2 Nov 2009 15:07
Factsheet September 2009
Bramdean Alternatives Limited (the "Company")
This Factsheet contains commentary and news for the month ended 30 September 2009, unless otherwise stated.
| Overview Bramdean Alternatives Limited is a Guernsey closed-ended 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. | September Estimated Net Asset Values Sterling shares: 84.02 pence US Dollar shares: US$ 0.7807 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 NAV for each underlying fund. Investments in underlying funds for the month ended 30 September 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 30 September 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 September 2009 NAV. |
| KEY FACTS | |
| Market Capitalisation | £78.01 million |
| Investment Manager | Bramdean Asset Management LLP |
| Annual Management Fee | 1.5% |
| Performance fee | 10% subject to an 8% return and a high watermark |
| Company Brokers | Matrix Corporate Capital LLP JPMorgan Cazenove |
| Sterling class share price on 30 September 2009 | 53.50 pence |
| Sterling class issue price (9 July 2007) | 100.00 pence |
| Number of Sterling shares in issue | 90,715,319 |
| US Dollar class share price on 30 September 2009 | US$ 0.60 |
| US Dollar class issue price (9 July 2007) | US$ 1.00 |
| Number of US Dollar shares in issue | 78,573,876 |
| Minimum investment | N/A |
| Dealing | Daily |
| Valuation | Monthly |
| NAV publication | Monthly |
| September Sterling Estimated NAV per share | 84.02 pence |
| September US Dollar Estimated NAV per share | US$ 0.7807 |
| Total common net assets | US$ 183,466,329.43 |
| Total Estimated Net Asset Value | US$ 183,236,996.52 |
| Half-year end | 30 September 2009 |
| Financial year end | 31 March 2010 |
| 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 (US Dollar shares) | GG00B1XCLF11 |
SEPTEMBER MARKET COMMENTARY
Despite a minor setback at the beginning of the month, global equity markets in September continued the strong rally that they have enjoyed since March, and the third quarter MSCI World Index return extended to more than 17%. The principal support for the markets was investors' increasing confidence that US consumption would support the world economy. Its strong home sales suggested that the collapse of the market was at an end. The massive fiscal stimulus of the Obama administration has, in addition, been perceived as supporting the government sector. US equities were modestly positive in the month, up 3.5%.
Within the developed economies, Japan has been the laggard, owing to deep-seated structural problems and the strength of the yen which has harmed export earnings. Even so, domestic demand appeared to be holding up, according to the evidence of the Tankan survey.
Most spectacularly, though, emerging markets have enjoyed strong support in the rally, as investors gain confidence that the global economy is through the pit of recession. The MSCI Emerging Markets Index has gained more than 60% in the year to date.
Global bond markets were also strong in September, despite risks of higher inflation arising from an anticipated end to the recession. Yields on 30-year Treasuries fell to below 4%, while corporate bonds benefited from investors' increasing appetite for risk. European bond markets also showed strength in the European Central Bank's auction.
The obverse of yen strength is a decreasing demand for the dollar (and also the pound). The policy of quantitative easing, boosting the money supply, and keeping interest rates at almost zero, has depressed the dollar on the international exchanges. Commodity markets were strong in September, partly because of the weakness of the dollar. Gold prices soared to over US$1,000 an ounce before falling back slightly and oil fell back from its recent strength to US$70 a barrel. Copper, cocoa and sugar prices all rallied.
PORTFOLIO NEWS
General
The underlying unaudited performance in September was +2.26% for the Sterling Share class and +0.26% for the US Dollar Share class. There were 22 holdings in the Company's overall portfolio as at 30 September 2009; the Company previously had 23 holdings but during the month the Company's redemption from Lansdowne UK Equity Fund Ltd was completed.
The Company's redemption notice to Aarkad Plc ("Aarkad") remains suspended. The Company continues to work with the manager and fellow investors to realise value from the underlying portfolio at a prudent speed.
The Company has completed its programme of tactically reducing its allocation to hedge funds. The Company expects part of these proceeds will be redeployed by the Investment Manager into new investments, with the remainder held in cash to fund Private Equity & Specialty draw-downs.
The stand-out performers during September were King Street Capital Ltd and Deephaven Global Multi-Strategy Fund Ltd. Positive returns were also reported by D.E. Shaw Oculus International Members Interest and Paulson Advantage Plus Ltd.
The Company benefited from upward revaluations of two of its Private Equity & Specialty holdings. The portfolios of underlying holdings with substantial mark-to-market securities continue to benefit from upward revaluations driven by the current market recovery; non-mark-to-market securities will also rise if their listed comparables appreciate in value.
Hedging
Neither the Sterling Share class nor the US Dollar Share class currently has any currency hedges in place. The Company's overcommitted status makes it difficult to bear the mark-to-market volatility from passive currency hedges. Instead, the Company continues to monitor its currency exposure to determine whether hedging such exposure is in the Company's interests and will implement currency hedges tactically as necessary to guard against currency volatility.
The main currency exposures are between the US Dollar, the Euro, and Sterling - with the US Dollar appreciating against both Sterling and the Euro during the month.
Private Equity & Specialty Funds
The Company has commitments to 17 Private Equity & Specialty Funds amounting to approximately US$216 million; no new commitments were made during September.
The total amount that has been drawn-down on the commitments made is approximately US$104.0 million, with two capital calls totalling approximately US$1.9 million having been drawn-down in September. The Company has now received total distributions of US$4.2 million since inception, with no distributions received in September.
