Rowan Williams, chief investment officer at Nitrogen Fund Managers, on what the smart money is doing
30 January 2025 - 05:00
byRowan Williams
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Volkswagen’s headquarters in Wolfsburg, Germany. Picture: REUTERS
Rowan Williams, chief investment officer at Nitrogen Fund Managers
BUY: Reinet
Reinet is an investment holding company with exposure to predominantly European private assets, as part of the broader Rupert business empire. The company recently disposed of its remaining holding in British American Tobacco (BAT), realising more than £1.2bn, with the indication that it will apply the cash “towards ongoing investment activities”. This continues the shift of Reinet’s portfolio from its investment in BAT to predominantly unlisted assets, including Pension Insurance Corp (Penscorp), and investments in several private equity funds. Penscorp is a leading provider in the UK pension risk transfer market, with pensions insured growing to almost 350,000 and the business showing good growth since its formation.
Reinet’s private equity fund partnerships have delivered strong internal rates of return. The group trades at a discount to NAV of more than 35%, giving investors a cheap entry point into a portfolio of attractive assets. The sale of the remaining tobacco interests removes a potential regulatory overhang and discount on the share, and provides fresh capital that management can deploy into the existing portfolio or return to shareholders via share buybacks or dividends.
SELL: Volkswagen
The internal combustion engine (ICE) carmakers, including Volkswagen (VW), are facing challenges on multiple fronts. In Europe demand has shrunk and competition is intensifying from Chinese electric vehicle (EV) manufacturers. VW’s operations in China are grappling with slowing demand, and profits in the US are under threat as the Trump administration imposes tariffs across the supply chain, particularly in Canada and Mexico. Efforts to cut costs in Germany are being stymied by militant unions and unhelpful local governments. Analysts agree that Europe has passed peak car demand and the sector is now in structural decline. To top this off, the shift in production to EVs is costly and margins on EVs are lower than on ICE vehicles. Management is trying to address these challenges, but the sheer scale of the task will weigh on the VW share price.
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BROKERS’ NOTES: Buy Reinet, sell Volkswagen
Rowan Williams, chief investment officer at Nitrogen Fund Managers, on what the smart money is doing
Rowan Williams, chief investment officer at Nitrogen Fund Managers
BUY: Reinet
Reinet is an investment holding company with exposure to predominantly European private assets, as part of the broader Rupert business empire. The company recently disposed of its remaining holding in British American Tobacco (BAT), realising more than £1.2bn, with the indication that it will apply the cash “towards ongoing investment activities”. This continues the shift of Reinet’s portfolio from its investment in BAT to predominantly unlisted assets, including Pension Insurance Corp (Penscorp), and investments in several private equity funds. Penscorp is a leading provider in the UK pension risk transfer market, with pensions insured growing to almost 350,000 and the business showing good growth since its formation.
Reinet’s private equity fund partnerships have delivered strong internal rates of return. The group trades at a discount to NAV of more than 35%, giving investors a cheap entry point into a portfolio of attractive assets. The sale of the remaining tobacco interests removes a potential regulatory overhang and discount on the share, and provides fresh capital that management can deploy into the existing portfolio or return to shareholders via share buybacks or dividends.
SELL: Volkswagen
The internal combustion engine (ICE) carmakers, including Volkswagen (VW), are facing challenges on multiple fronts. In Europe demand has shrunk and competition is intensifying from Chinese electric vehicle (EV) manufacturers. VW’s operations in China are grappling with slowing demand, and profits in the US are under threat as the Trump administration imposes tariffs across the supply chain, particularly in Canada and Mexico. Efforts to cut costs in Germany are being stymied by militant unions and unhelpful local governments. Analysts agree that Europe has passed peak car demand and the sector is now in structural decline. To top this off, the shift in production to EVs is costly and margins on EVs are lower than on ICE vehicles. Management is trying to address these challenges, but the sheer scale of the task will weigh on the VW share price.
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