Factsheet as at 31 August 2018

Investment Commentary
The GBP A class of the fund recorded a loss of 0.61% for the month of
August 2018. This brings the cumulative return of the fund in GBP from
inception in June 2015 to 39.22%.
Focus Rising instability in emerging markets has spawned a new financial
The VT Price Value Portfolio is an open-ended UCITS fund acronym: BAIT. This coinage is perhaps a little unfair on Italy, but it
incorporated in the UK. The fund’s objective is to deliver makes sense in the context of Brazil (experiencing a currency crisis
attractive long term returns. ahead of presidential elections where the leading candidate is in jail),
Argentina (seeking a $50 billion bailout from the IMF amidst a currency
Investment Philosophy crisis in which interest rates have been hiked to 60 percent) and Turkey
The fund seeks to invest with specialist ‘value’ equity managers (in the unhappy position of simultaneously experiencing currency crisis,
internationally on an unconstrained basis. The fund also seeks trade wars and a finance minister who happens to be the son-in-law of
to invest into listed businesses of exceptional quality trading at the President).
undemanding multiples. The fund endeavours to invest
according to the time-honoured principles of ‘value’ investing Other than two small investments in African and Indian subsidiaries of
developed by Benjamin Graham. Fairfax Financial Holdings, our only exposure to non-developed markets
is in Vietnam. The country is, strictly speaking, not even an emerging
market; index provider MSCI designates Vietnam as a ‘frontier’
Fund Facts economy. To distinguish between developing, emerging and frontier
Investment Manager Price Value Partners economies, MSCI uses criteria including economic development, size and
liquidity, and market accessibility. Not being beholden to benchmarks,
Portfolio Managers Tim Price, Killian Connolly we can invest freely throughout the world. From a bottom-up basis, the
Fund Type UK UCITS OEIC sheer number of companies generating significant cash-flow yields in
Launch Date 16 June 2015 Vietnam is remarkable, so we’re happy to focus on that economy and
Share Classes A, B wait for other countries or regions to become equally as compelling.
Currency Classes GBP, USD, EUR
Dealing, Valuation Daily 12:00p.m. GMT Perhaps other markets participants are noticing the valuations available
Management Fees A: 0.75% in Vietnam, as our regional managers returned c.3.5% during a turbulent
B: 0.50% month when the Ishares MSCI Emerging Market Index fell by over 3.5%.
Performance Fees None We are attending a research trip next month, visiting companies located
ISIN Codes A £ Acc: GB00BWZMTX09 in and around Ho Chi Minh city and will update investors on valuations
A £ Inc: GB00BD8PLW60 and operations in more detail following that trip.
(Variations in historic A $ Acc: GB00BWZMTY16
performance shown by the A € Acc: GB00BWZMTZ23 Sentiment has certainly turned strongly negative on commodities in
general, which is the typical reaction when emerging market volatility
Oc currency share
different
rises. The strong dollar also doesn’t help sentiment for resource
classes of the fund relate B £ Acc: GB00BWZMV016
solely to foreign exchange B £ Inc: GB00BD8PLY84 companies and the combination of both these factors was in our view
translation effects, as the B $ Acc: GB00BWZMV123 the primary driver of the poor returns from our commodity-related
underlying holdings are B € Acc: GB00BWZMV230 holdings. It certainly wasn’t their results to end June, which were strong
identical.) across the board. The metal streaming firm, Wheaton Precious Metals
(WPM) fell over 17% for the month despite the release of some strong
Minimum Investment A £1000 / $1000 / €1000 operational results. The firm saw H1 net profit rise 201% to CAD386M.
Minimum Investment B £1M; $1M; €1M A portion of this profit was attributed to a one-off gain on the
termination of a streaming contract, however, EBITDA and CFO
remained strong without even factoring in the expected increase in metal
sales toward the end of the year as more royalty contracts come on
Fund Metrics stream.
Price to earnings ratio 14.1x
Ramelius Resources, which we discussed a few months ago, also saw a
Price to book ratio 1.3x
large disparity between end June results and its share price this month.
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Performance History
Period GBP A Share
Class

