Hansa Investment Company Ltd · LSE:HAN
Hansa Investment — Hansa Trust — Investor Presentation (November 2017)
58 slides from Hansa Investment's investor presentation, November 2017
Slide 1: Hansa Trust November 2017
“® HANSA TRUST PLC HANSA TRUST November 2017
Slide 2: Hansa Trust is a proprietor based investment trust
Hansa Trust is a proprietor based investment trust blending best-in-class third party funds, a global equity portfolio and a strategic holding in Ocean Wilsons Holdings Managed by Hansa Capital Partners the trust adopts a long-term approach, ignoring short-term noise, with a focus on the growth and
Slide 3: Index
HANSA TRUST Index • History of Hansa & Strategic Review • Performance Review • Portfolio Positioning & Characteristics • Ocean Wilsons Holdings • Market Outlook • Appendix 3
Slide 4: History of Hansa & Strategic Review
History of Hansa & Strategic Review 4
Slide 5: Hansa timeline
HANSA TRUST Hansa timeline Rea Brothers acquire a number of Finsbury Trust becomes investment companies, including Hansa Trust Scottish and Mercantile Rea Brothers purchases Strategic review of Hansa 58% of Ocean Wilsons Scottish and Trust initiated Holdings Limited Mercantile becomes Hansa Trust be
Slide 6: Corporate structure
HANSA TRUST Corporate structure 6
Slide 7: Strategic Review October 2017
HANSA TRUST Hansa Trust Strategic Review October 2017 Description Portfolio Hansa Trust Weight January 2014 Core Regional Regional exposure based on the output of the Hansa 33.5% Silo House View. Description Portfolio Weight UK Special situation UK equities 65% Equities but also included larger
Slide 8: Performance Review
Performance Review 8
Slide 9: Performance to end October 2017
HANSA TRUST Performance to end October 2017 Financial YTD One year 3 years (p.a.) 5 years (p.a.) 10 years (p.a.) 15 years (p.a.) NAV Performance TR 10.6% 16.7% 7.9% 8.0% 4.2% 13.0% NAV Performance ex. OWHL TR 8.7% 14.4% 8.5% 9.2% 3.5% 10.1% Ordinary Share TR 20.0% 20.8% 5.0% 8.9% 1.9% 13.0% ‘A’ Ordi
Slide 10: Performance of the different silos one year to October 2017
HANSA TRUST Performance of the different silos one year to 31 October 2017 30% 25% 20% 15% 10% 5% 0% Core Regional Funds Global Equities Thematic Diversifying (ex OWHL) Ocean Wilsons Cash/FX Holdings Limited 10
Slide 11: Portfolio holdings by silo
£0 £10,000,000 £20,000,000 £30,000,000 £40,000,000 £50,000,000 £60,000,000 Goodhart: Hanjo 3,234,610 Findlay Park American 2,208,562 Indus Japan Long Only 1,967,469 Select Equity Offshore 1,390,255 SISF Asian Total Return 1,237,273 Vulcan Value Equity 1,075,441 Adelphi Eur Select Equity 994,258 Blac
Slide 12: Portfolio holdings by silo (comparison)
£10,000,000 £20,000,000 £30,000,000 £40,000,000 £50,000,000 £60,000,000 £70,000,000 £80,000,000 £90,000,000 £- Findlay Park American 4,650,219 Select Equity Offshore 4,404,705 SISF Asian Total Return 3,706,262 Goodhart: Hanjo 3,560,407 Vulcan Value Equity 3,389,744 BlackRock Eur Hedge 2,170,685 Indu
Slide 13: Performance of less correlated funds June 2016 to October 2017
HANSA TRUST Performance of less correlated funds 1 June 2016 to 31 October 2017 A basket of lower-correlated funds was purchased in June/July 2016. The performance since has been positive and outperformed bonds and cash. 25.0% 20.0% 15.0% Performance (GBP) 9.1% 10.0% 4.5% 5.0% 1.5% 0.1% 0.0% -5.0% -
Slide 14: Transactions January 2017 to October 2017
HANSA TRUST Transactions 1 January 2017 to 31 October 2017 • Equity Purchases £31.8m: • Equity Sales £37.5m: – Berkshire Hathaway £2.7m – Galliford Try PLC - £7.8m (profit of £4.1m) – Samsung £2.6m – Experian Group Limited £6.3m (profit of £4.1m) – Softbank £2.5m – NCC Group - £5m (profit of £3.2m)
Slide 15: Portfolio Positioning & Characteristics
Portfolio Positioning & Characteristics 15
Slide 16: Current Positioning (as at October 2017)
HANSA TRUST Current Positioning (as at 31 October 2017) 25% 20.9% 20% 15% 12.9% 11.4% 10% 6.9% 6.7% 6.8% 5.9% 6.1% 5% 3.1% 3.5% 3.8% 3.5% 2.0% 1.7% 1.8% 1.2% 1.0% 0.5% 0.2% 0% 16
