Henderson Opportunities (HOT)

Managed by James Henderson and Laura Foll, Henderson Opportunities (LON:HOT) trust aims to achieve capital growth in excess of the FTSE All-Share index through a portfolio of UK companies. Operating with an unconstrained mandate with regards to market capitalisation, the trust structurally incorporates exposure to seven different categories of stocks.

As we discuss under Portfolio, there remains significant flexibility in the indicative ranges of these different categories and the managers are primarily driven by stock opportunities they are identifying. However, these different categorisations are used to help ensure the portfolio does not become overly aligned with specific macroeconomic outcomes and remains balanced. The indicative ranges further give rise to a structural overweight exposure to smaller companies.

This leads to a fairly high degree of correlation in the relative fortunes of HOT and UK mid and smaller caps. Along with consistent use of Gearing, this has helped returns in recent months. The balanced stylistic approach incorporated and a degree of valuation discipline in rebalancing away from previous winners ensured that HOT outperformed in both the pre-vaccine and post-vaccine rallies seen in 2020 and 2021 to date, with different portions of the portfolio boosting returns at different times.

Despite this, HOT has seen its discount widen once again to c. 11.7%. Although this is somewhat narrower than HOT has typically traded at in recent years, it is substantially wider than the peer group. As we discuss under Discount, the discount has widened once again in recent months having traded at close to NAV earlier in 2021 with share price declines against a relatively static NAV.