Shires Smaller Companies Trust, managed by Glasgow Investment Managers has failed to capitalise on t...
Shires Smaller Companies Trust, managed by Glasgow Investment Managers has failed to capitalise on the rally in small companies. In the first six months of the year the £33.1m trust grew its NAV by 21.8% against a rise of 31.2% in the FTSE SmallCap Index.
The principal contributions to the good performance of the index were made by basic industry and resource stocks, notably in the chemical and construction industries where substantial recoveries in earnings are expected. The trust's underlying portfolio has been underweight in these more cyclical sectors and emphasised sectors with defensive characteristics, such as food manufacturing and health care, which did not perform as well.
While the trust underperfomed its benchmark it was well ahead of the FTSE All-Share Index which returned 11.5% over the six months. During the year there has been a marked reduction in the number of the trust's warrants in circulation. At the beginning of June holders exercised their rights to subscribe for 12,134 new ordinary shares at £1 per share. In addition the trust purchased in the market 649, 608 of its warrants for cancellation.
There are now 2,463,417 warrants outstanding and the last date for warrant holders to subscribe for ordinary shares is 1 June 2000. The repurchase of warrants at a price that, taken together with the subscription price of £1 per ordinary share, represents a discount to underlying NAV per share contributes a small increase in fully diluted NAV per share. As at the close of business last Wednesday the trust was trading at a discount to NAV of 20.4%. At the beginning of the year the discount stood at 23.3.
Shareholders in the trust benefited from a rise in revenue earnings from 5.51p compared with 2.32p for the corresponding period last year. The trust's interim results report the board has declared a second interim dividend of 1.45p per share.
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