Shares in Rab Special Situations (AIM: RSS) held steady despite the company reporting a fairly gloomy update on its investment portfolio.
The fund reported that despite a 19% jump in the Bloomberg World Mining Index and 7% rise in the Bloomberg World Index in March, the Special Situations Fund reported a 8% fall in the NAV return in March and 13.2% fall for the year to date.
Net assets at the end of March were US$426 million, while debt as a proportion of net assets fell from 8% in February to 7% in March.
“While it was encouraging to see a rebound across some of the larger listed holdings, the market conditions for private equity have not improved as investor risk aversion and liquidity requirements remain very high,” the fund stated.
“As such, the situation for many of the holdings in the unlisted portfolio, which accounted for 61.8% of the estimated net assets in the strategy at the end of March, continued to deteriorate largely due to companies' inability to secure ongoing finance.”
Despite the difficult environment for the fund, it did note that there was still considerable upside in its investments, particularly if conditions in the IPO and M&A markets improve and commodity prices recover further in 2010.
“Conditions continue to be challenging for the Company, but the manager expects that as metal prices gradually recover into 2010 the market for small-capitalization development stage equities will improve and liquidity will once again become available from the listed portfolio. “