Westhouse backs F&C private equity trust

Westhouse Securities has reaffirmed its backing of F&C Investments’ private equity investment trust after a meeting with the manager Paul Sneddon.

The trust broker said F&C Private Equity had seen the discount, which its shares trade at relative to the value of its assets, narrow but that the trust stilloffered investors value.

“Our meeting merely reinforced our ongoing ‘buy’ recommendation on the fund,” analyst Paul Locke said.

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“The fund is due to go ex on its next dividend on April 30, which in itself provides attractions at these levels. However, it is the active management of the portfolio and the still highly attractive valuation on the underlying portfolio that continue to grab our attention.”

Going ex-dividend means a stock will cease to pay a dividend, so buying the trust before this date means investors would receive the payout. However, stocks usually drop in price by close to the amount of the expected dividend. Mr Locke added that while concerns about stock prices in the broader equity market persist, the F&C trust traded at an average multiple of 7.6x enterprise value at end 2013.

“Cheaper debt, a conservatively priced portfolio, active management of this portfolio and a historically active realisation profile (at enhanced valuations), underpin our recommendation on this fund,” he said.

“And such fundamentals… are still available on a comparatively attractive discount.”