Slide 17: Portfolio Characteristics (as at October 2017)
HANSA TRUST Portfolio Characteristics (as at 31 October 2017) Look-through analysis of Hansa Trust portfolio, including holdings in Ocean Wilson (Investments) Ltd* Geographic Exposure 4.2% Sector Exposure 2.3% 1.5% 1.1% 2.2% 1.0% 0.5% 3.1% 5.3% 16.8% 9.0% 34.8% 5.3% 10.0% 7.1% 16.4% 11.2% 7.9% 9.5%
Slide 18: Other Portfolio Characteristics (as at October 2017)
HANSA TRUST Other Portfolio Characteristics (as at 31 October 2017) Annual 3rd Party Management Fees on Underlying Holdings Liquidity Cash 0.6% 1.5 < x ≤ 2% 1 < x ≤ 1.5% 5.7% Fixed 5.6% 34.7% 1 Week 35.9% 0% 36.7% 1 month 0 < x ≤ 1% 3 months 8.5% 52.0% 10.5% > 6 months 4.0% 6 months 5.9% Look-throug
Slide 19: Dividend Profile
HANSA TRUST Dividend Profile Dividend Policy The Trust’s dividend policy was updated in 2014, and it is now to pay two similar interim dividends each year. Barring unforeseen circumstances, the dividend is expected to grow over time reflecting the longer term returns of the portfolio. Under certain
Slide 20: Discount
HANSA TRUST Discount Hansa Trust Ord and A combined Hansa Trust Ord and A combined (relative to AIC overall average discount) 0% 10% -5% 5% -10% 0% -15% -5% -20% -10% -15% -25% -20% -30% -25% -35% -30% -40% -35% -45% -40% -50% -45% Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-1
Slide 21: Ocean Wilsons Holdings
Ocean Wilsons Holdings 21
Slide 22: Ocean Wilsons Holdings
HANSA TRUST Ocean Wilsons Holdings Ocean Wilsons Holdings is a Bermudian investment holding company whose main assets are a controlling interest in Wilsons Sons and an international investment portfolio, both run with a long-term view. The Oceans holding is controlled by the Hansa Trust board 22
Slide 23: Wilson Sons
HANSA TRUST Wilson Sons Revenue EBITDA Wilson Sons is among Brazil’s largest and oldest port, maritime and logistics services companies 23
Slide 24: Wilson Sons
HANSA TRUST Wilson Sons Despite the challenges faced in Brazil in recent years, Wilsons has generated significant economic value 24
Slide 25: Wilson Sons
HANSA TRUST Wilson Sons Wilson Sons operates in a market with significant structural growth potential 25
Slide 26: Ocean Wilsons Investments (Limited) as at October 2017
Hansa Trust Ocean Wilsons Investments (Limited) as at 31 October 2017 30% 28.3% 25% 20% 15% 13.3% 9.5% 10% 8.5% 6.0% 6.4% 6.7% 5% 3.0% 3.0% 3.2% 2.5% 2.0% 2.3% 2.5% 1.0% 1.0% 0.5% 0.4% 0% Ocean Wilsons Investments (Limited) is an investment portfolio focused on achieving long-term returns while emph
Slide 27: Market Outlook
Market Outlook 27
Slide 28: Risk-on Risk-off
HANSA TRUST Risk-on Risk-off RISK-ON RISK-OFF Still more to go for in Market timing is hard – better to equity markets but progressively move in this direction….but getting late in the day can we find good defensive assets? 28
Slide 29: Risk-on……valuations
HANSA TRUST Risk-on……valuations Aggregate Index Historical Percentile 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% P/E to Growth EV/Sales EV/EBITDA Price/Book Forward P/E FCF yield Cyclically adjusted P/E S&P500 STOXX600 ……Under a wide range of valuation measure, equity markets are increasingly fully
Slide 30: Risk-on……liquidity
HANSA TRUST Risk-on……liquidity …….clearly we are at an inflection point in the liquidity cycle but still huge amounts of liquidity being pumped into the system and a sense that rates remain anchored at low levels 30
Slide 31: Risk-on……growth
HANSA TRUST Risk-on……growth …….Economic growth is largely improving in both developed and emerging markets. No sign of recession any time soon 31
Slide 32: Risk-on……excess & exuberance
HANSA TRUST Risk-on……excess & exuberance Arguments for….. Arguments against….. Pockets of consumer excess in areas such Mortgage debt, which is far more important, auto debt is well under control Overall country debt levels still high in Banks are key to healthy economies and they developed economie
