The performance of shares in Electra Private Equity over the past three months shows the wonder of investment trust discounts. We recommended buying the shares when they were trading 36 per cent below net asset value. Now the discount has narrowed to 21 per cent, so investors have made a chunky profit.
Part of the reason is improving market sentiment. Private-equity trusts are a play on the stock market, so when prices rise, their discounts usually narrow. But Electra has led the pack, which reflects the sale of two companies at decent valuations in August. First, it received £12.3m for a heat services supplier, Thermocaox, nearly tripling its money in just under four years. Equally impressive, it almost doubled its money on a Dutch abattoir equipment maker, MPS, which it bought for €21m less than two years ago.
When: 2/07/10
Price: 1,209p
Performance: +23%
