Tribeca Global Natural Resources Limited (ASX: TGF) is a listed investment company (LIC) that listed in October 2018, raising $157.5m through the issue of 63.0m shares at $2.50 per share. The Company provides exposure to a concentrated, high-conviction and actively managed portfolio of long and short positions in natural resources equities and credit positions as well as outright commodities positions. The portfolio is managed by Tribeca Global Resources Pty Ltd (the “Manager”), which forms part of the Tribeca Group, a global asset manager that was founded in 1998 and has $3.2b in FUM. The strategy is based on a blend of top down macro-economic analysis and sector and thematically focused bottom-up fundamental corporate analysis. The strategy is flexible (intentionally), with the Manager having the ability
to invest throughout the capital structure (equity and debt) and across the resources sector value chain. While the Manager has a global mandate, the Manager’s focus is on developed, rather than emerging market jurisdictions. Net and gross exposure will not exceed 150% and 200%, respectively. The Company will seek to generate shareholders a return in excess of 15%p.a. (after fees and expenses) over the long-term, which the Manager considers to be a period of more than 5 years.
Given the global mandate, the Company will have direct exposure to foreign exchange movements. The Manager will seek to fully hedge the foreign currency exposure of the portfolio. The Manager will seek to achieve this through a combination of natural hedges and foreign exchange forwards and contracts.
Independent Investment Research (IIR) has reaffirmed its Recommended rating for Tribeca Global Natural Resources Limited (ASX: TGF). We view the Company to be well placed to take advantage of the expected outperformance of the resource sector given the current inflationary environment. Over the longer-term the underlying strategy has outperformed relevant market indices and has delivered on its objective of generating a return of 15%+ p.a. since the inception of the strategy to 28 February 2022. While we view the Company to be well positioned in the current market, we consider an investment in the Company as high risk. The Manager employs leverage on long positions and through the use of shorting. Further to this, the Manager invests in credit securities in which there is limited transparency and limited liquidity. There has been turnover in both the investment team and the Board, however we view the majority independent board representation to be a positive and note that Ben Cleary remains a constant as the Portfolio Manager. The discount to NTA has been narrowing since the market dislocation event in March 2020. We expect the continuation of recent strong performance and the addition of a dividend stream will have a positive influence on the discount.
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