Riverstone invests exclusively in the global energy industry, with a particular focus on the exploration & production and midstream sectors. It invests directly in oil producing assets, which means it’s relatively defensive compared to trusts that invest purely in public traded equities. Also, Riverstone should produce a return that’s not correlated to the rest of the market.

Today, the company reported its figures for full-year 2017 revealing a 6.2% decline in net asset value per share to 1,527p, mainly thanks to the increase in the value of sterling during the second half of last year. On a dollar basis, net asset value per share increased 2.6%.

Mixed performance 

During the year, Riverstone’s portfolio performance was mixed with its third largest investment, Liberty Resources II LLC, growing in value from 1x invested capital to 1.3x, thanks to a successful drilling programme and some acquisitions. Meanwhile, Meritage Midstream Services III LP is now marked at 1.8x gross multiple of invested capital following the acquisition of its second gas processing facility in 2017.

Still, like most oil-focused businesses, Riverstone has struggled over the past three years as oil prices have fallen. Now prices are recovering, management is optimistic. Indeed, commenting on today’s results chairman Richard Hayden said: “The improvement in oil market fundamentals offers a positive tailwind for the portfolio and provides an accommodative environment for Riverstone to exit some of its more mature investments in 2018.” This implies that during the year ahead, investors should see handsome returns as the company unwinds its portfolio and either reinvests or returns capital. 

As shares in the trust are currently trading at a discount of around 30% to net asset value, I believe that this is one global investment opportunity that might be too good to pass up.

Brexit protection 

Another global investment trust I’m positive about is Atlantis Japan Growth (LSE: AJG). Many investors overlook Japan because the region has struggled economically over the past few decades. 

However, it now looks as if this trend is coming to an end with key economic indicators pointing to a recovery over the past 24 months. The economy is in its seventh consecutive quarter of expansion with annualised growth of 1.5% expected for the fiscal year ending in March 2018. Meanwhile, corporate Japan is expected to report 16% pre-tax profit growth over the same period. 

But trading in Japan stocks is difficult for the average investor and that’s why I’d buy Atlantis.

Over the past five years, this trust has achieved a return for investors of 153% as Japanese small-cap stocks have powered ahead. Over the same period, a benchmark of UK small-caps has only returned 107%. So looking at these figures it certainly seems having the international diversification is worth the extra effort. 

At the time of writing the trust is trading at a slight discount of 6% to its last reported net asset value per share of 255p.

The post Can you afford to ignore these 2 global investment trusts? appeared first on The Twelfth Magpie.

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Rupert Hargreaves does not own any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, you won’t find me investing in the company at this point in time. The reasons are many, with the most worrying being that it’s incredibly difficult to value the company at this point in time. This is because drilling tests are still being conducted at a variety of its fields to determine just how much oil they may contain and, even more importantly, how much may be viably extracted.

Second, this is a costly process and the company’s two producing sites grossed a grand total of £104,000 in revenue in the half year to March while their cost of sales was £167,000. This means the company is still reliant on shareholders to keep the lights on. It last tapped shareholders for £6.5m in funds in May and increased the share count by some 30% to do so.

There’s no recent information on cash burn rates, but total operating losses of £1m in H1 suggest this latest fundraising won’t last forever. And then, if the company’s drilling tests do turn up significant amounts of oil, shareholders will likely bear the brunt of fundraising in the future.

This isn’t necessarily a bad thing, and it’s part of the reason capital markets exist, but it does mean the current scenario is simply too risky for me to invest in UK Oil & Gas at this point in time.

A less risky option

If I were looking for exposure to the oil and gas industry, a much more appealing option in my eyes is Riverstone Energy (LSE: RSE). This is an investment trust that has stakes in a variety of listed and unlisted upstream and midstream firms primarily in low-cost-of-production fields in the US and Western Canada.

In the quarter to September, rebounding energy prices led to 11% year-on-year and 4% quarter-on-quarter upticks in the company’s net asset value (NAV). Increased valuations for many of its portfolio companies led to its gross multiple of invested capital rising to 1.5 times.

Now, actual returns for investors will be lower due to the portfolio management fee and taxes, but this is still a pretty hearty return considering the fund only began investing in late 2013. As of today, the fund also trades at a large 15% discount to NAV, which could mean hefty gains for investors if management figures out how to close this gap.

As I’m not exactly bullish on the long-term outlook for oil producers and their medium-term outlook is hazy, I don’t see myself investing in Riverstone. But with its shares trading at a steep discount and an attractive portfolio of conventional and unconventional producers, I can understand why oil bulls would.

The post One oil stock I’d buy ahead of UK Oil & Gas Investments plc appeared first on The Twelfth Magpie.

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• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So if you’re looking at including some unlisted investments to your portfolio, then you may want to check out these two specialist funds.

