Majedie Investments (MAJE)

02/01/2024

Results analysis from Kepler Trust Intelligence

Majedie Investments (MAJE) has released its annual results for the year ending 30/09/2023, the first following the transfer of portfolio management responsibilities to Marylebone Partners in January 2023. Over the period, MAJE's NAV total return increased by 14.1%. The managers report that investment performance between February 2023 (when they assumed investment management responsibility) and the financial year-end was effectively flat.

Over the course of the financial year, MAJE generated a share price total return of 26.2%, which is reflected in the discount narrowing from 25.8% to 18.7%. Subsequently, MAJE's discount has narrowed to 12.1%, as at 29/12/2023.

The dividend policy has changed following the introduction of the new investment policy which will see equal quarterly dividends paid, equating to approximately 3% of NAV over the year - the board hopes this will ensure greater clarity for shareholders.

Chairman Cristopher D Getley commented that MAJE's new investment manager, Marylebone Partners, "believes that this is an excellent juncture at which to be deploying capital." He also noted that "the board expects the period ahead to be defined by structurally higher rates, variable liquidity, more geopolitical and cyclical volatility, and greater fundamental price dispersion within markets", adding "this is precisely the sort of environment in which a highly selective, fundamental approach that features distinctive bottom-up investments should thrive."

Kepler View

Majedie Investments (MAJE) aims to provide investors with a liquid endowment-like investment strategy. With the appointment of the new investment manager, Marylebone Partners, in January 2023, we believe MAJE now offers investors a truly differentiated investment proposition. The managers' ambition over the long term is to provide shareholders with an alternative to generic investment strategies whose historic success depended on cheap leverage, abundant liquidity, and rising asset prices. Although the strategy is focused on equities, the managers have an unrestricted multi-asset approach which could provide some stability and reduce volatility over time. Although it is too early to analyse performance, we think the portfolio includes some diversifying allocations which we don't think many investors will have exposure to, in addition to the prospect of new, alternative investment ideas.

In our view, the narrowing of the discount since Marylebone took over the management of the trust, reflects the interest in such a differentiated strategy as investors have become more aware of what MAJE now offers, and we note the incentive for the managers is to maintain a narrow discount given the management fee is tied to the market cap. We believe MAJE's mix of fundamental bottom-up ideas with lower levels of cross-correlation to one another has the potential to offer investors an investment proposition capable of performing across the market cycle and acting as a complementary investment for shareholders' often generic equity portfolios.

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