Special Situations/Low Beta

Special situations is an asset class where we attempt to take advantage of short-term anomalies in the market and seek absolute returns that are uncorrelated with the wider equity market. For example, market anomalies occasionally present themselves in takeovers where the price of the target company does not rise to the bid price (less the time cost of money). Bid arbitrage occurs in times of high market volatility and presents very attractive risk/return profiles. Alternatively there may be a specific event that will trigger a rise in the share price.

Low beta investments have low correlations with the wider stock market and therefore may not fall during periods of market corrections.

Our past stock selection has included:

Company Sector Rationale  

Carador Income Fund

Financials

Loan company that trades at a discount to NAV and yields >13% in USD

 

ITV

Media

Takeover target with an above-market dividend yield

 

Kier Group

Construction & Materials

Deeply undervalued stock with an above-market dividend yield

 

Regional REIT

Investment Trust

Trades at a discount to NAV with a >7% yield

 


These shares are bought with a very short term time horizon.

For investors with a higher risk tolerance, we can manage between 12.5% and 50% of the alternatives allocation in options.