MAM’s Greenwood invests third of Worldwide Growth in arb targets

MAM Funds’ Nick Greenwood has upped arbitrageur plays to 33% in his £35m Miton Worldwide Growth investment trust.

Greenwood has added 4% to the space in the past month to take advantage of illiquidity in trusts with a market cap below £100m, making it the largest bet in the portfolio.

It currently has 25 positions ranging from 0.5%-1.5.

“We are seeing an opportunity in investment companies with a market cap below £100m as wealth mangers will not go near them. This creates distortion as the companies have £100m of assets but trade on a 40% discount so the market cap is £60m,” said Greenwood.

“The fear of illiquidity and wide discounts attract activist investors who then attempt to build up shares and force the trust to liquidate.

“As we are an investment trust, we can sit it out with our exposure to these illiquid trusts as we do not have to worry about redemptions.”

Greenwood has added positions in Aseana Properties, private equity group Aurora Russia and Infrastructure India as part of this strategy. 

“They will either find new buyers and the discount will narrow or there will be some kind of M&A activity, which means we will profit either way,” Greenwood said.

“Of course, there is a lot of risk involved in this space but this is why we have lots of small positions instead of having concentrated holdings at 4%.”

To fund the increase in arbitrageur plays Greenwood has taken profits in other areas selling a 4% stake in Anglo & Overseas trust prior to its rollover into EP Global.

Although he said the rollover is logical, he decided to cash in after being concerned on a top-down view of the economic prospects in North America and Europe, to which EP Global has heavy exposure.

“The corporate developments happened much quicker than I anticipated, so I decided to take profits as we bought at 83p and sold at £1 when the market went up to a level I thought was overvalued,” said Greenwood.

“On a top-down basis, we are concerned with the direction mainstream markets are going so, in the short term, this is why we have reduced the exposure and added it to our special situation arbitrageur plays.”