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Started: cautionyourblast, 8 Feb 2024 16:31
Last post: pekingduck, 5 Apr 2024 16:22
I tendered all my holding for the buyback at £10.50, got scaled back to 54% which is better than the initial offer of around 36%. Pretty happy to get out with > half my holding at this price, having bought in under £5. Letting the others revalue towards £10 and then run this to see if the green energy recovery boosts the unlisted holdings over the next couple of years..
Many thanks PekingDuck! Much appreciated!
December, Crescent Point Energy finalised its acquisition of
Hammerhead, which resulted in a $175m distribution to REL and the receipt of 8m shares
of Crescent Point Energy (CPG). In addition, Onyx's valuation also increased from 3.00x
to 3.20x Gross MOIC. However, the decarbonisation portfolio dropped 22.9% in value,
driven primarily by its position in Enviva, which lost 85.4% of its market value due to
missed earnings targets, plant-level operational disruption, and ongoing restructuring. In
addition, FreeWire lost 75% of its value due to reduced growth projections as the
company works to preserve cash in a challenging fundraising and growth environment
for EV-related businesses. With the exception of Infinitum, the remainder of the
decarbonisation portfolio continued to suffer from fundraising headwinds caused by the
impact of rates and lower risk appetite from investors. RSE says that these businesses will
remain susceptible to market volatility until they reach profitability.
Having updated our model, our live NAVe falls by 1.2% from $15.76ps/1248pps to
$15.57ps/1233pps, down 2.5% since 31/12/23, reflecting overall weakness in the listed
holdings, with a notable 57% fall in Tritium, 48% in Enviva and 10% in Crescent Point.
RSE continues to show its commitment to capital returns, with its announcement today
to return $200m via a tender at a 16% discount to the 31/12/23 NAV. The tender price is
fixed at 1050pps, a 31% premium to last night’s close and a 16.4% premium to the current
price. If approved by shareholders, this would lead to an estimated uplift of around 8.7%
to our live NAV. The potential impact of the remaining buyback capacity would be to add
around 1.7% to NAV in the absence of the tender. But it becomes more powerful if
deployed post tender as the £22m would buy back a larger proportion of the remaining
shares at potentially a bigger discount to NAV (we argue that post returns of capital the
headline discount should widen to reflect the smaller amount of cash on the balance sheet,
with the price constant, and the NAV enhanced). At current prices the combined impact
would ab an estimated overall 12% NAV per share increase. The price has responded well
to the tender news, and is up 13.5% to 908pps (@9.30). This implies a headline discount
of 26.3% to our live NAVe. But stripping out cash and listed this is a 106% discount to
the remaining unlisted holdings (this is the metric to focus on in our view, and should
remain constant before and after any capital returns). This remains very good value in our
view and thus overall we remain Overweight
Exert from recent JPM note on results/tender offer:
RSE is proposing to return $200m (£158m) of its excess capital to shareholders via a tender offer at a fixed price of 1050pp,
a premium of 31% to the closing market price of 800pps on 7/2/24, and a 16% discount
to the 31/12/23 NAV announced today of 1253pps (see below). RSE expects to launch
the tender before the end of this month, closing during March. The number of shares
purchased is expected to represent ~36% of RSE’s existing ordinary shares then in issue
(excluding any shares held in treasury). The tender requires shareholder approval at an
EGM, which is anticipated will be held in March, and will be subject to other legal,
regulatory and customary conditions. Since the announcement on 23/5/23 of the
authorised increase of £30m for the share buyback programme through to
31/12/23,126,023 ordinary shares have been bought back at a total cost of £18m ($22m)
at an average share price of 567p/$7.13. As of 31/12/23, £22m was available for
repurchase. In addition, pursuant to changes to the IMA announced on 3 January 2020,
the manager agreed for RSE to be required to repurchase shares or pay dividends equal
to 20% of net gains on dispositions. No further carried interest will be payable until the
$85m of realised and unrealised losses to date at 31/12/23 are made whole with future
gains.
