AVI Global Trust’s Steady Climb: Dissecting the Half-Year Results
AVI Global Trust (AGT) has delivered its half-year report to 31 March 2025, showcasing modest but resilient growth against a backdrop of significant geopolitical noise. While the numbers won’t set the world alight, they reveal a trust sticking firmly to its value-hunting guns, navigating choppy waters, and rewarding shareholders with a chunky dividend increase. Let’s unpack the essentials.
The Headline Numbers: Steady As She Goes
- NAV Total Return: +1.0%
- Share Price Total Return: +0.8%
- Benchmark (MSCI AC World Index): +1.5%
- Discount: Narrowed slightly to 9.2% (from 9.4%)
- Interim Dividend: Increased 25% to 1.50p per share (paid 25 July 2025)
The period was bookended by unusual calm followed by significant volatility triggered by US protectionist rhetoric (specifically, President Trump’s tariff announcements just after the period end). Chairman Graham Kitchen rightly notes that these snapshots don’t capture the full ride, but AGT emerged largely intact.
Dividend Delight and Buyback Brawn
The 25% hike in the interim dividend to 1.50p is a clear positive signal. Revenue earnings per share came in at 2.75p, comfortably covering the payout. The Board explicitly states its intention to “at least maintain” the final dividend, pointing towards a minimum total dividend of 4.05p for the full year – a steady and growing income stream many shareholders will welcome, even as the primary focus remains capital growth.
AGT also flexed its buyback muscle, spending £30.39 million to cancel 12.7 million shares (2.9% of shares outstanding). This shrewd capital allocation added 0.3% to the NAV – a tangible benefit for continuing shareholders and a clear tool to manage the discount.
Portfolio Pulse: Winners, Losers, and Conviction
Portfolio Manager Joe Bauernfreund’s report provides the colour behind the numbers. Performance was driven by a mix of successful exits, strong underlying NAV growth in key holdings, and active engagement.
Star Performers (Contributors):
- Apollo Global Management (+178bps): The standout. Acquired during turmoil in 2021 and sold in Dec 2024 for a stellar 165% total return (41% IRR). A classic case of identifying misunderstood quality and recurring earnings streams.
- D’Ieteren Group (+164bps): Benefitted from AGT opportunistically increasing its stake during tax-driven selling pressure after a large special dividend announcement. Its 51% discount to NAV (anchored by a recent transaction valuing its crown jewel Belron stake) remains a key attraction.
- Aker ASA (+88bps): NAV growth driven by its oil subsidiary Aker BP and a surge in dividends paid up to the holding company. Its new capital allocation framework targeting an 8%+ yield is compelling.
- News Corp (+65bps): The sale of Foxtel (albeit partly for unlisted DAZN stock) removes a distraction. The market still undervalues the potential for structural simplification, particularly around the massive REA Group stake.
- Reckitt Benckiser (+56bps): Bought during deep pessimism (litigation fears, decade-low P/E), AGT exited after a successful turnaround plan launch and discount narrowing, booking a solid 17% return.
Challenging Positions (Detractors):
- Rohto Pharmaceutical (-185bps): The biggest drag. Management’s pursuit of unprofitable regenerative medicine and poor communication (including a dilutive convertible bond surprise) overshadowed strong core skincare/eyedrop businesses. AVI has launched a public campaign with 17 recommendations to refocus management and capital allocation. Trading at a significant discount to peers despite superior margins.
- Entain (-93bps): Hit by an AUSTRAC investigation and the abrupt departure of its CEO after only five months. Despite these blows, AGT sees value obscured by near-term noise. The core online ops are showing improved growth and player retention, and BetMGM’s path to profitability looks better. The core stub trades at a bargain-basement ~5x EBITDA.
- Gerresheimer AG (-59bps): A new position. This German packaging leader trades at a chunky 47% discount. AGT sees multiple catalysts, including a strategic review of its Moulded Glass division and potential M&A interest (though one suitor, KKR, walked away). A post-period profit warning prompted an open letter from AVI to the Supervisory Board. Engagement is intense.
- Dai Nippon Printing (-54bps): Sold off after a large activist investor exited and a smaller-than-hoped buyback. AGT remains bullish on its hidden gem – the near-monopoly Fine Metal Mask business – poised to benefit from the shift to larger OLED panels in tablets/laptops.
- Christian Dior (-51bps): Suffered alongside luxury peers (LVMH) on demand concerns. AGT views the CDI structure itself as a source of potential future uplift if the Arnault family collapses it at NAV.
Geographical and Strategic Shifts: Doubling Down on Japan
One notable shift is AGT’s increased exposure to Japan (excluding Softbank), now at 23% of NAV vs. 16% a year ago. Bauernfreund expresses strong optimism, citing a developing market for corporate control, proactive management, and governance reforms permeating the market. This conviction, combined with low valuations, makes Japan a key hunting ground for AGT’s activist approach.
Reflecting the broad opportunity set they see, AGT’s gearing stands at 9.5%. Crucially, the portfolio’s weighted average discount sits at 39% – near the widest levels on record (barring COVID-19 panic). This deep value backdrop fuels AGT’s optimism for medium-term returns, even if near-term macro uncertainty (especially US trade policy) persists.
Outlook: Hard Work Over Crystal Balls
The Chairman and Investment Manager are refreshingly candid about the unpredictable macro environment, particularly US trade policy. They don’t pretend to have a crystal ball. Instead, the focus remains resolutely on the bottom-up:
- Unearthing companies trading at deep discounts to intrinsic value.
- Engaging actively (often publicly, as with Rohto and Gerresheimer) to unlock that value.
- Capitalising on specific catalysts and events.
- Using buybacks opportunistically to manage the discount and add NAV.
As Bauernfreund succinctly puts it: “Our experience shows that timing the market is largely a futile exercise… we continue to believe that hard work, activism and events will be crucial to unlocking value.” The record over the past five years (+122% NAV return, +28% ahead of the benchmark) suggests this disciplined approach pays off.
The dividend hike and active discount management provide shareholder comfort, while the wide discounts across the portfolio and intensified activist stance signal confidence in future performance. AGT is navigating the uncertainty by sticking to its well-defined, value-driven knitting. It’s a strategy worth watching closely.
Want more? Joe Bauernfreund and Tom Treanor host an investor presentation on 16 June 2025 at 11:30 GMT. Register here or email [email protected].