Energy

When most investors think about getting exposure to the oil and gas sector, they usually only consider oil majors, such as BP and Royal Dutch Shell, and small-cap exploration and production (E&P) players like Premier Oil and Genel Energy. There’s not a lot on offer in the middle ground though, which is why closed-end investment company Riverstone Energy Limited (LSE: RSE) seeks to bridge the gap.

Riverstone offers exposure to both the exploration & production and midstream energy sectors by investing in a diversified portfolio of onshore and offshore assets. The portfolio’s 14 active investments include significant assets in the low-cost Permian & Eagle Ford shale basins, which makes it well placed to offer investors resilience and growth amid near-term commodity price volatility.

Shares in the investment company have fallen by as much as 3% today after the company reported a 1.8% decline in its net asset value (NAV) to $19.74 per share for the for the half year to 30 June. And due to sterling’s modest recovery since December, NAV per share in sterling terms decreased even further, by 6.9%, to £15.16.

Although these figures seem disappointing at first glance, they aren’t so bad in light of the 14% decline in the West Texas Intermediate oil price over the same period. As such, this demonstrates the continued resilience of Riverstone’s investments in the current low energy price environment and reflects its superior operational performance.

Moreover, valuations seem attractive, with shares in the investment company currently trading at a 13% discount to its NAV. This makes Riverstone Energy a tempting play in the energy sector.

Private equity

Private equity has been one of the fastest-growing and best-performing alternative asset classes in recent years, but it is, for the most part, off limits to retail investors. Investment trusts, such as Princess Private Equity (LSE: PEY), therefore give retail investors an indirect route into this growing asset class.

What’s more, unlike most private equity funds on the market today, which are fund of funds, Princess also invests directly into unlisted equity and debt investments. As direct investments now account for more than three-quarters of the portfolio, the fund has a hands-on approach to value creating, which avoids an extra layer of management and reduces costs for investors.

In addition to diversification advantages, there’s also the potential for greater returns by including private equity investments in the portfolios of ordinary investors. Recent studies show that private firms often grow faster than public ones, as private firms on the whole have better growth prospects and are generally more responsive to new opportunities.

Princess Private Equity today reported a 2.7% increase in its NAV in the second quarter to €10.77, meaning its shares are currently trading at a 7% discount.

The post Can these funds help you to achieve financial independence sooner? appeared first on The Twelfth Magpie.

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• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Golden cash cow 

Caledonia Mining (LSE: CMCL) reported its figures for the first half of 2016 with gold production up by around 3,000/oz, or 12.7%, and the on-mine cost of production per ounce down to $629 at the end of Q2, a fall of $91/oz year-on-year. The company’s all-in-sustaining cost of production for the half fell to $943/oz from $1,007 for the first half of 2015. 

Lower costs and higher production volumes helped Caledonia report a 172% increase in net profit for the first half and earnings per share more than doubled to 8.6 cents, from 4.1 cents for H1 2015. Cash generation for the half was just under $9m. 

There’s no other way of putting it, these figures from Caledonia are extremely impressive. The company is a low-cost gold producer that’s generating plenty of cash and growing production steadily without leaning on debt. Cash generation of $9m, or around £6.7m, for a company with a market cap of £46m makes the company one of the most productive and efficient miners there is. 

City analysts are expecting the company to report earnings per share of 15.9p for 2016 and 26.6p for 2017. Based on these figures the company is trading at an attractive forward P/E of 5.5 and supports a dividend yield of 4.4%. 

Discount to NAV

Shares in energy investment company Riverstone Energy (LSE: RSE) are rising today after the company reported a 13.1% increase in its sterling net asset value per share for the six months ended 30 June. With a share price of only £10.55 at the time of writing and a NAV of £12.25 at the end of June, Riverstone looks to be undervalued.

The company has a portfolio of 16 oil investments around the world, covering both onshore and offshore as well as conventional and unconventional exploration and production, midstream and credit. Only 77% of the group’s total capital is invested, leaving room for further growth if opportunities present themselves. 

Still, the group made a loss of $25.2m for the period, but most of this loss is due to high admin and financing costs. Earlier this week Riverstone announced its first exit transaction which is expected to generate a return of 2.1 times the group’s capital before costs or an internal rate of return of 77%. 

Double-digit earnings growth 

Lastly Coca Cola HBC (LSE: CCH), which today reported results for the six-month period ended 1 July. FX-neutral net sales revenue grew by 2.4%, or 3% taking into account one less selling day in the period and volume grew by 0.7% on the same basis. However, despite this sluggish volume and sales growth, earnings per share increased by 6.9% for the year and basic earnings per share grew by 12.5% as the firm continued to cut costs and improve margins. Net profit for the period expanded 10.8% year-on-year. 

These upbeat figures have sent its shares up by 6.2% in early deals, but after these gains some investors may find that the shares are too expensive for comfort. City analysts are expecting earnings per share growth of 15% for full-year 2016 and if the company hits this target, the shares are trading at a forward P/E of 20.8. 

The post Are these three underdogs a buy after today’s results? appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.