Slide 33: Risk-on……market lifecycle
HANSA TRUST Risk-on……market lifecycle Global Financial Crisis Liquidity pumped into the system ? via zero interest rate policies and QE The avoidance of a Liquidity global collapse in economies and the cycle banking system saw valuations inflects normalise across asset classes Equities rise Bond yie
Slide 34: Risk-off……bonds
HANSA TRUST Risk-off……bonds …..the hunt for yields has forced down yields, reducing long-term returns in much of the fixed income space. Identifying value in bonds from here requires more novel thinking and nimbleness 34
Slide 35: Risk-off……hedge funds
HANSA TRUST Risk-off……hedge funds Traditional Portfolio Portfolio with addition of CTAs Cash CTAs 20% 20% Equities 40% Equities 50% Cash 15% Bonds 30% Bonds 25% Dec 1999 to Sep 2017 Traditional Portfolio Portfolio with addition of CTAs Total Return 105.9% 122.0% Annualised Return 4.2% 4.6% Biggest D
Slide 36: Risk-off……hedge funds
HANSA TRUST Risk-off……hedge funds Discretionary macro hedge funds in equity market downturns 1.0% 0.5% Avg monthly return in equity down market 0.5% 0.4% 0.0% -0.5% -0.4% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% -3.9% -4.5% S&P 500 TR Index BbgBarc Global HFRI Macro Index MKP Opportunity Aggregate
Slide 37: Risk-off……real assets
HANSA TRUST Risk-off……real assets ……infrastructure has performed well with demand growing following many years of underinvestment, governments moving infrastructure programmes off their balance sheets and falling bond yields. The question from here is have valuations moved too high and are the risks
Slide 38: Risk-off……commodities
HANSA TRUST Risk-off……commodities Real US Interest Rates World Monetary Base …..gold arguably has no fundamental value but some of the factors that are associated with stronger gold prices are positive 38
Slide 39: Summary
HANSA TRUST Summary Lower Risk Assets Bonds, 1.9% Cash, 0.5% Private Equity, 7.6% Directional Hedge Hedge Funds (non Funds, 4.6% directional), 7.6% Wilson Sons, 20.9% Riskier Assets Strategic Allocation Equities, 56.9% …..we’re currently running 10% in defensive assets. We’re minded to progressively
Slide 40: Conclusion
HANSA TRUST Conclusion • Clearly markets are in the more mature stages of their lifecycle • Higher valuations remove the safety net and can lead to higher portfolio volatility and being susceptible to disappointment • For this reason we are getting prepared to add to more defensive positions as the
Slide 41: Appendix
Appendix 41
Slide 42: Investment process…..Overview
HANSA CAPITAL Investment process…..Overview Dynamic Asset We believe in dynamically moving between asset classes to reflect both valuations and the Allocation position within the business cycle. We are truly global in our outlook We do not view volatility as being an important risk. Rather we wo
Slide 43: Investment process….. Dynamic Asset Allocation
HANSA CAPITAL Investment process….. Dynamic Asset Allocation Global Equities Multi Asset Portfolio Here the Business Cycle becomes the key driver Valuation extremes are key drivers: • We seek to increase/decrease defensive holdings in these periods Time 43
Slide 44: Investment process….. Dynamic Asset Allocation %
HANSA CAPITAL Investment process….. Dynamic Asset Allocation 100% 90% 80% Long-only 70% Private Equity Private Debt 60% Real Assets 50% Emerging Market Debt 40% High Yield Debt 30% Hedge Funds Market Neutral Funds 20% Cash 10% 0% 2009 2010 2011 2012 2013 2014 A client’s Strategic Asset Allocation
Slide 45: Investment process….. Risk
HANSA CAPITAL Investment process….. Risk -48% -46% The fund management industry defines Much more important are drawdowns which volatility as risk – it’s convenient but not exceed a client’s tolerance ultimately relevant to long–term investors such as Hansa 45
Slide 46: Investment process…Risk
HANSA CAPITAL Investment process…Risk • Drawdowns represent the peak to trough performance of different asset classes at points of market distress. Typically the riskier the asset class the greater the potential drawdown. Drawdowns are problematic when they exceed an investor’s tolerance level, espe
