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Hi Guys, no chat here for over a year and now trading at 95c on 21% discount!
I'm thinking of buying in following a cash out I got on Dunedin Enterprise Investment Trust (DNE) who as part of their winding down plan bought back my investment at a 1% discount to NAV.
Hi Gewillia, I have no idea what is behind the sudden surge. I won’t jinx it but jumping in.
Well Oli, someone appears to have lit the blue-touchpaper here on Guy Fawkes Day - up from $2.50 last Friday to a high of $2.95, so far today. Moving the NAV premium to 40-odd per cent. Plus, the big off-market buyers seem happy to follow, with yesterday's purchase of 100,000 shares at $2.74 from the block-listing, which is reassuring.
The only logical explanation, that I can imagine, is that one or two of MNTN's unlisted investments have IPO'd with spectacular success in the US. Unless MNTN announces this, I can see no way to check this out. Have you, or any other reader, got any bright ideas?
Gewillia, many thanks for your considered and honest reply. Also many congratulations on your investment in FUTR. I also invested in this but joined the party relatively late and so didn't make anyway near what you did. I guess its experiences like that drive FOMO.
Like you I'm happy to accept high risk for higher returns. I generally believe time in the market is better than timing the market, however, on occasions when valuations look very high I might take a bit out, especially on those investments where prices can drop more than the market. Technology Investments Trusts where pricing can be more volatile than the market are a case in point. I was in ATT quite heavily in Feb 19 when Covid reared it's ugly head and fortunately sold a month before the market crashed and big discount opened up on their shares. I was able to buy back about 40% cheaper and the prices quickly recovered. Currently, I am about 85% invested, having withdrawn the 15% recently at what seems high market values. I am waiting for an opportunity to buy back into ATT or other technology based funds including MNTN. MNTN is clearly a quality fund as are many of BG's. If I invested now and came back in 5 years I have no doubt I will have done very well. I do wonder however if I will get a better opportunity to buy in over the next few month. As you suggest lets check back in March and see whats happened.
Great question, OliG. This trust has been at a 20+% premium since inception, but over time it has consistently increased the NAV to catch up with the purchase price, so to speak.
A 42% gain in the first almost-fully-invested FY ended 31.01.21. Then another 11% for the 1/2 year to 31.07. Now another 15% gain between 31.07 and last week. That's over 70% in less than 2 years. Quite phenomenal numbers.
I bought on 20th May, when the premium was about 25% and now the NAV is greater than my May PP. Clearly common sense dictates that one day the NAV has to catch up with the SP, either through a lack of NAV growth, or through PI's moving off to buy another better-perceived winner. The question, though, is, when will this happen?
I have a high appetite for risk and running profits and for periodically recycling paper profits. In May, I sold half a 3-year-old holding in FUTR that had risen from £3.50 to £25 (definitely the best purchase of my life in speed terms) and ploughed the profits into MNTN, which has since risen from $1.89 to $2.52, so I am "playing with profits" which greatly lessens the stress level.
Can BG continue to generate enormous profits across their stable of funds & IT's? Well, Anthony Bolton managed it for more than 20 years, but it seems to take a rare and particular discipline, lacking in 99% of fund managers, to succeed for so long. As we saw recently with Woodford, once he lost his watchdogs at Investco. Somebody famous described the market as "climbing a wall of worry". We all research, then dive in and worry until there's a paper profit margin of, say 25%, when the worrying goes away - at least I do.
Going on the principle of "Faint heart never won fair lady", my answer to your question is "Yes, it is a steep premium", but based on management's track record, both here and elsewhere (SMT), a new shareholder today would have a far better than average chance of making a good profit. Please remember though that I am regularly wrong!
Let's check back with each other next March?
Gewillia, this is a very interesting trust but the 30% premium seems a bit steep don't you think?
The good results RNS from last week makes for sobering reading in small part. Two of MNTN's US investments IPO'd this year. My eyes were caught by the notes that both were locked-in;
Research reveals that Oscar Health debuted on 3rd April at $39, opening at $36. Itself not a good sign. On May 13th when it had already sunk down to $23.14, it reported a quarterly loss of $87 million - almost twice the estimate forecast 6 weeks earlier. The downhill slide has continued to Friday's close of $18.21.
Zymergen floated on 22nd April at $31 and topped out at $52 at month-end. All quiet in the $25 to $45 range until 4th August when disaster struck in the form of a profits warning, which saw it bottom at $7.85. Currently $14.04c. The company now expects no revenue this year and "immaterial revenue" in 2022. The CEO took a powder. MNTN is locked-in until 19th October. How many of the original investors will bail-out soon thereafter?
I'm a keen follower of BG, who have made me enormous profits over the past few years in several trusts, but these two 2021 disasters show just how difficult it is to completely avoid ever getting egg all over your face, even with all the resources of a major fund manager. From a trading perspective, I'll be interested to see how BG react. We PI's are famous for running our losses and cutting our profits. Will BG toss the pair out 100% and move on? I know I would. Slapped wrists all round, then look for something better.
The good news, of course, is that these purchases are the rare exception and the NAV continues to rise gracefully, but it made for a sobering weekend to realise how easily even the experts can get hit for 25% and 50% losses, within 4 months, compared to the opening day price. It's impossible to know that MNTN' purchase prices were - hopefully much less than the issue prices.
MNTC was already almost 17% invested at July 31st.