Revaluations were received from three managers and these have been incorporated into the September NAV calculations; two were upward revaluations to reflect recovering values in the underlying portfolios, while one revaluation was downwards, reflecting falls in the values of market comparables, adverse currency movements and the J-curve effect. As stated in previous communications, downward valuations in the initial years of private equity are to be expected given the J-Curve effect, and it is likely that the Company will receive further fair market valuation write-downs from some of its managers.
Transitional portfolio
The portfolio held one fund, Aarkad, during September. The rest of the portfolio comprises of cash. The Transitional portfolio returned +0.01%, including cash, but excluding currency movements, during September.
Strategic Hedge Funds portfolio
Performance was up during the month with a positive return of +5.87%, driven by the improving sentiment towards a global recovery coupled with an increase in risk appetite and market participation. Year to date the portfolio has returned +10.34%.
PORTFOLIO HIGHLIGHTS
Event Driven - With global markets on the rise, the two managers made money on the long side of the portfolio. Distressed and stressed names drove P&L for the distressed manager, coupled with bonds in a middle-market lending company profiting from an expected bond exchange. The special situations manager gained from mergers & acquisition exposure, as well as a recovery in gold names during the month, with gold reaching the US$1000 an ounce mark in September.
Global Macro - The global trader posted positive performance, with gains in discretionary macro strategies offset by losses from systematic equity strategies. Discretionary macro benefitted from G10 currency positions and emerging markets trades in equities and sovereign debt.
Relative Value - The multi-strategy manager was up during the month, with largest gains made within the US credit book, including a number of stressed and distressed bonds. US convertible securities were the second largest contributor, as the market for convertible trading continues to improve with more attractive financing terms amidst the credit rally. Losses came from the long/short equity book in Asia and the convertibles book in Japan.
Outlook - Despite the improvements in economic and financial market conditions, many of the world's major economies remain in a fragile state as both bank lending and consumer credit demand continue to contract. The importance of fiscal and monetary stimulus in driving recent improvements suggests policy actions will play a key role in shaping future market developments. Given difficulties associated with the timing and nature of future government and central bank actions, a nimble approach is being maintained within this portfolio and exposure focus continues to be on liquid and more trading-orientated strategies. At the manager level, there is recognition of the mounting debt problems in the western world; however, there is current bias towards near-term cyclical tailwinds giving way to structural headwinds during the course of 2010.
Portfolio Highlights
Geographical Allocation
| North America 74.62% |
| Europe 14.14% |
| Global 8.49% |
| Asia & Other 2.75% |
Portfolio Holdings Asset Allocation
| Cash 43.16% |
| Private Equity 25.55% |
| Specialty 17.19% |
| Strategic Hedge Funds 11.07% |
| Transitional 3.03% |
PORTFOLIO HOLDINGS (INVESTED CAPITAL) ON 30 September 2009
| Manager | Type | Portfolio Weighting |
| Cash | Cash | 43.1% |
| Oaktree OCM Opportunities Fund VIIb LP | Specialty | 7.4% |
| Greenpark International Investors III LP | Private Equity | 6.4% |
| D.E. Shaw Oculus International Members Interest | Strategic Hedge Funds | 5.1% |
| Thomas H Lee Parallel Fund VI LP | Private Equity | 3.6% |
| SVG Strategic Recovery Fund II LP | Specialty | 3.5% |
| Coller International Partners V LP | Private Equity | 3.3% |
| Aarkad Plc | Transitional | 3.0% |
| Paulson Advantage Plus Ltd | Strategic Hedge Funds | 2.6% |
| DFJ Athena LP | Private Equity | 2.2% |
| MatlinPatterson Global Opportunities Partners III LP | Specialty | 2.1% |
| Goldman Sachs Capital Partners VI LP | Private Equity | 1.9% |
| HIG Bayside Debt & LBO Fund II LP | Specialty | 1.9% |
| Silver Lake Partners III LP | Private Equity | 1.9% |
| Terra Firma Capital Partners III LP | Private Equity | 1.9% |
| King Street Capital Ltd | Strategic Hedge Funds | 1.8% |
| Deephaven Global Multi-Strategy Fund Ltd | Strategic Hedge Funds | 1.7% |
| Tenaya Capital V LP | Private Equity | 1.5% |
| Thoma Bravo Fund IX LP | Private Equity | 1.4% |
| Pine Brook Capital Partners LP | Specialty | 1.2% |
| Resonant Music LP | Specialty | 1.0% |
| AIG Brazil Special Situations II LP | Private Equity | 0.9% |
| Rho Ventures VI LP | Private Equity | 0.6% |
Cash: The Company currently has six approved cash deposit accounts.
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. At present, the Investment Manager favours holding cash and so the Transitional portfolio represents a small part of the overall portfolio.
Strategic Hedge Funds: The part of the Company's portfolio which is managed by RMF Investment Management, Nassau Branch.
DISCLAIMER
This Factsheet update has been produced by Bramdean Asset Management LLP (the "Investment Manager"), 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 the Investment Manager. 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 the Investment Manager and its affiliates to be reliable, but the Investment Manager makes no representation as to their accuracy or completeness. The Investment Manager accepts no liability for loss arising from the use of this material. The Investment Manager 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 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. The Investment Manager 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 the Investment Manager's website www.bramdean.com.
Capita Registrar's helpline is 0871 664 0300 (Calls cost 10 pence per minute plus network extras, lines are open 8.30am-5.30pm Monday-Friday). 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