Portfolio performance for the last quarter of 2023 remained essentially flat with positive
performance from the conventional energy portfolio offset by lagging results from the
decarbonisation investments. Growth stage (pre-profitability) energy transition and
decarbonisation investments continue to lag broader markets, and still face adversity as
the viability of their business plans remain in question due to a dampening of investor
appetite in the face of higher interest rates. RSE points out that a lower risk appetite
presents a substantial risk for these businesses as they are at a stage in their growth that
relies disproportionately on funding from private equity, corporate balance sheets and
institutional investors, and that RSE’s decarbonisation investments are not immune from
these headwinds. On the energy commodity front, WTI crude prices were down 6.5% in
2023 and 20.8% in 4Q, with Brent Crude down 6.2% in 2023 and 19.2% in 4Q. Henry
Hub natural gas spot prices were down 29.1% in 2023 and 3.7% in 4Q. Consolidation in
the US oil and gas sector has reached levels not seen in a long time with over $250bn in
acquisitions announced in 2023. The Permian basin featured prominently in this deal
activity and reflects the acquirers' strong balance sheets due to the sector's commitment
to cash-flow-generation.
Against this backdrop, RSE's conventional energy portfolio gained 7.6% in value over
4Q, driven largely by Crescent Point Energy's (previously Hammerhead Energy) 21.1 %
improvement in share price, countering slight weakness in Permian
Many thanks, tichtich.
Still questions remain on the mechanism here, but I guess that'll become clear in the near future.
Best wishes!
Started: saintsforever, 7 Nov 2023 18:18
Last post: pekingduck, 5 Dec 2023 16:07
JPM view on Hammerhead deal + what follows:
Taking the combined cash and Crescent Point equity proceeds of
$11.26 and $4.00 per share respectively implies a combined price of $15.26 per share that
is a 4.3% uplift to yesterday’s US NASDAQ closing price for Hammerhead. Most of the
24% uplift captured vs the 30/9/23 that is mentioned in the RSE statement reflects the
increase in the Hammerhead NASDAQ share price that was up 22.6% from the 30/9/23
close to 6/11/23 close. We estimate that exchanging for the cash and Crescent Point shares
results in a 1.5% uplift to our live RSE NAVe from $16.31/1,327p per share to
$16.55/1,347p per share. But while the uplift to the live NAV is relatively small, this is
a strong result for RSE, in our view.
Hammerhead listed via a SPAC combination transaction that completed earlier this year and Bloomberg Finance L.P. says Riverstone Holdings LLC owned 81.6% of the overall Hammerhead shares. In this context we think
capturing an uplift to yesterday’s close and monetising the Hammerhead holding far
quicker than we expected is an excellent result for RSE overall.
RSE shares have re-rated this morning to 700pps (@10:00) at the time of writing, up 9.2% from yesterday’s close.
We think this largely reflects the potential for an expected return of cash to shareholders
as mentioned at the end of RSE’s statement. At the current share price we estimate RSE
trades at a headline discount to NAV of 48.0%, but deducting for the listed holdings and
net cash (now 72% of NAV combined, pro-forma for the Hammerhead disposal) this still
implies a 170% discount on the remaining unlisted assets.
This calculation becomes a bit less meaningful with such a high proportion of NAV in cash and listed securities but suggests RSE still represents good value at the current share price. If cash is returned at
a price close to NAV then shareholders could effectively realise some of the discount to
NAV and this may occur as soon as early 2024 if the Hammerhead disposal completes in
December 2023. We are Overweight
Hi. I only came across this stock last week. I was having difficulty confirming saintsforever's NAV estimate of £14, until I realised I wasn't looking at the latest update. Once confirmed, it looks like a great opportunity, so I've taken the plunge. Thanks, saints, your comment was helpful.
I recently bought another stock at over 40% discount to NAV, and the price has already risen 25%. I don't suppose RSE will go up so quickly, but maybe, if and when the Hammerhead sale goes ahead. On the other hand, I'm half expecting a general downturn once the dreams of a Fed/BOE pivot fade (which may have started today).
