The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
To provide ordinary shareholders with attractive risk-adjusted returns, principally in the form of regular dividends, by investing in a diversified portfolio of primarily UK-based solar energy infrastructure assets.
Find out MoreLondon South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Could be a turning point this week with 18.9m shares traded, 3 times the 30 day moving average. Could also be making a bottom here with 94.7 the neckline? DYOR before trading.
Interest rates coming down US gas on the way up .... and 2p divi in a couple of weeks ... 94p was the Xmas peak so a good target, agreed.
It's looking like NESF 'might' (potentially/maybe/who knows) have bottomed. With the increase in the divi at the same time, I think I'm prepared to start rebuilding a position.
Agree, IMO interest rates won't be going up to levels that put Next Energy in danger.
I piled in a few weeks back in the early 70s, however this only bought my average down to around 80p, but still very happy with this. The SP will get back to the 90s, but only as time and the debts are less of a worry to the market imo.
I think the danger lies is refinancing debt rather than borrowing rates, which remain well below the NESF discount rate. This danger seems to have passed for now with the renewal of the RCFs, and the preference share issue is looking like a very good decision.
Ultimately, all these renewable trusts need their share prices to go above the NAV per share, so they can issue new shares to grow without excessive gearing.
"Ultimately, all these renewable trusts need their share prices to go above the NAV per share"
Not so easy for NESF that can buyback shares at a discounted rate. Disappointing that NESF has increased the divi rather than fix the divi and buyback ....
... other closed end funds like PGMR that holds stock in other companies, could use borrowings or cash tp create shares at a discount, buy the underlying stock at a heavy doscount to NAV and release shares at a premium to the stike price at purchase. Not so easy for NESF that owns assets, but I did make the suggestion to PGMR a month or so ago.
NESF are still trying to sell some assets, which would help with the debt.
https://www.lse.co.uk/rns/NESF/capital-recycling-programme-m8mqcg5xxjlgxws.html
Though there seems to be no takers at the prices they want to sell at. This could change as interest rates come down a bit.
I guess it doesn't matter in the short term whether it is a buy back or a dividend increase, it all adds to share holder returns, and at least the dividend is covered. Hopefully if they sell some assets then they could do an aggressive buy back. If they are in talks, this could be why it was a dividend increase, rather than a buy back.
I think a lot of their debt is described as 'floating rate' which is off putting a little. (they are about 45% geared with debt).
...
The £70m RCF extension is now available until June 2025 and benefits from improved terms with a margin of 150bps over SONIA ("Sterling Overnight Index Average") compared with 160bps over SONIA under the earlier terms. As at 7 May 2024, the Company's total interest cost for any amount drawn under this RCF was 6.7% due to SONIA being at 5.2%.
...
The new facility is available until June 2026 and provides two additional 12-month extension options at NESF's sole discretion to bring the maturity date up to June 2028. The RCF continues to benefit from attractive terms with a margin of 120bps over SONIA ("Sterling Overnight Index Average").
...
The Company continues to prioritise its Capital Recycling Programme and expects to use the proceeds from the Programme to pay down existing borrowings under the Company's RCFs.
...
I bought more today, as the yield is good, if rates come down and then they can sell something this will all look a lot better. I think that is the case, at least my investment case.
The 45% gearing figure is a little misleading because it includes the preference share capital (which receives a fixed dividend and will never need to be repaid) and long-term "amortising debt" (which is being repaid over its term like a mortgage).
This leaves £177m of RCF debt which is aroung 15% of the gross asset value. Reducing this debt seems like s wise precaution when raising funds through a share issue is not possible. Also to avoid high floating interest rates,
US Nat Gas futures are now up 50% post the February 2024 lows ... so there should be some hike in UK gas prices ... speaking of which I just fixed energy prices for two years with EDF .... can't see UK prices going much lower in Brexit Britain.
Reckon Sunak has called GE because he knows interest rates will drop in June,
It won't make a scrap of difference IMO. The Tories has been destroyed by themselves through the use of nonstop wrecking balls demolishing all aspects of the UK's wellbeing.
Lower interest rates will boost bond proxy renewable share prices ... that's all I'm interested in ... picked £10K up at 72p last thing today .... looks like the sector has taken a hit today ... Labour government Great British Energy fears I'm guessing.
TOD, can you expand. I also saw large drops in a few reits which are more bond proxies. I dont see why these should drop due to an election which we all knew was coming. I could understand oil and gas shares..
Luckily I had some YouGov (+5%), which is worth a look. Think a short is closing on that. Guess they will be busy now!
Renewables are seen as bond proxies ... allegedly stable share prices .. a slight irony under the current environment I agree .. but there we are. These companies can have sizeable debt so returns are interest rate sensitive - hence many in the sector looking to reduce RCF dependency - but reutns are also linked to gas prices that are squeezing nicely now so I'm a bit surprised by the continued low price going forwards ... so can only attribute the weakness of a possible Labour government and claims of cheaper energy for everyone with various rumours of nationalization in the sector.
Nationalization is not what Labour are proposing ... more like PFI without the PFI .... state/private combination generating energy as UK turns to renewable as its power source.
A drop in SP was expected on Ex-dividend today. However, the drop seems excessive. Must be other factors affecting share prices, Tories not helping as Gavster-NBC states. Lots of late Buys are good to see. Hang-in.
NESF dropped far more than most. Dividend was only 2p.
BSIF -2.67%, UKW -1.8% etc. There has been heavy selling since the 15th IMO, as I was surprised the dividend increase could not improve share price. Was watching it carefully trying to trade some. I would guess a short, but not sure why do it now.
The REITs I mention are a little more politically sensitive as they are related to health care. PHP is over 3% short, that is huge. Some speculation Labour would interfere with the arrangements PHP have.
All of these are cheap for a reason IMO. I hold, but trying not to get seduced here by 'current' yields.
This also didnt help
Barclays on Wednesday downgraded specialist solar energy and energy storage fund NextEnergy Solar Fund
NESF to equal weight from overweight and lowered its price target to 0.87 pound sterling from 1.00 pound.
Gungi - I'm level II watcher .... there is a hedge fund crawling around this share hitting it hard .... and has been there for a couple of months ....