Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset.
British Empire: an undervalued asset
Sometimes investing is simple. Everyone understands that if you can buy something for less than it’s worth you should do well. British Empire adopt this approach in less well researched parts of the market, looking for both undervalued assets, and importantly, underlying assets that will appreciate over time. Their hunting ground is in investment trusts, family controlled holding companies and property companies listed around the world. These give them exposure to a hugely diverse range of investments, including ecommerce businesses, New York real estate, Swedish industrials and German residential property.
British Empire then look for catalysts for the share price of their investments to catch up with the value of the underlying assets, either through share buybacks or special dividends. If this is not forthcoming they adopt a constructive activist approach. This simple style of investing has seen them compound returns at over 12% a year since 1985.
As British Empire is itself an investment trust trading at a discount to the value of its underlying invests, we estimate that we can buy £1 of assets for 65 pence; that kind of value doesn’t come around very often.
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