Renn Universal Growth moves to net cash for first time in 16-years
The Renn Universal Growth investment trust has recently moved to a net cash position for the first time in the trust’s 16-year history.
Historically, a net borrower with the capacity to borrow up to a maximum of 20%, the trust now has 15% in cash following a series of mergers, acquisitions and sales within the portfolio.
In May, Renn Universal sold a stake in its largest holding Anchorfree for $5.3m after Goldman Sachs invested $52m in company, of which $25m went towards selling shareholders. Whilst maintaining 84% of the original holdings, the trust made a 110% return on its initial investment. The trust has also recently benefitted from the merger of PHC with Acadia Healthcare and the sale of Access Plans.
Meanwhile manager Russell Cleveland has been slashing the trust’s exposure to China, reducing it from 30-40% to 8%, selling companies such as Hollysys Automated Technologies.
“We are getting out of China. It is going to come back but it will take so long to sort out,” Cleveland says. “The favourites of one bull market often sit out the next bull market. We are moving on to something else.”
The board of RENN Universal are now in discussion with major shareholders regarding plans for the surplus liquidity.
“We have never passed out money before but we are studying it,” Cleveland says. “We could pay out 4% or 5% a year, but some major shareholders don’t want cash, they want us to buy in more shares. We are getting feedback and will decide what to do in the next three to six months. All of the options will be positive for shareholders.”
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