RIT Capital Partners (RCP) listed on the London Stock Exchange in 1988. If you had invested £10,000 and reinvested the dividends, today it would be worth £393,000. That’s an annual return in excess of 10%.
You might think this is a good news story but in the past three years the share price has fallen by 3.7% as shareholders headed for the exit, perhaps worried about exposure to private equity, briefly widening the discount to NAV to more than 30%. For a long term investor like me this was an opportunity although I had no idea when it would bounce back. Well it is bouncing back right now and the share price is up 15.45% so far this year and what is so charming is the discount is still 24% and the dividend has risen every year since 2015 – I cannot see any older data.
Scottish Mortgage and Monks share some characteristics with RCP and they trade at discounts of 11.4% and 5.9% respectively. It doesn’t require a big stretch of the imagination to imagine that RCP might trade at a discount below 14% boosting the share price by at least 10%. At least that’s what I imagine. The scaredy cats who deserted RCP will return, in large part thanks to the fund manager, Maggie Fanari, who had been a RCP non-executive director for five years. She has had only a year in her new role, officially CEO at RCP, and her strategy is already bearing fruit.
“Maggie was previously Senior Managing Director, Global Group Head of High Conviction Equities at Ontario Teachers’ Pension Plan which has a global mandate to invest in public and private companies. At Ontario Teachers’, she served as a member of many of the pension plan’s investment committees. She was involved in the execution of investments across a variety of asset classes (private and public), including supporting the development and execution of the venture and growth business.
Before joining Ontario Teachers’, Maggie worked at KPMG and Scotia Capital. Maggie is a chartered accountant and a CFA charter holder. She also holds a BBA from the Schulich School of Business at York University and ICD.D certification from the Institute of Corporate Directors.” (RCP)
The point is she is not an over-promoted egomaniac, as some fund managers are, gambling with investors’ money hoping to get some long-priced winners. RCP is in the FTSE 250 and is not super risky although it has exposure to China, technology and private equity. On a scale of 1 to 7 where 1 is safest it scores 5.
I am very pleased my confidence in the RCP board was not misplaced but I do wish I had bought the shares in 1988 and forgotten all about them.