On this page you will find a video with a message from the Chairman and a presentation from the Investment Manager. Below is also a hyperlinked pdf of the AVI Global Trust plc 2020 Annual Report. We invite anyone who has any questions on the report or presentation to email AGM@aviglobal.co.uk and the questions along with the responses will be posted here below.
We wish you the very best this holiday season.
Questions and Responses
“Hopefully not too late but could the manager discuss why the holding in Tokyo Broadcasting has been sold. Previously the manager has explained that this company represents an excellent example of a valuation well below asset value. What has changed ?”
“TBS is indeed a very cheap company, and exactly the kind of situation that has drawn the attention of investors such as ourselves. The challenge with many undervalued situations in Japan, is to get management to change their attitudes to shareholder returns and to adopt more shareholder-friendly policies. We have had some success on this front and have found many management teams to be receptive to our suggestions. In the case of TBS however, management have been far too slow to change. Whilst we could continue to put more pressure on them, the reality is that the shareholder register is dominated by friendly groups who will always support management, and thus the pace of change has been too slow.
We had been investors in TBs for three years. That is what we believe to be the minimum amount of time needed in order to assess whether we are making progress with management. Earlier this year, there were many cheap opportunities and we needed to raise cash to take advantage of those. We concluded that the upside from those would likely be greater than from TBS.”
“I thought that AVI employees held more shares in the Trust than is mentioned in the R&A?”
“Regarding the number of shares held by AVI staff, the number appears lower than you might expect as it only includes the shares held by the investment team rather than the broader group of employees. The total number of shares held by all AVI employees is 398,877.”
“I know how frustrating and disappointing it is to see share prices fall in names that one has carefully researched and studied. Do you intend to introduce a change in the future to the process of monitoring to attempt to reduce the losses and subsequent impact on performance and overall return?”
“Of course, no one intends to buy stocks that go down. And one of the areas I have invested greatly in is building up the research team at AVI. We now have 8 analysts working alongside me on the investment team so we have invested greatly in our efforts and capabilities on this front. Something we have never previously done at AVI to this extent.
The detractors to performance this year should be put into the context of a remarkable year. Most of the losses were locked in by sales that took place in March this year in order to raise cash to be invested in other opportunities we believed would fare better in a lockdown environment. Whilst we may have crystalised a loss over the reporting period it is not necessarily the case that these investments have been poor over their lifetime. They were poor over the period from 30th September 2019. The decision to lock in those losses was a good one. As the money was invested in stocks that went up by more than the amount those shares, we sold went up by.
Whilst I would dearly have liked to sell them before the COVID-19 crash in February/march, as you are aware markets fell sharply over a matter of days. That is not an easy environment in which to sell shares, that are not always the most liquid.
Thus, we took a tough decision to sell out of companies that had fallen sharply and that looked cheap on the surface, in order to buy companies, we thought would do better.
The through research that the team had carried out before anyone had heard of COVID-19 meant that we were able to re-position the portfolio quickly and efficiently, having already carried out extensive due- diligence on the new names that came into the portfolio.
We did not predict COVID-19, which is the kind of event that very few research processes can build into their models. Rather than focus on the fact that we crystalised a loss on a handful of holdings, I am most proud of the fact that we took decisive action to prevent further under-performance and that we were bold enough to reposition the portfolio.”
AVI Global Trust p.l.c is referred to as ‘AVI Global’ throughout the website. AVI Global’s investment managers, Asset Value Investors are referred to as ‘AVI’