Given their comments on the RNS confirming the sale, strong likelihood that it will involve a significant return of cash to shareholders, esp given that committed funding to existing investments is only c. $6m..?
As of 30 September 2023, REL's published cash balance was US$127 million. Following the expected completion of the Hammerhead transaction in late December 2023, approximately 43% of REL's net asset value is expected to consist of cash. REL is currently exploring the most efficient means of returning its excess capital to shareholders (while also taking into account the anticipated on-going requirements of its other portfolio companies) and will make a further announcement in due course.
Assuming this deal completes the current £7 share price will be effectively covered by cash leaving the other half of the £14 nav in it for free.
The bod have a nice conundrum ….. any bets on what they choose to do?
Started: gameangler, 6 Nov 2023 22:59
Last post: gameangler, 6 Nov 2023 22:59
Last post: pekingduck, 13 Oct 2023 09:16
Oct 11 (Reuters) - Exxon Mobil's mega $60 billion deal for shale rival Pioneer Natural Resources could be a catalyst that will drive further consolidation in the U.S. oil and gas industry, analysts said, as they zeroed in on a handful of likely targets.
Dealmaking in the U.S. oil and gas patch has picked up pace as producers sought to replenish their inventory after years of under-investment.
The Permian Basin, the top U.S. oilfield known for its low cost of extraction, is seeing a consolidation with more than $26 billion worth of deals this year before the Exxon announcement, as per Rystad Energy data. That is more than double the entire value of deals signed in 2022 for the region.
"(The Exxon transaction) is a positive read-through to the sector overall, particularly the Permian Basin players," said Gabriele Sorbara, managing director of equity research at Siebert Williams Shank & Co.
Rivals will "step up to try to compete with Exxon", Sorbara said.
Future buyers are likely to be among Exxon's closest big rivals in the Permian Basin such as Chevron and ConocoPhillips, analysts said.
"Chevron seems the most likely to respond with a transaction of its own," said Andrew Dittmar, a director at consultancy Enverus.
The most-prized targets for Chevron could be Coterra Energy or Devon Energy, he added. Chevron had $9.29 billion in cash and equivalents at the end of June.
Others mentioned included Matador Resources, Permian Resources and Diamondback Energy
Green energy is out of favour but major investment in Permian has risen strongly over last 2 days on Exxon's bid for Pioneer and events in Israel. Suspect discount to NAV is increasing.
Wave of red today. Any reason for this or just follow m' leader?
Last post: sparkyA1, 28 Sep 2023 14:55
Movement at last after the Tender Offer went through. Hoping for some more growth.
Started: Washerupper, 23 Aug 2023 15:45
Last post: Washerupper, 6 Sep 2023 21:38
Excellent posts Agricore. Thank you
"Global investment in clean energy is on course to rise to USD 1.7 trillion in 2023, with solar set to eclipse oil production for the first time"
(Source: https://www.iea.org/news/clean-energy-investment-is-extending-its-lead-over-fossil-fuels-boosted-by-energy-security-strengths)
Solid Power is also a buy on 7 analysts following and a candidate for your "must buy list"
(Source: https://www.nasdaq.com/articles/3-up-and-coming-ev-stocks-to-put-on-your-must-buy-list)
Are we starting to feel less appalled?
Finally a $13m loss on Enviva, which I've previously covered in some detail, and once again on Nasdaq a buy with 33% upside according to the 5 analysts following including Citi and JP Morgan. Again it's a recovery play but where they are guiding the market with cost reductions, EBITDA substantial growth as previously described - refer to:
(Source:https://s28.q4cdn.com/898203682/files/doc_financials/2023/q2/EVA-2Q23-Investor-Presentation-08-04-2023-updated-4pm.pdf)
If you've been paying attention I've described $83m of losses, not $58m. That's because there are other portfolio members on a >1 MOIC, like Freewire on a 2X MOIC. So gains as well as losses.
So when you say "They've repeatedly made terrible decisions." if you look at their portfolio objectively then they've also made some smart decisions too. Moreover, I've described specifically why the jury is out with most of the portfolio too.
