25 Jun 2009 10:22
Factsheet May 2009
Bramdean Alternatives Limited (the "Company")
This Factsheet contains commentary and news for the month ended 29 May 2009, unless otherwise stated.
| Overview Bramdean Alternatives Limited is a Guernsey-based Investment Company listed on the London Stock Exchange. The Company invests in a diversified portfolio of Private Equity Funds, Hedge Funds and other Specialty Funds. | May Estimated Net Asset Values Sterling shares: 81.35 pence U.S. Dollar shares: US$ 0.7622 As described in the Company's prospectus and as has been the case since its launch, the Net Asset Value ("NAV") and the NAV per share are both calculated monthly by the Company's administrator based on the latest published net asset value for each underlying fund. Investments in underlying funds for the month ended 29 May 2009 are valued using the values (whether final or estimated) as advised by their managers, general partners or administrators. The Company has therefore relied on valuation and reporting methods used by the managers, general partners or administrators of the underlying funds in deriving the 29 May 2009 NAV and NAV per share. For the avoidance of doubt the Directors have not exercised their discretion to depart from the above valuation policy with regard to the May 2009 NAV. |
| KEY FACTS | |
| Market Capitalisation | £76.1 million |
| Manager | Bramdean Asset Management LLP |
| Annual Management Fee | 1.5% |
| Performance fee | 10% subject to an 8% return and a high watermark |
| Company Brokers | JPMorgan Cazenove Cenkos Securities Plc (until 18 June 2009) |
| Sterling class share price on 29 May 2009 | 57.0 pence |
| Sterling class issue price (9 July 2007) | 100.00 pence |
| Number of Sterling shares in issue | 90,715,319 |
| U.S. Dollar class share price on 29 May 2009 | US$ 0.50 |
| U.S. Dollar class issue price (9 July 2007) | US$ 1.00 |
| Number of U.S. Dollar shares in issue | 78,573,876 |
| Minimum investment | N/A |
| Dealing | Daily |
| Valuation | Monthly |
| NAV publication | Monthly |
| May Sterling Estimated NAV per share | 81.35 pence |
| May U.S. Dollar Estimated NAV per share | US$ 0.7622 |
| Total common net assets | US$ 179,117,475.24 |
| Total Estimated Net Asset Value | US$ 178,893,578.39 |
| Half-year end | 30 September 2009 |
| Financial year end | 31 March 2009 |
| Company Secretary and Administrator | RBC Offshore Fund Managers Limited |
| Registrar | Capita Registrars (Guernsey) Limited |
| Stock Exchange code (Sterling shares) | BRAL |
| Stock Exchange code (U.S. Dollar shares) | BRAU |
| Sedol code (Sterling shares) | B1XCHB9 |
| Sedol code (U.S. Dollar shares) | B1XCLF1 |
| ISIN code (Sterling shares) | GG00B1XCHB94 |
| ISIN code (U.S. Dollar shares) | GG00B1XCLF11 |
MAY MARKET COMMENTARY
Global equity returns continued to be strong in May despite continued economic pain. The MSCI World Index recorded a double-digit gain for the second month in succession, with a year-to-date rise of 10%. U.S. equities almost recovered all their 2009 losses by the end of the month and recorded a more than 30% gain in three months. Spreads between Libor and Treasury yields reverted to normal and long-term government bond yields in the advanced industrial economies returned to pre-crisis levels. At the same time, GDP sharply contracted in the U.S. and European economies, Chinese exports fell 26% in the month, house prices continued to decline, unemployment rose and the Obama administration prepared a massive bailout package for the auto industry. Yield curves in the U.S., the Eurozone and the UK steepened appreciably as government borrowing soared.
The economic pain has however been associated with a very slight rise in confidence levels judging by survey data. The U.S. National Association of Home Builders index increased by 2 points, from a very low base, in May. But lagging data, notably the U.S. unemployment rate (now 9.4%), are very weak. Commodity prices also showed some resilience, suggesting expectations of recovery next year - crude prices rose by 30% in May. Against a background of exceptionally easy monetary conditions and burgeoning deficits, the dollar reached new lows for the year, falling below Euro 1.40. It appeared that investors were unwinding dollar positions against the Euro and the Yen, expecting the worst of the crisis to have passed.
