Friday, 17 February 2017

Temple Bar - Final Results

I hold this investment trust in my ISA. It is part of my ‘basket’ of income-focussed investment trusts designed to provide an above inflation rising natural income and hopefully some increases in capital over the longer term.

TMPL has been managed by Alastair Mundy since 2000. He takes a contrarian view on the timing of buy and sell decisions - buying the shares of companies when sentiment towards them is thought to be near its worst and selling them as fundamental profit improvement and/or re-evaluation of their long-term prospects takes place.

This contrarian approach centres on long-term investment in cheap, out-of-favour companies in the belief that over time, these will be affected by reversion to mean.

This approach has proved very successful over the longer term with the trust outperforming the FTSE All Share index over the past 5 & 10 years. In more recent times, the value approach has underperformed the benchmark.

Results

They have today published full year results for 2016 (link via Investegate). The past 12 months has  been much better than the previous year with total return of net assets increasing by 20.4% compared to a gain of  16.8% for the FTSE All Share index. The contrarian approach often requires long periods before the benefits for the trust are realised.

TMPL v FTSE All Share (click to enlarge)

Despite a post-Brexit wobble, Temple Bar emerged from 2016 with the best one-year NAV total returns of any of the mainstream UK income trusts.

Temple Bar's attractions include ongoing charges of just 0.62%, a natural dividend yield of 3.2% and the third-best 10-year total returns in the UK equity income sector (behind my other holdings Edinburgh and Finsbury) despite a poor run in 2014 and 2015.

I am hoping maybe the tide is at last turning in favour of value investors.

Income

The trust is committed to paying a rising dividend year on year and has met this commitment for the last 33 years.

The board are recommending a final dividend of 16.18p making 40.45p for the full year - an increase of 2% on 2015. The dividend is covered by income receipts of 43.74p.

In my report last year, the share price has lost around 16% over the previous 12 months, so things seem to be back on track.  The share price appreciation over recent months means the yield has reduced from 4.0% last year to currently ~3.2%.


I took the opportunity to reduce my holding in TMPL a couple of years back but I am happy to continue with the remaining shares for the longer term.

Feel free to leave a comment below if you have any thoughts on this investment trust.

4 comments:

  1. Hi DIY
    Thanks for posting this, looks pretty positive. I added to my TMPL holding last year. Funny that it was originally one of my Monkey stocks which I picked out of the hat! :-)

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    1. Yes weenie, not complaining...37% increase since last Feb and 118% over 10 yrs.

      Are you keeping track on the original Monkey entries? If so it would be interesting to see an update at some point?

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    2. I still have the Monkeys spreadsheet ticking over and was planning to do an update later in the year, as in Monkey Stocks after 2 years. However, if you want to see its current status, here's the link: https://docs.google.com/spreadsheets/d/1jf4RgXthMc8Fxx6oVs0omwALjYzMXrFEGu9hCetRgWQ/edit#gid=316099119

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    3. Thanks weenie...I will look forward to the 2 yr update!

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