Temple Bar discount narrows

Over the period, Temple Bar delivered a share price return of 0.21%. The total return of the FTSE All-Share index was  own 4.57%, while the trust’s net asset value total return was marginally better it still lost 4.03%. 

The company’s discount to NAV during the period narrowed though, from 7.80% to 3.84%. During the period nearly two million shares were bought back by the company. 

Shell, BP and Total Energies, Standard Chartered, Vodafone and Pearson were positive contributors to return, whereas four domestically-focused names, Royal Mail, Marks & Spencer, ITV and Currys were major detractors to performance.

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There were no new holdings established in the portfolio during the six-month period, although early in February the managers reduced the trust’s level of gearing on concerns that even prior to the war in Ukraine, the deteriorating economic outlook was not being adequately reflected in share prices. 

Redwheel portfolio managers’ Ian Lance and Nick Purves commented: “Conversely, at the end of June, we reintroduced an element of gearing, increasing the company’s holdings in the most undervalued stocks, in the belief that the valuations of those shares now fully discounted a likely recession.”

The managers noted that while the economic backdrop is highly uncertain and there is much for investors to worry about, the stock market is a discounting mechanism and much of this will already have been factored into share prices. 

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“From the starting point of today’s depressed valuations, for those who can extend their time horizons, the opportunities are compelling, with stocks in the portfolio offering the potential for significant upside to a reasonable view of intrinsic value,” they added.

Current chair Arthur Copple will step down from the position at the next AGM meeting. He will be replaced by Richard Wyatt, subject to his re-election.