RNS Number : 6524U
RAB Special Situations Company Ltd
29 June 2009
RAB Special Situations Company Limited
Update May 2009
Throughout the month of May world markets echoed the previous month's recovery from the market doldrums of early March. The Bloomberg World Index posted a 14.0% gain during the month, meaning its year-to-date performance is +12.8%. Indeed performance amongst the major indices gave cause for optimism with rallies ranging from 0.99% to 9.19% among the Dow, S&P, TSX, ASX, FTSE 100 and AIM All-Share.
Given this strong market-wide performance, and in particular the strong performance of the mining sector (the Bloomberg World Mining Index was up 23.9% for May) the RAB Special Situations Company was able to continue capitalising on the current rally by achieving a NAV return of 10.5% to 41.81p during the month bringing the year-to-date loss to 1.9%1. The listed portfolio has contributed 24.3% year-to-date; however the private portfolio has been written down by 21.8% and, when one considers the relative size of the two sub-portfolios at the beginning of the year, these moves have broadly cancelled each other out. However the manager has already gone some way towards improving the liquidity profile of the portfolio. Whereas the public-private breakdown was 35.1%-70.6% at the beginning of the year, it is now 60.1%-48.5%. The debt owed by the portfolio to the prime broker increased from 7.5% of net assets at the end of April to 9.0% of net assets at the end of May. However it needs to be stressed that this increase in the dollar debt position is attributable to the dollar finally beginning to fall away against most other currencies and the portfolio holding most of its debt in Sterling and the Canadian dollar to match the assets.
On the commodities front, oil was amongst the most spectacular of performers, with West Texas Intermediate spot rising 27% and the spread in the contango falling sharply, particularly in near-term contract expiries. Likewise industrial metal prices continued their rally across the board. However data from China presents reasons to be cautious, with iron ore port inventories at near-record levels, leaving the question of what will be a sustainable level in the long-run given that the ore clearly isn't being used up as fast as it is coming in. That being said, following the scrapping by Rio of the planned $19.5 billion tie-up with Chinalco, the head of Export-Import Bank of China, Li Ruogu, was reported to have said: 'One failure does not mean that we will stop our march,' giving yet further indication of China's enhanced appetite to secure feedstock.
All indications are that the mood is turning, but the manager expects it will be a slow process. As such we appreciate your continued patience, but feel that the wheels are in motion to reward this patience in the long-run.2
1 Past performance is not a guide to future returns.
2 Returns, or any performance, cannot be guaranteed.
This document is being distributed and the presentation is being made in the United Kingdom only to persons who are qualified investors within the meaning of Section 86(7) of the Financial Services and Markets Act 2000 who have professional experience in matters relating to investments and who fall within the exemption contained in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and to high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts who fall within the exemption contained in Article 49 of that Order, and to such other persons who are otherwise permitted by law to receive it. This document and its contents and the presentation are directed only at such persons and any investment or investment activity to which this document relates is only available to such persons. Persons of any other description, including those who do not have professional experience in matters relating to investments, should not rely on this document or act upon its contents.
This information is provided by RNS
The company news service from the London Stock Exchange