MIGO Opportunities 29 November 2023

MIGO Opportunities (MIGO) is managed by Nick Greenwood who aims to exploit the inefficiencies in the UK closed-ended funds market. In particular, Nick looks to find opportunities in closed-ended funds that are under-appreciated by the market, where the market isn’t accounting for something in the NAV or the corporate structure. Often, this means buying at a deep discount and waiting for an identified catalyst to close that discount over time. The ideal situation for Nick is one in which NAV performs well and a deep share price discount is closed by a factor the market has overlooked, leading to potentially extremely attractive returns.

Nick believes the autumn of 2023 is a “once-in-a-generation opportunity” thanks to the wide discounts across the market. Currently, his top 12 holdings are on an average 31.3% discount. Nick is particularly excited about the opportunities in the listed private equity sector, in uranium, Vietnam, and Japan, speaking to the deep diversity of the portfolio. In fact, the cash allocation in the portfolio has been ticking down over this year, reflecting all the opportunities Nick sees.

Nick has managed MIGO since it launched in 2004. It was recently announced that the investment management duties are to be transferred from Premier Miton Investment Management to AVI Global Investors (AVI) in December 2023. However, this will also see Nick join AVI to continue his position as manager of the trust, alongside the reinstating of Charlotte Cuthbertson as co-manager (see Management).

The idiosyncratic nature of MIGO’s investments can at times significantly enhance performance, but at times can lead to underperformance—with the diversification of holdings lagging the technology and consumer-driven global indexes during market rallies such as that seen over the last 12 months (see Performance).

In our view, the discounts currently available in the investment trust space are likely to present a great long-term entry point, even if the gloominess of the economic outlook means this is harder to see than to act upon. MIGO offers investors a way to get access to a basket of deep discount opportunities with considerable diversification in the portfolio and a professional manager tracking day-to-day the often complicated and quick-moving underlying situations. In fact, as we discussed in a recent strategy article, boards are increasingly taking severe action to close discounts, which offers the potential for strategies like Nick’s to see some exceptional returns in a short period of time.

In recent months, expectations that rates will go higher and stay higher for longer have hit asset prices and widened discounts across the board, which has led to some difficult performance for MIGO. However, we would expect MIGO to come into its own once these pressures ease, and the trust has proven to deliver excellent returns compared to markets in the past, driven by individual catalysts across core themes or through an improvement in risk sentiment. As interest rates look to be plateauing, we believe we could be close to the moment of maximum opportunity both at the NAV level and the discount level.