1 Month -0.61%

Year-to-date -2.87%
Since inception
39.22%
(16.06.2015)

The fund is managed independently of any

benchmarks. Chart source: Bloomberg LLP.
 Investment Commentary (continued)
Following the acquisition of the Edna May tenement in September
last year, the firm is now producing over 200,000 oz of gold a year
across multiple tenements - from both underground and open pit
mines. It has zero debt, c. AUD100m in cash (40% of market cap)
and offers a compelling CFO yield of over 50%. It’s guiding for
slightly higher production for the next twelve months and
announced a 74% increase in net profit from its end June 2017
figures. Unfortunately, the negative sentiment across all resource
companies saw the shares fall over 12% for the month. Diamond
Geographic Exposure Offshore, the Tisch family-controlled oil services firm was in our
view another casualty of macroeconomic sentiment and not bottom
Country Allocation Country Allocation up factors. Shares rose over 5% at the start of the month as end
Japan 36% Vietnam 17% June results beat market expectations. However, the shares fell
c.9% during the month despite the operations YTD still providing
Europe 21% Canada 8%
us with a c.10% CFO yield and Diamond announcing two substantial
US 10% Australia 3% new contracts with BP and Anadarko as well as lower out-of-service
time in coming quarters. On the back of this guidance, we expect
India 2% Other 2%
EBITDA and CFO to rise by year end – irrespective of the
Cash 1% macroeconomic winds.

We made one small charge in the portfolio during the month,

Sector Exposure reducing the position in Arcus Japan (the worst performing Japanese
Sector Allocation Sector Allocation exposure since we launched the fund) and adding more to our
Industrials 29% Consumer 17% holding in Boskalis, the diversified marine holding company. The
Financials 10% Commodities 20% results announced this month by Boskalis included a write-down in
their transport subsidiary, however its EBITDA was in line with our
Technology 8% Real Estate, 11% expectations for a cash on cash return of over 10%. We prefer to
Infrastructure look at Enterprise Value (EV) when analysing companies as the book
Utilities 3% Other 1% value of some investments or intangibles are, for accounting
reasons, far removed from their cash-generating capabilities. The
write-down impacts not only investor sentiment, but more
importantly book value returns of the company. However, with our
Major holdings 10% margin of safety, Boskalis is generating enough cash-flow from
Samarang Japan Value 16.3% the assets to meet our margin of safety and since the transport
sector was loss making, it is not contributing to this cash-flow. So
Halley Asian Prosperity Fund 15.9%
the ability of the firm to compound via cash-flow and EBITDA hasn’t
Vietnam Value and Income Fund 9.5% been impaired by the write-down. We brought the position up to
Argos Argonaut Fund 7.3% 3.3% and expect it to add strong performance to the fund when
Boskalis operates in line with the increased order book and
Arcus Japan Fund 5.6% management guidance of a stronger second half of the year.
Michinori Japan Equity Fund 4.7%
Loews Corp 4.6% Lastly. one of the best performing holdings during the month was
Yara, up 7.3%. We built up the position in the summer of 2106 after
Yara International 4.4% our holding in Wheaton Precious Metals had almost doubled in
Power Corp 3.9% value. At that stage, sentiment was strongly against fertiliser
companies as analysts predicted a glut in Urea and Ammonia
HAL Trust 3.7%
production. The company continued to grow book value during the
end of 2016 and 2017 despite lower revenues as predicted. This
year it has grown reported revenue growth of 5% and CFO growth
Fund Platforms of 40%. The stock has returned c. 20% but now that the key metrics
The fund is available on the following platforms: are growing again, we look forward to further gains.

AJ Bell Allfunds
Alliance Trust Ascentric
Aviva Brewin Dolphin
Co-Funds Hargreaves Lansdown
James Hay Novia
Nucleus Old Mutual Wealth
Stocktrade TD Direct
Transact
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Important Information
Past performance is not a guide to future returns. The value of investments and the income from them may go down as well as up and is not
guaranteed. An investor may not get back the amount originally invested. Price Value Partners Ltd does not give you investment advice so you
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(and take particular note of the risk factors detailed therein). If you are unsure whether to invest you should contact a financial advisor. We have
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