Hawksmoor’s investment managers bought into heavily-discounted energy storage funds across their trio of multi-asset portfolios.
Ben Conway, and his co-manager Daniel Lockyer, have added investment trusts specialising in assets that store energy generated from renewable sources across the flagship Distribution fund, and its £195m Vanbrugh, and £27m Global Opportunities portfolios.
The manager duo added Gore Street Energy Storage (GSF) and Gresham House Energy Storage (GRID) to Vanbrugh, which is the most cautious of the three Hawksmoor funds, while GRID was added to the £210m Distribution portfolio and Global Opportunities.
GSF currently trades on a premium of 14.1% premium and pays a yield of 6.6%. Over 12 months, the share price has jumped 18.3% and the net asset value (NAV) has grown 11.4%.
GRID is the more popular trust at £396m, but hasn’t fared as well as GSF, although still delivering a NAV return of 5.7% and a share price of 8.7%. The fund is trading at a premium of 14.6% and pays a yield of 5.5%.
Conway said the energy storage funds are an ‘exciting’ opportunity.
‘[The funds] own batteries and then rent them out to the National Grid (NG) to complement the use of renewable energy,’ he said.
‘The grid really likes batteries that store and supply energy to the grid at times of demand.’
The funds were bought when the discount rates were high, which Conway said meant there is ‘plenty of room to come through and drive the NAV forward and deliver an attractive level of income’.
The manager said the key to Hawksmoor’s strategy is ‘identifying idiosyncratic opportunities’ and ‘owning cheap assets for a long time’.
Conway also added Japanese-focused trusts to the Distribution fund, which lagged its Investment Association Mixed Asset 40-85% Shares sector over the final quarter of 2020, returning 7% against 8% for the average manager.
He initiated a holding in the £127m Polar Capital Japan Value open-ended fund, run by Gerald Cawley, despite its poor performance against the Topix benchmark over one, three, and give years. The portfolio fell 10.3% in 2020, against a 9.6% gain in the index, due to its value bias.
Conway said the fund ‘has a strong flavour in terms of style’.
‘Japan is clearly the cheapest equity region in the world and it is correct to increase exposure, and within Japan we think there is a similarly strong opportunity in that style, so it is discount on discount,’ he said.
‘Japan has always been cheap, relatively, but the value discrepancy is unjustifiable.’
He added that the pair have been selling more generalist global equity funds as ‘we really target the cheapest areas of the equity markets’.
Hawksmoor Investment Management this week announced it is being taken over by Hurst Point Group, a subsidiary of US private equity giant Carlyle Group. Conway described the bid as ‘very flattering’ and stressed that for investors there will be ‘no change’ in the way the funds are run.