Slide 47: Investment process…..Risk
HANSA CAPITAL Investment process…..Risk We protect ourselves against permanent impairments in capital in three ways: Valuation based investment approach and dynamically managing portfolios through business cycles Investing in high quality managers through a rigorous due diligence process Div
Slide 48: Investment process….. Portfolio Blending
HANSA CAPITAL Investment process….. Portfolio Blending Long-Only Long-Short Strategic Core Our natural hunting A combination of all-weather Regional Silo ground – as endowment managers or protection in type investors we want more mature business cycles to capture the natural Fee conscious! bet
Slide 49: Investment process…..Well connected
HANSA CAPITAL Investment process…..Well connected We have seeded some exceptional managers The combination of an extraordinarily well connected network and an experienced team enables us to invest in exceptional managers These managers are not normally available to the man on the street 49
Slide 50: Investment process…..Global equity selection
HANSA CAPITAL Investment process…..Global equity selection Our global equity portfolio is composed of 20 – 45 names, is diversified, has a high active share and is built from the bottom up 50
Slide 51: Investment process…..Summary
HANSA CAPITAL Investment process…..Summary Proprietor DNA A proprietor driven approach is central to how we manage money….patient, unconstrained and dynamic A dynamic approach We believe a static approach to managing money fails to reflect how cycles evolve and valuations change Well connected
Slide 52: The Team
HANSA CAPITAL PARTNERS The Team William Salomon Managing Partner *(years in industry/ (30yrs/17yrs) years at Hansa) Alec Letchfield Chief Investment Officer, Partner (25yrs/4yrs) Christopher Townsend Private Equity (18yrs/7yrs) William Lewis Jon-kit Chan Rob Royle Russell Metcalfe Research Analyst R
Slide 53: Team biographies
HANSA CAPITAL Team biographies William Salomon Managing Partner William Salomon has extensive knowledge of all aspects of private client and strategic fund investment business. He was responsible for developing Finsbury Asset Management and the Finsbury range of funds based on the concept of early r
Slide 54: Team biographies
HANSA CAPITAL Team biographies Christopher Townsend Private Equity Christopher is a qualified solicitor. He has an MA from Peterhouse, Cambridge and was awarded an MBA from London Business School. He is currently investment director at Hansa Capital GmbH and a non- executive Director of Ocean Wilson
Slide 55: Team biographies
HANSA CAPITAL Team biographies William Lewis Research Analyst Will joined Hansa Capital Partners LLP in 2012, having previously worked for four years on the investment team at what was then Lord North Street, now Sandaire Investment Office, a London- based private investment office. He graduated fro
Slide 56: Team biographies
HANSA CAPITAL Team biographies Robert Royle Global Equities Robert joined Hansa Capital Partners in 2016 to manage Global Equity portfolios. Prior to this he was a Partner at Smith & Williamson managing North American and Global equity mandates. He previously worked for Citi Quilter and Hill Samuel
Slide 57: Performance of the different silos three years to October 2017
HANSA TRUST Performance of the different silos three years to 31 October 2017 80% 70% 60% 50% 40% 30% 20% 10% 0% Core Regional Funds Global Equities Thematic Diversifying (ex Ocean Wilsons Cash/FX OWHL) Holdings Limited 57
Slide 58: Important Notice
IMPORTANT NOTICE This presentation pack is issued by Hansa Capital Partners LLP, which is authorised and regulated by the Financial Conduct Authority. Hansa Capital Partners LLP is the Portfolio Manager and Company Secretary to Hansa Trust PLC. Investment Trusts are UK Public Listed companies and ar