Lowland Investment Co (LON:LWI) is a UK equity income investment trust with a focus on growing capital and income. It has been managed since 1990 by James Henderson at Henderson Global Investors; during 2016 Laura Foll, who has assisted Henderson since 2013, was named joint manager. LWI invests in 100+ mainly UK companies across the market cap spectrum, generally with about one-third of its portfolio respectively in large, mid-cap and smaller stocks. It has recently increased its gearing with an issue of 30-year loan notes, locking in a long-term fixed borrowing cost of 3.15%. LWI’s managers note that they are finding many attractive opportunities to buy undervalued stocks with good long-term growth potential, at dividend yields that comfortably exceed the cost of borrowing. The discount is currently wider than longer-term averages.
Investment strategy: Find value with growth potential
LWI’s managers favour cash-generative companies with good capital and income growth potential, and aim to buy stocks when they are out of favour and undervalued by the market. The investment process is research-intensive and bottom-up, with hundreds of company meetings undertaken each year. The stock list is relatively long (122 companies at 31 March 2017), and includes companies from across the market cap spectrum, including some that may be lower-yielding but offer better future growth prospects. Up to 20% may be invested outside the UK.
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