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#Big NGI sell down today
Last edited 3 months ago

09-Apr-2020:  NGI dropped by a whopping -23.53% today from $1.70 to close at $1.30.

There seems to be adequate liquidity, so it looks like a fundy selling down or out.  At last notice they had the following substantial holders:

  • Mr Sean McGould (CEO, President & Co-CIO), 11.99%
  • Delaware Street Capital Master Fund, L.P., 8.08%
  • IOOF Holdings (ASX:IFL), 6.88%
  • Perennial Value Management, 7.23%

The following companies ceased to be substantial holders of NGI shares on the following dates:

  • 26-Mar, 2020:  UBS Group AG and its related bodies corporate
  • 03-Mar-2020:  Eley Griffiths Group Pty Ltd
  • 17-Feb-2020:  Renaissance Smaller Companies Pty Ltd

The latest announcement from NGI was their March quarter update, released yesterday morning:

08-Apr-2020:  March 2020 Update

Their Global Long/Short fund did OK, only falling -3.25% in CY2020 YTD (first three months of this year to March 31), and their Lighthouse Diversified Fund fell -17.94% during the same three months, outperforming the S&P500 TR (Total Return) Index (which was down -19.9%) and the MSCI AC (All Country) World Daily TR Gross USD (US$) index (-21.26%).   So, yes, they lost money, but not as much as most global ETFs did.

Here's some of their commentary:

Assets under management for the total business are still being finalised and are expected to be available for announcement to the market next week (following the Easter holiday period).  Assets under management will be negatively impacted as at 31 March 2020 due to investment performance, and it is likely that we will see increased redemptions in the short-term as some of our clients have indicated a need to exit some of their hedge fund positions in order to generate liquidity in their broader portfolios.

We experienced very divergent results across our portfolios. We were pleased with the results of our equityfocused funds, which reflected a proactive approach in de-grossing the risk in these portfolios from the beginning of March.  Despite market conditions, there remained ample liquidity in the market to trade and implement these risk management strategies.  We were, however, disappointed with the performance of our multi-strategy funds, particularly for our Relative Value Volatility, Merger Arbitrage and Credit strategies.  A lack of liquidity in key markets coupled with exceptionally wide bid/offer spreads limited our ability to implement risk reduction strategies and generated much larger losses than expected. Despite the extraordinary events that drove these results, we would have expected to protect more on the downside in these funds. 

The duration and severity of the economic shock remain uncertain; therefore, it is imperative that we continue balancing risk management with new investment opportunities created by this massive dislocation. In fact, several investment opportunities have recently appeared and we are actively allocating in structured credit, investment grade bonds, and macro/quantitative trading strategies across our funds that invest in such strategies.
Withdrawal of earnings guidance

The Company provided earnings guidance to the market when it released its 2020 interim results on 13 February 2020, which was premised on normal global market conditions.

The impacts of the COVID-19 pandemic has led to unprecedented global market conditions and volatility, which has negatively impacted investment performance.  As these conditions are still on-going, we are unable to accurately predict how investment performance may impact Assets Under Management and hence revenue for the remainder of the 2020 financial year.  As a result, the Company considers it prudent to withdraw its FY20 guidance.

Despite the withdrawal of guidance, the Company retains a sound balance sheet with no debt and a strong cash balance.  The current management team have seen turbulent times before in the Global Financial Crisis of 2008, and are satisfied that Navigator is well positioned to ride-out the current market volatility and uncertainty.

--- click on link above for more ---

Doesn't seem enough to justify a -23.5% sell down today - when the market was up +3.5%, the DOW was up last night, and the DOW Futures are also up.  Funds were down in March, performance fees are unlikely to be earned this half, particularly for the March quarter, but none of that comes as news at this point.  It's all well known.  I reckon we'll see another "Ceasing to be a substantial holder" notice lodged very soon, unless Sean McGould has had a big sell-down, in which case it would be a "Change in substantial holding" notice.

I don't hold NGI shares myself, but I am watching them.

About NGI:  Navigator Global Investments Ltd is the listed Australian holding company for US-based Lighthouse Investment Partners, LLC.  Lighthouse has been managing portfolios of hedge fund assets since 1999.  The Navigator Group has approximately 139 staff world-wide, with key offices in New York, Chicago and Palm Beach Gardens, and additional offices in London, Hong Kong and Brisbane.

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