013, the discount to net asset value remains at an unsatisfactory level (around 23% at year-end). As a consequence, the FOHF’s Board convened to determine a coherent discount management strategy that genuinely serves the best interests of the company and all its long-term investors. An analysis of NAV and share price evolution since the company’s inception in 1996 shows that ALTIN’s level of discount to NAV is cyclical and is essentially driven by performance and by general market appetite for alternative strategies. The Board has reviewed the measures implemented in 2013 by ALTIN and by its peers and has concluded that capital reduction strategies have had only modest success in narrowing the discount to NAV. While the Board takes very seriously into consideration requests from some investors that demand a continuation of vigorous capital reduction measures, the Board is concerned that an open-ended commitment to buying back capital will inevitably have a longer term detrimental impact on returns, by increasing the total expense ratio of the company and by reducing liquidity in the shares.
Atlin holds a globeal track records as a listed FoHF.
Alex Akesson
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