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Have been invested in this for a couple of years started off well now 11% down ! Worst performer in my portfolio.
Thats impossible,are you on the right BB ?
long term record is best in sector.
Drop today so topped up.
down again.
I checked the sp of the top holdings - most are up so maybe the fall is due to the excessive premium to net assets compared to other trusts in the sector.
Topped up.
Any views?
Check the date when I posted this! At that time it was not doing well
I'm still not following the reason for "issue of equity" benefiting existing shareholders. Surely it's just dilution, so how does that benefit?
I missed the RNS when it came out last Friday but have since read the share issue prospectus on the Baillie Gifford website. Can’t see any benefit to holding as I’m not intending to be in this for 5 years or more. Had a good run with PHI this year. Just disappointed that such a large share issue is underway. Might be my ignorance of how Investment Trusts work, but a dilution of 50% with the doubling of shares over the coming year is too much for me.
It brings in more cash for the company to invest.They are issued at market price so no dilution
In fact shares can only be issued at a premium to net asset value so it is the opposite of dilution so is to the advantage of current shareholders.
So are you saying they have investors, market makers or whoever lined to to buy these extra shares for cash, creating a cash pile for future investment,as opposed to them buying existing shares on the open market which would not result in anymore cash for the managers to use?
Just trying to understand how it works.Who pays the cash, it's not a placing or rights issue?
Liitlened, the prospectus itself says it will be a 50% dilution if you don’t participate in the share issuance programme.
I suppose when they say dilution they are referring to the % holding you have in the trust. When you say it, you must mean the value of the holding.
But the company gets cash for it and the cash is more than the share value because they are sold at a premium so shareholders are better off in total.Simple maths
The shares are sold at a premium to NAV, not to current SP. As the SP was at a substantial premium to NAV prior to the announcement of the prospectus, this premium has now reduced significantly, thereby also reducing peoples’ holdings last week by 12%. And there will be continued pressure to prevent the SP from getting very far from NAV again as more shares are issued over the coming year. And it is dilution as the company themselves have stated.
As long as they issue new shares at a premium to NAV, and the underlying assets - i.e. the investments themselves - perform well, I guess it should be ok. But it will take a little while to recover that 12% drop.
That's as I see it Reckoner. Thanks for your post.
The only query I have is saying "sold" or is it "offered" at since the initial 3 tranches were priced well over that days, and the days since, market prices. Have they been sold and cash received or are they laying there awaiting sale when and if the market price catches up
OK, got it now. It,s the time of the rns that.s confusing me. I assumed the shares were being offered at that time for sale the following day, whereas they had already been offered and presumably sold earlier on the day of announcement.
Happy now I understand it because this is one of my largest holdings and I needed to be clear.
Yes, the RNS is retrospective but you’re still right that they are being issued at a premium to the price on that day. I’m learning as I go here, but I think the way it might work is that certain brokers will be used by PHI to offer the new shares to current investors, whether these are institutions or high-net worth individuals. They might be willing to pay more than the SP simply to ensure they don’t see a significant dilution to their % holding. The rest of us are excluded it seems, but we can judge whether the investment still makes sense according to our own objectives.
Noone is going to buy shares ABOVE the market price,that doesnt make sense.But buying above NAV does make sense if there is a premium which might be sustainable.It s good for the company because its the only way to increase there portfolio
So why was the equity issue price (as stated in the RNS) significantly higher than the SP on several occasions in December?
I notice this isn’t the case in January btw.