Lowland Investment Company
Is the tide turning?
12 April 2024
Lowland Investment Company’s (LWI’s) unconstrained, multi-cap investment policy differentiates it from most peers in the AIC UK Equity Income sector. It offers investors broad market exposure, outside of the large, traditional ‘income stocks’ at a 13% discount to NAV. The underperformance of small- and mid-cap companies versus larger peers has slowed and a turnaround would be very positive for LWI. Portfolio returns are already benefiting from acquisition activity, spurred by low valuations, and LWI has been outperforming its benchmark for the past 18 months. Meanwhile, quarterly DPS is running at 4.9% above the previous year, an annualised rate of 6.4p, reflecting a prospective yield of 5.3%. MORE »
Positioned to benefit from UK recovery
9 April 2021
Lowland Investment Company (LWI) is riding high among its UK Equity Income peers over 12 months as a market rotation towards more cyclical and domestic UK names looks to vindicate its valuation-aware, multi-cap approach. With the Brexit withdrawal agreement now signed, managers James Henderson and Laura Foll say an increase in takeover activity shows private equity and trade buyers see the value in UK companies, and argue that international investors should also return to a market that has got used to being seen as ‘unloved and underperforming’. After almost a decade of adding to its revenue reserve each year, LWI was able to draw on this to increase its FY20 dividend, with sufficient firepower to do so again in FY21 even if UK corporate dividends take longer than anticipated to recover. MORE »
Looking ahead with quiet optimism
24 July 2020
Lowland Investment Company (LWI) invests across the UK market capitalisation spectrum, seeking a combination of capital and income growth. Although its smaller-cap bias and value-orientated investment approach mean it has underperformed in recent years, managers James Henderson and Laura Foll at Janus Henderson Investors remain confident in the ability of well financed, well managed companies in areas such as engineering and insurance to recover and grow in the medium term. In the meantime, the trust has revenue reserves with which it plans to support its long-term record of maintaining or growing its annual dividends. MORE »
Value-orientated portfolio with 4.5% dividend yield
21 August 2019
Lowland Investment Company (LWI) has suffered a period of poor performance recently, with both its share price and NAV close to 12-month lows, as its value investment style has remained out of favour in a market where investors have preferred highly rated growth companies. Managers James Henderson and Laura Foll continue to see opportunities in both large and smaller UK companies that are growing their dividends, and LWI’s own dividend yield has reached a cyclical high of c 4.5%, a level that has historically been followed by strong NAV returns in subsequent years. Although underperformance in the past 12 months has weighed on the trust’s medium-term performance record, it has generated NAV and share price total returns of c 14% pa over 10 years, well ahead of both the FTSE All-Share Index return and the AIC UK Equity Income peer group. MORE »
Finding value in out-of-favour UK stocks
29 January 2019
Lowland Investment Company (LWI) invests mainly in UK companies that the managers, James Henderson and Laura Foll at Janus Henderson Investors, believe are undervalued in relation to their long-term growth prospects. The recent stock market volatility has seen P/E valuations fall across the board, and the current portfolio forward P/E multiple of c 11.5x represents a c 6% discount to the benchmark FTSE All-Share index. While LWI remains biased to the smaller end of the market cap spectrum (c 60% of the portfolio is outside the FTSE 100 index), the managers have recently been finding opportunities in some out-of-favour larger companies with attractive yields. LWI has a total return focus, currently yields 4.0% and has grown its total annual dividend at a compound rate of c 10% over the past five years, well ahead of the rate of inflation. MORE »
Seeking opportunities in unloved UK stocks
26 June 2018
Lowland Investment Company (LWI) invests for income and capital growth in a diversified portfolio of mainly UK stocks of all sizes, from high-risk early-stage intellectual property plays to household-name FTSE 100 banks. With the overriding theme being that managers James Henderson and Laura Foll believe their current share price does not reflect the value of the business. The managers have been finding opportunities in stocks that are largely exposed to the domestic market, an area that has been very out of favour with investors, who are preoccupied with low wage growth, higher inflation and the potential impact of Brexit negotiations. This has arguably led to a degree of recent underperformance and discount widening, but LWI’s impressive track record of c 12.5% annualised share price and NAV total returns over Henderson’s 28-year tenure remains intact. MORE »
Long-term recovery focus drives outperformance
25 October 2017
Lowland Investment Company (LWI) invests across the UK stock market with the aim of providing attractive capital and income returns for its investors. Managed by James Henderson and Laura Foll at Janus Henderson Investors, LWI’s portfolio is diversified over more than 100 stocks, allowing the managers to back undervalued and recovery situations over the long term by starting with small positions to limit downside risk. An example of such a stock is insurance company Hiscox, bought in the aftermath of the collapse of the Lloyd’s insurance syndicates, since when its market capitalisation has increased from £40m to c £4bn. Holdings such as this have helped LWI to outperform its FTSE All-Share Index benchmark (in NAV total return terms) over one, three, five and 10 years, and since James Henderson began managing the portfolio in 1990. MORE »
Multi-cap growth and income with focus on value
3 May 2017
Lowland Investment Company (LWI) is a UK equity income investment trust with a focus on growing capital and income. It has been managed since 1990 by James Henderson at Henderson Global Investors; during 2016 Laura Foll, who has assisted Henderson since 2013, was named joint manager. LWI invests in 100+ mainly UK companies across the market cap spectrum, generally with about one-third of its portfolio respectively in large, mid-cap and smaller stocks. It has recently increased its gearing with an issue of 30-year loan notes, locking in a long-term fixed borrowing cost of 3.15%. LWI’s managers note that they are finding many attractive opportunities to buy undervalued stocks with good long-term growth potential, at dividend yields that comfortably exceed the cost of borrowing. The discount is currently wider than longer-term averages. MORE »
Seeking growth and growing income
15 June 2016
Lowland Investment Company (LWI) invests across the UK equity market (with a small proportion in overseas stocks) to achieve above-average total returns. While it is a member of the UK Equity Income sector, its managers have a greater focus on capital growth, which drives dividend growth, in order to secure a rising income for the trust over time. In the past five years it has produced compound annual dividend growth of 7.9% and currently yields 3.7%. Long-term performance has been comfortably ahead of the FTSE All-Share Index benchmark, driven by the managers’ focus on underappreciated recovery situations and a significant weighting towards mid-cap and smaller companies (two-thirds of the portfolio). Lead manager James Henderson has been in position since 1990 and the trust has been managed by Henderson Global Investors since its launch in 1963. MORE »
