Atlantis Japan Growth trust takes aim at discount

The board of the top performing Atlantis Japan Growth trust - run by Ed Merner - has moved to fend off arbitrageur activity by implementing a discount control mechanism (DCM), capped at 10%.

The company's market cap has diluted significantly over the past couple of years, shrinking from £152m at the start of 2011 to £49m today, putting the trust at risk of arbitrage activity. However, the board believe a DCM will increase liquidity and give its activist investors an opportunity to exit the shareholder register. Under the DCM terms if the trust's discount to net asset value (NAV) exceeds 10% over a rolling three month period a continuation vote will be proposed at the company's next AGM. Analysts at investment trust broker Numis argue an active share buyback policy woul...