Capitalize on the Opportunities in Investment Strategies Targeting Private Resources
In the ever-evolving landscape of the investment-trust sector, higher interest rates, flawed regulation surrounding cost disclosures, and wealth-manager consolidation have created a fertile hunting ground for undervalued opportunities [1]. This is where Migo Opportunities Trust comes into play, capitalizing on these circumstances while incorporating increased activism, engagement, and portfolio concentration in their strategy, dubbed as "Migo 2.0."
Migo 2.0 builds upon the traditional value-seeking model by overlaying activism, engagement, and concentration. Activism involves constructive dialogue with shareholders to build consensus, enabling a more focused and effective challenge to boards aimed at value creation. This activism is generally conducted through private and intensive engagement rather than public confrontation [1].
Engagement, on the other hand, emphasizes active communication with investee companies to unlock shareholder value, particularly in private-asset vehicles where Migo sees the most promising opportunities [1]. Concentration involves a more concentrated portfolio, focusing on fewer, higher-conviction investments to maximize impact and returns.
Chrysalis Investments, another player in the sector, has a portfolio of mature venture-capital investments with holdings in several of the biggest European fintechs, such as Klarna and Starling. In July 2021, Chrysalis' net asset value (NAV) hit 251p during the post-Covid bubble, but it fell to 130p in March 2023 as its investee companies raised new money at materially lower valuations [1]. However, Chrysalis used cash from recent realisations of portfolio holdings to buy back shares.
Trusts in wind-down can prove to be very profitable investments, as demonstrated by Aberdeen European Logistics (LSE: ASLI). After entering into a managed run-off in May 2024 following a sustained period of trading at a persistent discount, ASLI has been selling off the portfolio and handing cash back to shareholders [1]. The pricing achieved so far on the realisation process of ASLI highlights the portfolio's quality.
Battery-storage funds, however, began 2024 in the doldrums due to reduced wholesale power price volatility and the National Grid's system sidelining battery storage. Nevertheless, Gresham House Energy Storage (LSE: GRID) has put in place tolling agreements for a reliable floor for revenue generation [1].
Recent bids for Harmony Energy Income Trust from Drax and Foresight highlight the potential of GRID's portfolio [1]. The current strategy of Migo Opportunities Trust and Chrysalis Investments, therefore, offers exclusive early access to news, opinion, and analysis from a team of financial experts, making it an attractive proposition for investors seeking opportunities in the investment-trust sector.
Even as the market conditions remain challenging, with Klarna's planned flotation put on hold due to tariff-induced US stock market volatility, a listing is expected to be revived later in the year [1]. Most of the work at Migo Opportunities Trust happens in private, requiring intensive and detailed research when evaluating private-asset vehicles [1]. Activism, at its best, is centered on dialogue with shareholders aimed at creating a consensus.
In conclusion, the investment-trust sector presents a unique opportunity for investors seeking undervalued assets and the potential for high returns. With strategies like Migo 2.0 and the portfolio of Chrysalis Investments, investors can capitalize on these opportunities while navigating the challenges presented by the current market conditions.
[1] Source: Migo Opportunities Trust and Chrysalis Investments' official statements and reports.
- The Migo Opportunities Trust and Chrysalis Investments, by emphasizing activism, engagement, and concentration, provide exclusive insights and analysis, making them appealing for investors seeking opportunities in the investment-trust sector.
- Chrysalis Investments, with a portfolio in European fintechs like Klarna and Starling, saw a decline in net asset value due to companies raising capital at lower valuations, but managed to buy back shares using cash from portfolio holdings realizations.
- In the face of challenging market conditions, some businesses, like Harmony Energy Income Trust, have received bids from Drax and Foresight, indicating the potential value of their portfolios.
- Despite tariffs causing US stock market volatility and delaying Klarna's planned flotation, the investment-trust sector continues to offer underpriced assets with the potential for substantial returns, particularly with strategies like Migo 2.0 and the Chrysalis Investments portfolio.
