London, UK, 4 October 2023

Edison issues update on UIL (UTL): Investing for long-term value creation

UIL Limited’s (UIL’s) value-focused manager, Charles Jillings, is supported by a seasoned global team of sector specialists. The company has experienced a difficult spell of relative performance during a period of economic uncertainty and stock market volatility. Also, growth stock valuation multiples have come under pressure due to rising interest rates. However, the manager has high conviction that over the longer term significant value can be realised from UIL’s portfolio companies. Financial companies Resimac and Waverton Investment Management are the two largest exposures in the fund. Despite robust fundamentals, Resimac’s share price has languished and Jillings considers its 5.6x P/E multiple and 8.7% dividend yield to be very appealing.

Not only is UIL trading at a wide discount, an investor in the company also effectively receives a ‘double discount’. As examples, at end-August 2023, number two holding, Zeta Resources (17.0% of the fund), was trading at a 21.8% discount to net tangible assets, while number three holding, Utilico Emerging Markets Trust (12.3% of the fund), was trading at a 13.9% discount to NAV. Generally, investment company discounts across the board have widened in an environment of higher-than-average investor risk aversion. Therefore, a positive change in sentiment, maybe in response to less economic uncertainty in global markets, could lead to a material uplift in UIL’s share price.

 
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