Artemis UK Special Situations Fund
Fund Manager's Comment
Data as at 30 September 2010
After the macro-economic concerns of the past few months, the UK stockmarket rose strongly in September. The change in sentiment was supported by continued good corporate results and corporate activity. The fund benefitted from the recommended bid for Intec Telecom from CSG of the US. But the price was not exactly ‘top dollar’. The valuation is just over one times enterprise value to sales, which compares poorly to other deals in the sector. Whilst Intec has suffered in the short term, current profitability is at a low point and the company has over $100m in net cash. We remain holders on the outside chance of a higher bid.
A number of holdings had results during the month. Genus, the animal genetics company, produced strong figures and confirmed its exciting outlook given the need to increase productivity in farming. Shanks Group and London Stock Exchange both had in line trading statements. In the case of Shanks, the major positive in the statement was the sale of a PFI investment which reduces debt. For LSE the improvement in its market share is good news. The shares currently trade on 11 times earnings with a 4% yield which we feel is great value for a business that has fought off major competition.
CSR, one of our cash rich companies, initiated a share buyback of up to $50m – 10% of their forecast cash pile. Ricardo announced that their design for the Ocelot Light Armoured Protection Vehicle has won approval from the Ministry of Defence. This, accompanied by an improving order book in their automotive business, leaves the outlook for Ricardo quite positive. Finally, Sterling Energy, one of our oil exploration companies, fell following a negative result from a well in Kurdistan. Whilst this is clearly disappointing, they still have further to drill and have a strong balance sheet to finance other wells.
Co-Fund Manager
Ruth Keattch
Co-Manager of the Artemis UK Special Situations Fund Fund since 1 December 2008
Awards
UK Special Situations PDFKey Facts
| IMA Sector | UK All Companies |
|---|---|
| Sedol Number | 0219226 |
| Fund Size (offer basis) | £1100.0m |
| Historic yield | 1.70% |
| Unit offer price | 352.58p |
| Unit bid price | 330.48p |
| Valuation (UK business days) | 12:00 |
| Minimum lump sum investment | £1,000 |
|---|---|
| Minimum monthly investment | £50 |
| Launch | 9 March 2000 |
| Launch price | 100p |
| Preliminary charge | 5.25% |
| Annual Management Fee | 1.50% |
| Unit type | Accumulation |
| Accumulation date | 28 February |
| Total Expense Ratio | 1.56% |
Data as at 30 September 2010.
Performance
| Since Launch* | 5 Years | 3 Years | 1 Year | 6 Months | |
|---|---|---|---|---|---|
| UK Special Situations Fund (TR)† | 247.8 | 24.8 | -3.4 | 9.2 | 3.0 |
| FTSE All-Share (TR)† | 29.2 | 24.7 | -3.1 | 12.5 | 0.2 |
| FTSE 100 (TR)† | 21.2 | 21.9 | -3.5 | 11.8 | -0.6 |
| Sector Average | 21.6 | 19.5 | -5.3 | 11.9 | 2.2 |
| Position in Sector | 1 | 84 | 118 | 218 | 90 |
| Funds in Sector | 150 | 235 | 279 | 300 | 303 |
| Quartile | 1 | 2 | 2 | 3 | 2 |
Please remember that past performance is not a guide to the future.
* Data from 9 March 2000. Source: Lipper Limited, bid to bid in sterling with net income reinvested to 30 September 2010. All figures show total returns. †Percentage Growth. Sector is IMA UK All Companies.
Percentage Growth
Artemis UK Special Situations Fund Fund 12 Months to 31 December 2009
| 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|
| 9.2 | 15.2 | -23.2 | 15.2 | 12.1 |
Further Discrete Performance periods.
Source: Lipper Limited, bid to bid in sterling with net income reinvested. All figures show total returns.
Value of £1,000 invested at Launch to 30 September 2010.
Data from 9 March 2000. Source Lipper Limited, bid to bid in sterling with net income reinvested to 30 September 2010.
Asset Allocation*
*Without cash. Source: Internal
Top Ten Holdings*
| BP | 4.1% |
|---|---|
| GlaxoSmithKline | 3.4% |
| Centrica | 3.3% |
| AstraZeneca | 3.2% |
| Smiths Group | 2.9% |
| London Stock Exchange | 2.7% |
| Reed Elsevier | 2.6% |
| BG Group | 2.6% |
| Royal Bank of Scotland | 2.5% |
| BT Group | 2.4% |
* Without cash.
Source: Internal.
Market Sector Split*
| Industrial Goods & Services | 20.8% |
|---|---|
| Oil & Gas | 17.4% |
| Healthcare | 11.8% |
| Technology | 8.2% |
| Utilities | 6.7% |
| Food & Beverage | 5.7% |
| Financial Services | 5.6% |
| Insurance | 5.2% |
| Media | 5.0% |
| Other | 13.6% |
* Without cash.
Source: Internal.
% Variance†*
| London Stock Exchange | 2.6% |
|---|---|
| Smiths Group | 2.6% |
| Centrica | 2.3% |
| Reed Elsevier | 2.3% |
| Domino Printing Sciences | 2.1% |
| Royal Bank of Scotland | 2.0% |
| Shanks Group | 2.0% |
| Devro | 1.9% |
| Salamander Energy | 1.8% |
| Spirent Communications | 1.8% |
† Positive variance between stock % held in the Fund versus FTSE All-Share.
Risk Warning
Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk), 25 The North Colonnade, Canary Wharf, London E14 5HS and is a member of the IMA. Artemis Fund Managers Ltd is a member of the Artemis Marketing Group. We only market our own unit trusts. The value of an investment, and any income from it, can fall as well as rise as result of market and currency fluctuations and you may not get back the amount originally invested. Investment in the securities of smaller and/or medium sized companies can involve greater risk than is customarily associated with investment in larger, more established companies. The market for securities in smaller companies is often less liquid than that for securities in larger companies, meaning above average price movements both positive and negative can be expected.
All data is sourced internally unless otherwise stated.
The historic yield reflects distributions declared over the past twelve months as a percentage of the mid-market unit price, as at the date shown. It does not include any preliminary charge and investors may be subject to tax on their distributions.
