Cordiant Digital Infrastructure Ltd (LSE:CORD) has quietly delivered a strong run of form, outperforming its own targets and clocking up share price returns that would make even seasoned investors take notice.
According to a new note from Kepler Partners, the fund has beaten its target net asset value (NAV) return of 9% a year, with actual annualised performance since launch sitting slightly higher at 9.2%. That may not sound like much on paper, but it’s a solid result when paired with the strong rise in the company's share price over the past year, especially given the wider infrastructure sector’s more muted performance.
CORD focuses on digital infrastructure (the behind-the-scenes assets that keep the internet running) like fibre networks, data centres and mobile towers. It’s a specialist in a world full of generalists, and that focus has allowed it to grow assets through a hands-on “Buy, Build & Grow” strategy. The team takes majority stakes in companies, then boosts their value through development and bolt-on deals.
Investors are still getting a dividend, though that’s not the main story here. The yield is around 4.5%, and Kepler says it's comfortably covered by earnings, using a measure called AFFO (adjusted funds from operations), which takes all revenues and costs into account.
Despite its performance, the shares still trade at a hefty discount to NAV—around 22%—which Kepler thinks is unusually wide for a fund with this growth record.
"We believe CORD is a largely misunderstood investment company," the Kepler analysts wrote. "As a specialist infrastructure investor, amongst a peer group that invests in a broad range of more traditional infrastructure projects, it has been given a wider rating than most, arguably due to concerns that this specialism, and the portfolio concentration, could be considered riskier in more challenging times."
CORD owns just six companies, but these contain hundreds of assets. Notably, it recently expanded its footprint via a big data centre deal in Belgium and a fibre business acquisition in Ireland. These moves are helping to reduce risk from portfolio concentration while setting up for further growth.