I find it reassuring when a company sticks to its original name, no matter how inappropriate it may have become. Carphone Warehouse is an example and British Empire Trust, founded in 1889, another. It was pointed out to me by a friend who took me to lunch at Mon Plaisir in Seven Dials this week.
I have not yet bought any shares but I will when an opportunity arises. If you are interested in the history of the Trust you can either read it online or order a free copy, if you have it posted to a UK address. Its history from 1889 until 1985 is strictly for historians of investment trusts and has no bearing on the Trust today. In 1985 Asset Value Investors were appointed to run the Trust and have made an annual average gain of more than 12% since then. Why is it so interesting?
It has assets of £1,040 million, trades at an 8.5% discount to its Net Asset Value, charges a measly 0.87% and yields 1.6%. Actually there are plenty of other ITs trading at bigger discounts but BET has a Double Discount. It invests in family funds that themselves trade at deep discounts. I wondered if this second layer of fees might be a bit heavy but typically these funds are run on a shoestring. The Jardine group (Singapore) management fee is 0.15%, for example. Other family funds targeted by BET are Wallenberg (Sweden) and Agnelli (Italy). The Agnelli fund, called Exor, trades at a discount of about 32% – see what I mean about the Double Discount.
The Trust also picks other undervalued closed-end funds and special situations. For example, in January 2017. they bought a stake in the Tokyo Broadcasting System which seems to be massively undervalued. You can read their rationale here. Any other reasons for liking BET? Well, their chairman until last year was Strone Macpherson, a chap I haven’t seen since the 1970s but who will be better known to more than one reader. Like many Scotsmen Strone takes pleasure in making a mickle into a muckle. (Another exponent is Ian Taylor of Vitol.) Following Strone’s retirement veteran investor Susan Noble has been appointed Chairman. My friends says he likes women to be in charge; lower testosterone levels he thinks are advisable. If you are a long-term investor looking for more capital growth than income BET looks just the ticket.