crossley and West of invesco Techmark enterprise buy shares as discount goes beyond 50%
The two managers of the Invesco Techmark Enterprise Trust bought 50,000 shares in the company last week as its share price dipped to a 50% discount to NAV.
Andrew Crossley, lead manager, said both himself and Robin West, who works closely with him on the £12.5m trust, made the decision because they felt the whole technology market was oversold, which had led to a depressed NAV and rating.
Crossley said: 'For a conventional trust, I cannot remember a time when the discount had been so wide. This, in our view, represented an excellent buying opportunity.'
Alan Ray, analyst at Credit Lyonnais, however, said the trust is not as cheap as it appears and warned investors to be wary.
He said the bid offer spread on 25 September was 30%, or 9p, with the bid at 27p and the offer at 36p. That meant buying at a discount of 22% but selling at one of 42%.
The trust changed its policy and objective in May 2000 from investing in UK small caps to emerging UK technology. Crossley said before the change in objective, the trust, formerly Invesco Enterprise, was languishing through a lack of interest in its capital structure, which consisted of high yielding smaller companies, convertibles and growth equities.
He added: 'A number of investors came forward wanting the trust to become a UK emerging technology trust so the decision was made to have a clearly defined capital structure that only consisted of ordinary shares.'
Since the change in objective, the trust's share price performance has been close to that of the Techmark 100, which Invesco admitted had been a worse performing index than it had expected.
According to TrustNet, over one year to 24 September 2001, the share price is down 83.1%, compared to the index, which is down 71.2%.
Crossley said the trust has also outperformed others that changed their objectives to technology at the same time, such as the 3i European Technology and Amerindo Internet funds.
Over one year to 3 September 2001, on a mid-to-mid share price basis, Invesco Techmark Enterprise is ranked 12 in the sector specialist TMT peer group, returning -68.21%. 3i European Technology is ranked 13, returning -77.82, and Amerindo is bottom of the sector at 14, with returns of -85.3%.
Crossley said: 'We feel generally what has happened in technology has been due to the overvaluations and that ultimately technology is here to stay. Over the medium term, the sector will demonstrate decent growth and we believe we can add value to this in our ability in picking the right stocks.'
The trust invests in 109 holdings to diversify the portfolio. Crossley said the investment process is essentially a bottom-up stockpicking one, which currently favours IT, computer services, electronics and biotechs.
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