PORTFOLIO NEWS
General
The underlying unaudited performance in May was -7.70% for the Sterling Share class and +0.51% for the U.S. Dollar Share class, reflecting mainly the currency movement in the Company's dollar-denominated investments. This compares with +3.13% and +4.06% returned by the HFRI Fund of Funds Composite Index and Credit Suisse Tremont Hedge Fund Index respectively. There were 30 holdings in the Company's overall portfolio as at end May 2009.
The Company has continued its programme of tactically reducing its allocation to hedge funds, a strategy that the Investment Manager started to implement in December 2007. Partial redemptions have been received and more are expected in the coming months.
In December 2007, the Company's hedge fund holdings represented 86.3% of the Company's overall portfolio. As at the end of May 2009, they represented 26.4% of the overall portfolio. As a result of the repositioning of the portfolio during the course of 2008, the Company holds 37.0% of its net assets in cash as at the end of May. In the short term, the Investment Manager intends to maintain cash reserves in order to fund draw-downs from the Private Equity and Specialty Funds.
The stand-out performer during May was Paulson Advantage Plus Ltd. Positive returns were also reported by Kaiser Trading Fund, Kaiser Trading Group Pty. 2XL, D.E. Shaw Oculus, Deephaven Global Multi-Strategy, Kei Ltd, King Street Capital Ltd, Landsdowne UK Equity Fund, and Roy G Niederhoffer Negative Correlation Fund Ltd. During May, Alydar Fund Ltd and Evergreen MAC reported negative returns.
Private Equity and Specialty Funds
The Company has made commitments to 18 Private Equity and Specialty Funds amounting to approximately US$226.9 million. No new commitments have been made during May. The Company has now received total distributions of US$3.8 million since inception, with no distributions received in May.
Three capital calls were received from underlying funds in May. Revaluations were received from eight managers of the Company's Private Equity and Specialty Funds and these have been incorporated into the May NAV calculations; five revaluations were downward revaluations reflecting falls in the values of market comparables and adverse currency moments, while three revaluations were upwards. As stated in previous communications, downward valuations are to be expected given the exceptional market environment and it is likely that the Company will receive further fair market revaluation, including valuations as at 31 May 2009, from some of its managers.
Transitional portfolio
The portfolio held two funds at the end of May 2009; these two fund investments in the Transitional portfolio represent 6% of the Company's overall portfolio as at 31 May 2009.
The Transitional portfolio returned 2.25%, including cash, but excluding currency movements, during May. The key contributor for the portfolio was Kaiser Trading Fund.
Strategic Hedge Funds portfolio
The portfolio recorded a healthy gain of +3.00%, with all five styles up as the global economic recovery theme, which has dominated movements in financial markets for the past couple of months, continued to grow in popularity. YTD the portfolio has returned +4.19%.
PORTFOLIO HIGHLIGHTS
Equity Hedged - Equity markets continued to rally as speculation rose that the worst of the global downturn was over. The US focused fund posted its first loss of the year in May, largely from short exposure in poor quality stocks which caught the tailwind of the strong market rally. The UK manager performed very well, however, as bullish exposure to mining and selective banking stocks and shorts in UK housing-related names drove performance.
Event Driven - The special situations manager bounced back this month to post strong gains from its gold exposure, with AngloGold Ashanti increasing +35% in May. The distressed manager contributed positively from long exposure. The manager continues to adjust the portfolio actively, adding to core long positions while lightening its short book and only keeping highest conviction short positions.
Global Macro - May was a good month for the global trader, generating positive performance from various fixed income option strategy positions, inflation linked bonds and various municipal bond trades. The manager established new swap positions across different geographies and profited from the general swap spread tightening throughout the month. Tactical credit trading with a spread tightening bias added to returns as well.
Managed Futures - The managers took advantage of a number of prominent trends over the month, as the bullish sentiment drove risk assets higher, proving favourable for momentum strategies. Long positions in commodity-linked currencies such as AUD, CAD and BRL generated gains against the USD, while a short-term trader benefited from the upward move in stock indices. The only loss came from a long-term trend follower who continued to hold short positions in equities.