Since green investments are typically growth by their very nature, 27% is actually much less than other growth stocks. Comparing Scottish Mortgage for example that's down, what, 50%? GROW is down 70%.
The US IRA, the European Green Deal, the Chinese dominance in most things green, UK's labour Green Prosperity Plan from 2024, the Japanese Green Plan (https://www.jdsupra.com/legalnews/japan-unveils-green-subsidy-programme-6441356/) are juggernauts totalling more than $5 trillion of subsidies and support worldwide. We are only feeling the affect of those programs from mid 2023. You have to think carefully why those juggernauts are irrelevant since Riverstone's decarbonisation portfolio is a direct beneficiary.
Politically too, people can be as dismissive as they like about green wash, but there is a ground swell of public opinion as disaster follows disaster and a political solution is demanded to combat this. This will benefit decarbonisation - this is the certain future - and investors need to smell the fumes, it's as simple as that.
Extrapolating the past to predict the future as you appear to be doing, is something which wouldn't have worked for RSE's O&G portfolio if you'd done that 2 years ago - and I believe the decarbonisation portfolio will prosper going forwards in the same way.
34adsaddsa,
Couple of throwaway sentences ... do you have anything to substantiate what you say?
The MOIC for 30/06/23 for decarbonisation is 0.73X so a 27% overall loss. Not great but not "Appalling". Ceres Power down 70%, ITM down the same, Jupiter Green down 30%, Keystone Positive Change down 40%.... so what are you comparing against?
Let's look at that 27% or $58m.
1/ A third of that loss ($20m) is Anuvia - it's dead, gone bust, bad decision, but this happens.
2/ $9m is Hyzon. Hydrogen Fuel Cells. Looking at the Nasdaq RSE bought after a pull back of 33% but caught a falling knife with hindsight. It's an early stage play but a great example of a beneficiary under the IRA. It goes into commercialisation next year. "Hyzon Motors has announced the successful completion and testing of the first nine single-stack 200kW Fuel Cell System (FCS) B samples at its production and innovation centre in Bolingbrook, Illinois. This validates Hyzon’s design, equipment and operating procedures and it is now looking to increase its rate of production. Hyzon remains on course to declare Start of Production and commercialisation of its innovative FCS in 2024."
3/ $11m Tritium. Disappointing but digging into the detail are you aware that: "Tritium announced record results for the first four months of 2023 with a new production and revenue record, a $40 million capital investment from two existing backers and an expectation it will be EBITDA positive in the first half of calendar 2024. The company raised its forward-looking growth guidance as it continues to invest to meet strong customer demand for its EV fast chargers."
Did you know that they hold 30% US market share are according to the Nasdaq "super attractive", with a "strong buy" from 5 analysts covering them:
https://www.nasdaq.com/articles/buy-alert%3A-3-ev-charging-stocks-nearing-super-attractive-entry-points
Do you find that appalling?
A $30m loss on Solid Power. That loss is shared and also backed by BMW, Ford, Samsung and is funded by the United States Department of Energy to further scale and develop its nickel- and cobalt-free cells for its Solid-State battery technology that could significantly lower the price of EV batteries. The technology is intended to produce cells that are more energy-dense as well as lighter, thinner and less volatile than lithium-ion cells.
Doesn't that sound it could be a beneficiary of the IRA? If successful will the MOIC still be 0.39x? Or many times that?
...TBC next post...
Problem is that you're not getting the cash back. They're going to pump it into net-zero stuff which probably won't go well because their track record is appalling. They've repeatedly made terrible decisions.
Started: sparkyA1, 17 Aug 2023 09:53
Last post: sparkyA1, 17 Aug 2023 11:33
Thanks for your thoughts on this. It is a bit vague to me also. It's early days so will see how it plays out and whether we get any more details. Will also hold for now. Thanks.
Sparky - if, as they state in the RNS, that the tender offer (if taken up - they don't mention the 'if') will be accretive to the NAV, why would you want to sell shares at a current 44% discount? especially with some decent performance from the traditional energy companies since the end June NAV date?
