Repeated Purchase Option: BH Macro as a Safe Haven in Turbulent Times

The renowned stock market column Questor once again highlights an interesting investment opportunity: the £1.4 billion hedge fund BH Macro. This could serve as a safe investment haven in an uncertain political climate, particularly in the event of a second presidency by Donald Trump. Since the last recommendation to "hold" at a price of 353.5 pence in September of the previous year, the shares have risen over 14% to 402 pence. Nevertheless, they remain below the value of the company's assets, averaging 10% less over the past year. This means that shareholders do not fully benefit from the portfolio management led by Brevan Howard, a renowned asset management firm co-founded in 2002 by Alan Howard, a prominent Conservative donor. This is unfortunate, as Brevan Howard's team of bond and currency traders has consistently achieved better results than global stock markets since its inception in 2007, while protecting investors from sharp price declines. Although BH Macro has lagged behind the growth of the MSCI World Index over the past ten years, with a return of 92.1% compared to 158.3%, this gain was achieved with about half the volatility of the market benchmark, according to data from broker Deutsche Numis. Richard Horlick, Chairman of BH Macro, describes the company's ambition to provide a "ladder of performance"—steady gains without abrupt declines. Only in three out of 17 years were there moderate losses, including a 0.9% decline in net asset value in 2015, 4.4% in 2017, and 1.8% in the previous year. When the US stock market plunged by 12.5% in March 2020 due to the Covid crisis, BH Macro's assets rose by 14%, and the shares also increased by 18%. The fund achieved a return of 28% in 2020 and repeated this feat in 2022 with a gain of 21.9%, while stock markets were shaken by the Ukraine war, inflation, and rising interest rates. Unfortunately, the recent experience of shareholders was less pleasant, as the shares fell 23% from a peak of 512 pence in September 2022. This development occurred as BH Macro launched a major share issue in February last year to meet high investor demand. Two consecutive setbacks overshadowed the positive progress: the collapse of Silicon Valley Bank and other US financial institutions in March 2023 led to a 4% loss for the fund. Even more significant was the April merger between asset managers and main shareholders Rathbone and Investec. This left the combined company with a 35% stake in BH Macro, which would normally require a takeover bid. A waiver from this obligation was granted, but the expectation of a potential large share sale by Rathbone-Investec weighed on the stock price.