Relative Value - The multi-strategies manager posted a profit for the first time in 2009, with the majority of profits accruing from credit and convertible bond positions. Within the credit book, the allocation to U.S. distressed credit generated the strongest return, while the Asia-Pacific region drove performance in the convertible bond book.
Outlook - Looking ahead, the portfolio remains well positioned to profit from price anomalies across all asset classes and geographies. With the dynamic portfolio management skills of the managers it is hoped that they can continue to generate absolute returns irrespective of market directionality.
Portfolio Highlights
Geographical Allocation
| North America 65.97% |
| Europe 16.02% |
| Global 15.34% |
| Asia & Other 2.68% |
Portfolio Holdings Asset Allocation
| Cash 37.02% |
| Strategic Hedge Funds 20.47% |
| Private Equity 23.26% |
| Specialty 13.25% |
| Transitional 6.01% |
PORTFOLIO HOLDINGS (INVESTED CAPITAL) ON 29 May 2009
| Manager | Type | Portfolio Weighting |
| Cash | Cash | 37.2% |
| Greenpark International Investors III LP | Private Equity | 6.6% |
| D.E. Shaw Oculus International Members Interest | Strategic Hedge Funds | 5.3% |
| Oaktree OCM Opportunities Fund VIIb LP | Specialty | 5.0% |
| Thomas H Lee Fund VI LP | Private Equity | 3.7% |
| Aarkad Plc | Transitional | 3.1% |
| Deephaven Global Multi-Strategy Fund | Strategic Hedge Funds | 3.1% |
| Kaiser Trading Fund SPC | Transitional | 3.0% |
| Coller International Partners V LP | Private Equity | 2.8% |
| SVG Strategic Recovery Fund II LP | Specialty | 2.8% |
| Lansdowne UK Equity Fund | Strategic Hedge Funds | 2.6% |
| Paulson Advantage Plus Ltd. | Strategic Hedge Funds | 2.5% |
| Alydar Fund Limited | Strategic Hedge Funds | 1.9% |
| Goldman Sachs Capital Partners VI LP | Private Equity | 1.9% |
| MatlinPatterson Global Opportunities Partners III LP | Specialty | 1.9% |
| DFJ Athena LP | Private Equity | 1.8% |
| Terra Firma Capital Partners III LP | Private Equity | 1.7% |
| King Street Capital Ltd. | Strategic Hedge Funds | 1.6% |
| Tenaya Capital V, L.P.* | Private Equity | 1.4% |
| HIG Bayside Debt & LBO Fund II LP | Specialty | 1.3% |
| Resonant Music L.P. | Specialty | 1.1% |
| Pine Brook Capital Partners LP | Specialty | 1.0% |
| Roy G. Niederhoffer Negative Correlation Fund Ltd. | Strategic Hedge Funds | 1.0% |
| Silver Lake Partners III LP | Private Equity | 0.9% |
| AIG Brazil Special Situations II LP | Private Equity | 0.9% |
| Kaiser Trading Group Pty. 2XL | Strategic Hedge Funds | 0.9% |
| Thoma Bravo Fund IX LP | Private Equity | 0.8% |
| Evergreen MAC | Strategic Hedge Funds | 0.7% |
| Quantitative Investment Mgmt/Kei Ltd. | Strategic Hedge Funds | 0.7% |
| Rho Ventures VI LP | Private Equity | 0.7% |
| Limetree Emerging Beachfront Land Investment Fund II, L.P. | Specialty | 0.1% |
*note: formerly Lehman Brothers Venture Partners V L.P.
Transitional Investments: The Company will seek to avoid return dilution caused by holding amounts that are not committed or are committed, but not yet drawn-down, on both underlying private equity funds and underlying specialty funds by investing such amounts in a range of transitional investments, which may include equity hedge, senior debt, mezzanine and market neutral funds.
Strategic Hedge Funds: The part of the Company's portfolio which is managed by RMF Investment Management, Nassau branch.
NOTE
Following the announcement made on 11 May 2009 the Company wishes to remind shareholders of the dealing disclosure requirements under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the "Code") insofar as they apply to the Company.
Under Rule 8.3, if any person is, or becomes, "interested" (directly or indirectly) in one per cent. or more of a class of "relevant securities" of a company listed on the Panel's Disclosure Table, all "dealings" in any relevant securities of that company (including by means of an option in respect of, or a derivative referenced to, any such relevant securities) must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevant transaction.