Using a large part of their cash holdings to do this suggests the investment managers don't have line of sight on good new investment ideas for the portfolio? Or is this part 1 of a staged, gradual wind down of the whole portfolio and return of cash in full to shareholders. The RNS isn't clear on either point to me. I'm holding though..
Any comments on the tender offer released today?
Started: Agricore, 17 Aug 2023 07:29
Last post: Agricore, 17 Aug 2023 07:29
While a disappointing update it is interesting to examine the offenders. Are these "hopeless investments" by a hapless RSE - or something else?
Write downs at:
1. Anuvia - dead - nothing really to comment on. Move on.
2. Enuvia Biomass. It's worth looking at the scale of this business. Presumably Drax source from them powering the 5%-6% of UK power biomass. Their ability to replace metallurgical coal is particularly interesting as well as base power capability from converted coal power stations. Investor Presentation targeting margins to grow from $8MT (Q2) to $31-36/MT by Q4. If they can achieve that we may see the write down reversed?
(Source: https://s28.q4cdn.com/898203682/files/doc_financials/2023/q2/EVA-2Q23-Investor-Presentation-08-04-2023-updated-4pm.pdf)
3. Goodleap - loans impacted due to higher cost of capital - when you look at their range of improvement loans alongside higher energy costs and the IRA helping drive the cost of US solutions down (via tax credits) then I see reasons for optimism. A Forbes FinTech top 10
"GoodLeap is a marketplace for sustainable home upgrades including solar panel systems, energy-efficient windows, smart thermostats or HVAC systems. The company offers point-of-sale financing solutions in an effort to make environmentally-friendly home upgrades more accessible. GoodLeap has provided more than $20 billion in financing to about 700,000 homeowners, up from $13 billion disbursed to 380,000 homeowners one year ago.
Cofounders: Chair and CEO Hayes Barnard, 51, and Chief Revenue Officer Matt Dawson, 49, two longtime executives at SolarCity (now Tesla Energy); and Chief Risk Officer Jason Walker, 49, a veteran mortgage broker."
https://goodleap.com/homeowners/
https://goodleap.com/about-us/ (Backed by Edward Norton and Shailene Woodley)
https://www.forbes.com/sites/emilymason/2023/06/06/the-10-biggest-fintech-companies-in-america-2023/
Not a write down but one I've had my eye on steadily going up in price for some months.
Hammerhead - doubled from lows - its investor presentation suggests 30 years inventory from its assets:
Investor presentation: https://ir.hhres.com/static-files/e463159c-5a38-41eb-8178-7685d6a4991d
Conclusion: A lot of detail to chew through and still more to go. But despite a step back there appears to be grounds for optimism and there remains a substantial discount to NAV insulating investors, and tailwinds why their portfolio should do well going forwards.
Started: Agricore, 27 Jul 2023 07:43
Last post: Agricore, 16 Aug 2023 07:00
Hammerhead now trading c$13.75 up 40%. This is one of RSE’s public holdings
Hammerhead announce a positive Q2 albeit with lower short term profits https://www.hhres.com/wp-content/uploads/2023/08/2023-08-Hammerhead-Corporate-Presentation_vF.pdf
Today's (27th July) share price is slightly lower than May (Market Cap dropped from £275m to £249m):
As of today there are 46,254,554 shares in issue.
The update shows each share of RSE @ £5.40 (Q1 £5.70) is worth the following (as at 30/06/23): £10.14 (Q1 £10.97)
There's £3.68/share of publicly traded Oil/Gas holdings (Q1 £3.72)
There's £2.23/share of Cash (Q1 £2.10)
There's £0.69/share of publicly traded Decarbonisation holdings (Q1 £0.96)
So £6.60/share worth of liquid/tradeable holdings and cash...... (Q1 £6.74).
Plus a free carry on £10.14-£6.60 = £3.54/share worth of listed/unlisted decarb/ plus unlisted O&G (Q1 £5.19)
So you get £1.20/share back from liquifying all listed holdings plus £3.54/share worth of unlisted O&G/Decarbonisation.
i.e. Unlisted holdings of O&G are £1.64/share (Q1 £1.92) and unlisted holdings of decarbonisation is £1.86 (Q1 £2.23) a share.
