AVI Global Trust (AGT ) and its manager have been busy.

It was at the forefront of the campaign to tackle failings at Hipgnosis Songs Fund (SONG ); AGT profited from the Pantheon International’s (PIN ) tender offer and buyback programme; its manager has launched a campaign to shake up one of its Japanese holdings; manager Asset Value Investors (AVI) is taking on MIGO Opportunities (MIGO ) together with its managers – Nick Greenwood and Charlotte Cuthbertson – who are augmenting the AVI fund management team; and AGT was a well-deserved winner of best global fund at the recent Citywire Awards.

AVI is an activist investor, but has a much more constructive approach than the smash and grab one adopted by some other discount players.

It does not tend to be vocal about the work that it does to unlock value for investors unless it meets resistance. It thinks galvanising other stakeholders to put pressure on companies to do the right thing will help shift the dial.

The £1bn plus portfolio is focused on assets trading at a discount to the manager’s assessment of their intrinsic value.

This could mean that it is categorised as a value investor. However, in reality, the underlying portfolio is exposed to a wide range of businesses – from luxury goods to convenience stores, and from asset management to online marketplaces.

Nevertheless, AGT is never likely to be invested in the ‘hot’ parts of the market – which I guess today would be something like AI. For this reason, AGT can act as a good diversifier in your portfolio to funds such as Scottish Mortgage (SMT ).

The portfolio bears no resemblance to any index and so finding an appropriate yardstick to measure its success by is difficult. The board has decided to switch the trust’s performance benchmark from a world ex US index to the MSCI All Countries World Index (MSCI ACWI).

There is a good argument that it is hard for AGT to find sufficient US investments. Even today, AGT only has about 28% of its portfolio listed in North America while MSCI ACWI has 63% in the US alone.

Over the past 10 years (to end October), AGT has delivered NAV returns of 126.7% compared to 70.2% for its old benchmark. The overwhelming strength of the US market meant that MSCI ACWI delivered 155.8%. However, over three years, AGT is well ahead up 37.9% versus 29.4%. 

AGT holds a combination of names that you would likely recognise and companies that are a bit more esoteric, such as Norway’s Schibsted or Mexico’s FEMSA. Those two have been amongst the best performing of AGT’s stocks recently.

Schibsted owns a number of online classified and media-related assets, a company AVI began taking a position in last year and which is know the largest position in AGT.

The activist investor believed the market was not giving Schibsted full credit for the value of its 28% stake in Adevinta. That has changed recently as Permira and Blackstone have expressed an interest in acquiring the company.

Last week, Schibsted said that it would be prepared to reduce its stake in Adevinta by 60%, freeing up NOK24bn (about £1.8bn) of cash. Schibsted’s share price is up over 80% off its September 2022 low.

FEMSA is a conglomerate that had interests in a diverse range of businesses. Since AGT established its position, FEMSA has undertaken a strategic review and has been streamlining its portfolio, selling a non-core stake in Heineken, and freeing up cash from its US distribution business. It still has a stake in a Coca Cola bottling company that could be another source of cash.

The result is that FEMSA is now a purer play on its Mexican convenience store operations and associated businesses such as payment and loyalty cards. Investors seem prepared to put this on a higher rating and FEMSA’s share price is up by more than 50% this year.

Japanese asset rich companies are another interesting part of AGT’s portfolio. For many people, Japan has been seen as the place to be over 2023 although returns have been held back by the weakness of the Japanese yen.

There is hope of an end to yield curve controls, which have been holding down Japanese interest rates. Last week, the Bank of Japan edged closer to a relaxation of this policy, but the yen is still 16% weaker against the pound than it was at the start of the year.

AVI recently published its intention to vote against the board of Digital Garage, a Japanese marketing and payments company, next June. It had been engaging privately until now, but it felt that the company’s medium-term management plan was inadequate. There is an obvious fix to Digital Garage’s woeful share price performance. It has a 20% stake in Kakaku.com that could be divested.

A combination of widening discounts and a deliberate repositioning of the portfolio towards new discount opportunities means that the double discount on AGT and its underlying portfolio is close to its widest level.

For AGT’s private equity stakes, which include Oakley Capital (OCI ), Pantheon International and Princess Private Equity (PEY ), one catalyst for a re-rating could be a resolution to the investment companies cost disclosure problem.

In the short-to-medium term, AVI has been encouraging heavily discounted funds to view share buybacks and tenders in the context of their overall capital allocation policy - asking the question, would a share buyback generate better risk adjusted returns than a new investment.

AVI welcomed Pantheon International’s new capital allocation policy and the resultant uplift in its share price.

At just shy of 11%, AGT’s own discount is a bit wider than it should be. Again, the cost disclosure problem is having an impact here. The small print in the Autumn Statement that promised to tackle this could make a real difference to this fund.

James Carthew is head of research at QuotedData.

Any opinions expressed by Citywire, its staff or columnists do not constitute a personal recommendation to you to buy, sell, underwrite or subscribe for any particular investment and should not be relied upon when making (or refraining from making) any investment decisions. In particular, the information and opinions provided by Citywire do not take into account people’s personal circumstances.