Firering Strategic Minerals: From explorer to producer. Watch the video here.
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Well I did go ahead and bought a few more MV shares...
And me - I've bought some more too! I cannot understand the SP as long as we're comfortable that the NAV is reasonably well supported. Presumably some of the Forward Ventures lot might be "cashing out"? Private Equity is a long term play but has the best long term returns - it just might be the last fund I sell in my portfolio!
It is always disheartening when the value of an investment falls, more so when there is a chasm between the value of the underlying assets and the market capital of the holding company. It is not unusual for a small discount or premium to apply from time to time from MOST investment trusts, and, for the most part such variation tends to be in the region of 5% premium and 12%-15% discount.
Anything outside these figures generally merits investigation. More often than not, the gap closes to be in the range noted above. If the underlying valuation is wrong, it will distort the numbers. If the managers have a poor track record, then that will put pressure on the discount. Investment trust managers can (and often do) buy shares in the market and hold them in treasury to take advantage of unusual gaps and sell them at a later date when the price benefits the company.
My hunch is that there is insufficient cash to allow the trust to buy shares in the market and take advantage of the discount and that there is an institutional holder that is dumping their holding. I'm not convinced that the valuation is correct. The managers might have have stretched their rope a little too much and be close to breaking point. If the valuations are broadly correct and an institutional holder is really upset, it is possible that the Trust could be wound up to put an end to the miserable share price performance. Panic does not help in a decision making process but speculation can be beneficial.
Of course, this is not a holding for widows and orphans. Just the musings of an old duffer, so take with a scoop of salt.
The fact that two of the MV Directors recently bought shares should give us some confidence in the company - or at least I hope so!
Alas, most investment trusts hold listed equities so price discovery of the assets is a constant.
Here the valuations making up the NAV are based on funding rounds and comparisons with similar companies that are listed. So a much higher degree of subjectivity involved.
All similar vehicles are on massive discounts to the valuations of unlisted / listed / cash holdings.
IP group has cash at half its value, listed assets and listed assets probably then at 25%, ARIX until recently had the unlisted elements as a free ride, shellalion was until recently on a 60% plus discount.
Need the ipo market to improve and see assets floated at the values they are in the books. Also biotech needs to rerate.
Sangijuelas, I do accept that there are many Investment Trusts (IT) that hold listed equities, however, III, PEY and AUGM, which are among the IT which I hold are principally comprised unlisted companies though at different stage of life. If we accept that investing in seed and fledgling companies need very different resource from those which are at the stage to either be spun off as a quoted company or divest to the needs appropriate to the development of that business.
Some businesses require cash, others need introductions to build sales and some need skilled people for compliance.
As far as I am concerned, my cash investment in GROW would, if the IT were wound up tomorrow probably be completely worthless if bean counters from an insolvency outfit were engaged. On the other hand, GROW has a stake in plenty of companies and perhaps a few will be a runaway success in time. It is a risk that I am prepared to take. As a general rule, I tend to comment publicly where I am worried or find the quality of discussion does not merit engagement. (AFC, EZJ, BEG for instance).
There is still 100% for the share price to fall. My hunch is that the NAV is overstated as far as the broad investing community is concerned. That the managers have dipped into their pockets to buy shares, is incidental.
Another manager has chucked £50K into the hat.
"Another manager has chucked £50K into the hat."
So is that 'incidental' - or maybe a vote of confidence?!