The IRA remains a huge tailwind for the £2.55/share (Q1 £3.19) decarbonisation portfolio. The tax/subsidy benefits of IRA will begin to appear in 2023. Also of note in the commentary "Global investment in the energy transition totaled $1.11 trillion in 2022, a 31 per cent. increase in transition investment over 2021".
Meanwhile further buy backs of £29m will also be accretive. Assuming an average buyback of £5.40, equates to 5.37m shares for cancellation (@£5.40/share) dropping the shares in issue by end of 2023 to 40.88m. This equates ceteris paribus to a NAV per share of £11.47 (+£1.33)
So a 53% discount to NAV.
But if you think if reasonable that the decarbonisation portfolio could bounce (2x) from here due to IRA and the various measures due to a growing climate crisis and that the discount to NAV reduces to 20% over time then the upside is exciting.
£10.14 NAV/share+£2.55 decarb upside+£1.33 buy backs = £14.02/share @ 20% discount = £11.22/share
So future "fair value" is over double today's £5.40 share price. That assumes no appreciation on O&G where there's reasons why that might be too pessimistic. For example Hammerhead have made progress yet the share price has been punished compared to peers. Meanwhile most holdings have 30%-40% hedging so even if the oil market drops dramatically later this year (as I write Brent is comfortably back above $80) there's actually quite a bit of downside protection via the hedging.
GLA
Started: pekingduck, 28 Jul 2023 12:06
Last post: pekingduck, 28 Jul 2023 12:06
Everything else being equal, the writedown of Anuvia would reduce
our live NAVe by 2.3% or $14.0m from $620m to $606m or from $12.63 to $12.34 per
share. But today we are also making another change to our NAV to remove our
performance fee accrual. RSE pays its GP a performance fee of 20% of gross realised
profits subject to it meeting a portfolio level cost benchmark, which, at 31/12/22, was in
deficit by $95m. Footnotes in the quarterly NAV statements indicate the size of the
potential accrued fee which is not accrued until the portfolio cost level benchmark is met.
Our live NAVe includes our estimate of the potential performance fees, which today is
$29.8m, but, with RSE now significantly further away from the cost level benchmark test,
we are now removing that performance fee accrual from our live NAV. After adding back
the $29.8m, we were including for the performance fee accrual, our live NAV would be
$12.95 per share or 1,003pps. But we are also updating to include the latest share
buybacks for the period since 31/3/23, which results in our live NAVe increasing by a
further 33 cents to $13.28ps/1030pps (ie including the Anuvia writedown, buybacks and
the removal of our performance fee accrual). So despite the bad news, our live NAVe is
actually up overall by 5.1% as a result of our overall changes. Our 30/6/23 NAVe on the
same basis would be $12.98ps/1,022pps.
• Based on the current share price of 530p (@09:00), the headline discount to our live NAVe
is 48.6% but deducting net cash and the listed holdings at NAV, the implied discount on
the remaining unlisted assets is 123%. This is one of the widest discounts for any listed
private equity company we cover. While the Anuvia writedown is disappointing news for
RSE shareholders and a set back for RSE in its strategic transition towards
decarbonisation investments, a >100% implied discount on the unlisted assets implies the
market already applies no value to those investments at the current share price. We are
Overweight.
Started: Agricore, 6 Jul 2023 21:48
Last post: Agricore, 16 Jul 2023 17:41
Peking
>>>Hugely disappointing ytd return
Really? Anuvia had been marked down 30% as at Q1 2023 so accounted for 2.1% of NAV or 1% of the share price. Is 1% hugely disappointing? If you can keep it in perspective this failure, whilst unwelcome, is hardly catastrophic - and the 6% drop in share price since Q1 update is an over reaction, especially when you further consider the accretive buy backs actually more than offset this loss.
