We’re slowly getting a more realistic perspective on valuations at Patient Capital Trust. We’ve had a slew of writedowns and the board has indicated that they’ve run a full valuation review of the top 20 holdings. The shares are currently trading at 43.10p which represents a 34% discount to NAV of 65.02p at 26 September according to Numis.

According to a Numis report the most significant portfolio activity during the period was the acquisition of five unquoted assets from WEIF: Atom Bank, Carrick Therapeutics, Cell Medica, Ratesetter and Spin Memory for £72.8m through the issues of shares at 96.67p, the NAV at the time, plus costs (15.8% premium to the share price). In early September, the company committed further funds to Atom. Further financing was also provided to Inivata (a liquid biopsy company), Idex, Evofem Biosciences and Rutherford Health (formerly Proton Partners). The position in Oxford Sciences Innovation was sold at a modest premium to value. Positions in Cambridge Innovation Capital and Arix Bioscience were also sold.

I know nothing about Carrick and Cell Medica but I do think that Ratesetter is an excellent investment which will pay off and I also think that Spin Memory (familiar to Allied Minds shareholders) is also a more than decent businesses with great potential. I’m slightly less convinced by Atom Bank which has always seemed to promise much but largely failed to make a big impact.

I can’t blame the analysts at Numis for being more than slightly cautious when they say that they “remain wary of the stock until there is greater clarity over the timing of any management/strategic developments and greater portfolio disclosure. We believe that the appointment of a new manager could be a catalyst for a turnaround in sentiment.”

For my own part I think that by the time we get to that new manager – DJ Esprit or ICG perhaps – the share price will already have moved. I’ve started more consistently dipping back in around 43p a share.

Sticking with the theme of fallen angels in the funds’ space, what about taking another look at the Ground Rents Income Fund, now managed by a very capable team at Schroders > Ticker is GRIO. Brokers N+1 Singer put out a note this week that observed that:

“Ground Rents Income Fund (GRIO) share price has continued to come under pressure over the past few weeks, falling to a new all-time low of 78p as investor sentiment continues to be negative towards this asset class. It has subsequently recovered to 87.25p, but based upon the latest NAV of 113.24p as at 31st March 2019 the shares are still trading on a discount of 23%. We note the Board’s recent decision to maintain the current annual dividend payment of 3.96p (payable quarterly), putting the shares on a flat yield of 4.5%. With 93% of the portfolio having upwards only rent reviews (the majority of which being linked to RPI inflation) and 43% of the portfolio ground rent income due to be reviewed over the next six years, we see potential upside from these levels.”

The obvious unknown factor here is what will happen to the leasehold reforms being discussed at government level. My guess is that there will be some substantial changes but they won’t consist of an entire root and branch upheaval. There was a need for real change and I’m glad the government will crackdown on the utterly egregious practices.

But if the system mostly remains in place then GRIO should bounce a fair bit, perhaps back to 100p. On a 25% discount and a 4.5% yield this sub £100m fund could be an interesting one to watch. That said I’d only really be a buyer at below 85p or preferably less than 80p again.