Edison issues review on Hansa Investment Company (HAN/HANA)
Hansa Investment Company (HAN/HANA) fund manager Alec Letchfield argues that investors should not be overly distracted by the fund's exposure to Brazil through a c 11% position in maritime services company Wilson Sons (WSON). While the holding could prove beneficial as global economic growth and trade continue to recover, the remaining c 90% of the portfolio is much more significant, and Hansa IC's persistent 30%+ discount to NAV is arguably unwarranted given its healthy mix (via funds and direct equities) of growth, value and defensive/uncorrelated strategies. Recent performance has shown an improving trend versus peers, and a 13.3% local currency increase in WSON's share price since the start of 2020 (outperforming the main Bovespa Index by 11.5pp) has not been reflected in Hansa IC's discount to NAV, which moved by just 0.4pp from 33.9% to 34.3% (A shares) from 1 January 2020 to 4 May 2021.
Investor perceptions remain key to tackling Hansa IC's persistently wide discount, which is arguably unwarranted by the quality and breadth of its underlying holdings. The WSON stake, at just under 11% of NAV, arguably should not be 'the tail that wags the dog', nor, in our view, seen overwhelmingly as a negative (see page 5), given the pick-up in global trade and commodity prices and strong operational and share price performance. The recently announced 3.2p per share dividend for FY22 (flat y-o-y) puts the A shares on a current and prospective dividend yield of 1.5%.