The Company has in issue two classes of relevant security as follows:
Sterling participating shares of no par value, of which there are 90,715,319 such shares in issue; and
U.S. Dollar participating shares of no par value, of which there are 78,573,876 such shares in issue.
Each Sterling share carries 2.0194 votes, and each U.S. Dollar share carries 1 vote, at a general meeting of the Company. Accordingly, the total number of voting rights in the Company is 261,764,391.
A person will be treated as being subject to Rule 8.3 if he/she is interested in 1 per cent or more of the Sterling shares or 1 per cent or more of the U.S. Dollar shares and should disclose any dealings in either of such class of relevant security accordingly.
Such disclosure should include:
The number of U.S. Dollar shares in which such person is interested and the percentage such interest represents of the total number of U.S. Dollar shares in issue; and,
The number of Sterling shares in which such person is interested and the percentage such interest represents of the total number of Sterling shares in issue; and,
The total voting rights in the Company represented by the aggregate number of U.S. Dollar and Sterling shares in which such person is interested.
Shareholders making such announcements should continue to use Form 8.3 albeit as amended for the above purposes. Form 8.3 can be found on the website of the Takeover Panel at www.thetakeoverpanel.org.uk/disclosure/disclosure-forms. If shareholders are in any doubt as to the revised disclosure requirements notified in this announcement they should contact the Market Surveillance Unit of the Takeover Panel.
This requirement will continue until the date on which any offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of the Company, they will be deemed to be a single person for the purpose of Rule 8.3 and for the purpose of the requirements above.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of the Company by the Company or by the potential offeror, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction and should be disclosed with the necessary changes having been made.
A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the UK Panel on Takeovers and Mergers' (the "Panel") website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.
DISCLAIMER
This Factsheet update has been produced by Bramdean Asset Management LLP, which is authorised and regulated by the Financial Services Authority ("FSA"). Bramdean Alternatives Limited (the "Company") has appointed Bramdean Asset Management LLP as the Investment manager of the Company.
This material constitutes a financial promotion for the purposes of the Financial Services and Markets Act 2000 (the "Act") and the handbook of rules and guidance issued from time to time by the FSA (the "FSA Rules").
This material is provided for information purposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. This material has been provided specifically for the use of the recipient only and must be treated as proprietary and confidential information. It may not be passed on, nor reproduced in whole or in part under any circumstances without express written consent from Bramdean Asset Management LLP. The material provided is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material have been obtained or derived from sources believed by Bramdean Asset Management LLP and its affiliates ("Bramdean") to be reliable, but Bramdean makes no representation as to their accuracy or completeness. Bramdean accepts no liability for loss arising from the use of this material. Bramdean gives no representations or warranty that any indicative performance or return will be achieved in the future or that the investment objectives and policies from time to time of Bramdean Alternatives Limited (the "Company") will be achieved.
You should note that, if you choose to invest in the Company, your capital will be at risk and you may therefore lose some or all of any amount that you choose to invest. This material is not intended to constitute, and should not be construed as, investment advice.
Potential investors in the Company should seek their own independent financial advice. Bramdean neither provides investment advice to, nor receives and transmits orders from, investors in the Company nor does it carry on any other activities with or for such investors that constitute "MiFID or equivalent third country business" for the purposes of this FSA Rule.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE RESULTS.
Please note that up-to-date information on the Company, including its monthly NAV and share prices, factsheets, Annual Report and Financial Statements, Prospectus and portfolio information can be found at www.bramdeanalternatives.com or via a link from www.bramdean.com.
Capita Registrar's helpline is 0871 664 0300 (Calls cost 10 pence per minute plus network extras). For callers outside the UK, please dial: +44 (0)20 8639 3399.
Registered Office: Canada Court, Upland Road, St. Peter Port, Guernsey, GY1 3QE, Channel Islands.
CONTACT DETAILS
Loretta Murphy, or lmurphy@bramdean.com
Bramdean Asset Management LLP, 35 Park Lane, London W1K 1RB, United Kingdom
T: +44 (0)20 7052 9272 F: +44 (0)20 7052 9273 W: www.bramdean.com