If you look at the co-investors in Anuvia there was plenty of smart money participating in the series D round of Anuvia. It achived $25m of sales in 2022 but went back to the market in Q1 2023 for a series E round.... no dice. Most fertiliser plays have done terribly in 2023 e.g. Emmerson down 60% YTD, or giant CF in the US down 12%. One might think fertiliser to be a buoyant area for investment in a world where Russia and Ukraine are at war and climate change wreaks havoc.... but seemingly not, or not yet.
Given the strong macro tailwinds behind RSE's investments, the continuing need for energy security, and in 2023 we start to see the impact of the IRA, I'd be very surprised if the Board are under pressure to wind this up. I look forward to the H1 update.
Hugely disappointing ytd return for the share price, and to write down an investment to zero 15 months after making it? Questions the due diligence that's been done prior to this. Board must be coming under increasing pressure to wind this up and return cash to shareholders.
As a holder of both IX and RSE, today's news of a £10m upround with BP participating caused IX to rise by 110% (settling at +90% at close). The announcement caused the NAV to more than double (so even at a +90% share price its discount to NAV this evening is greater than it was 24 hours away before its announcement. The types of holdings in IX are not dissimilar to the decarbonisation holdings here. It's tangible proof of the hidden value due to the US's IRA (inflation reduction act) creating vast opportunities for decarbonisation opps.
Yet RSE is about 10% down in the past 6 months despite substantial buybacks and increases to NAV.
Started: Agricore, 7 May 2023 11:46
Last post: pekingduck, 30 Jun 2023 13:00
4.108m shares repurchased & cancelled in H1 of the year, just over 8% of the shares in circulation at 31/12/22.
Heading in the right direction now with more net buyers.
Mr Flibbles, thanks I wasn't aware of that forum. It looks good.
Post £40m of buy backs NAV drops to $615m but the shares in issue drop to 42.1m.
This would equate to a $1.01/share or 85p/share uplift in NAV. ($667m to $615m NAV and 49m to 42.1m shares in issue)
This assumes no change or improvement (or loss) otherwise to the NAV.
Each share of RSE @ £5.70 is worth the following (as at 31/03/23):
There's £1.52/share of Cash
There's £4.31/share of publicly traded Oil/Gas holdings
There's £1.13/share of publicly traded Decarbonisation holdings
Or £6.96/share of liquid assets ... cash plus public/liquid O&G/decarbonisation holdings. So you get £1.26/share back on top of your £5.70 purchase, from liquifying all listed holdings plus cash ..... get a free carry on £4.88/share worth of unlisted O&G/Decarbonisation shares.
Further £30m of buybacks being proposed at next weeks AGM, in addition to £11m outstanding from current program. Float is shrinking fast here.
Last post: Danger_Mouse, 28 Apr 2023 15:22
Thanks Tobin. Shame there is no video link and not in London. As PI with a full-time job with "only" £20K in this I really can't justify a trip to Guernsey. Hopefully, we can move up from that £12m trade reported socking up the massive buys earlier last week.
AGM announced but no more buy backs.
Is there a pause in buybacks? No RNS.
Biden praises Musk plan to open Tesla's charging network. Good for the bigger picture.
The seller is relentless, giving us 326.42k shares today. The share price of RSE continues to underperform while the rest of my portfolio grows into overvalued status so it will be soon time to sell some winners for more RSE.
The level of buybacks are phenomenal. If this trust is wound down I believe the private holdings are very desirable and worth more than in the NAV and the listed holding easy enough to sell.
Started: Agricore, 1 Mar 2023 22:46
Last post: Lsimo, 17 Apr 2023 17:41
You'll all no doubt remember how Ed Bramson muscled into Electra Investment Trust because he'd divined unrealised value. Having got control he realised all the assets and all was distributed to shareholders.....at full value. Short of the winding up of RSE an Ed Bramson .....or Warren Buffett type buying into and gaining control of RSE with a view to value realisation is another possible scenario. There's a ruddy big moat around RSE. It'd be a fine castle to own or control, especially if the castle is worth double or treble what Rightmove says!! I bought a big chunk today. Not enough for control!!!
Immense value in the unlisted investments, discount to NAV has widened further despite the ongoing and very significant buyback program. Agree that PE investments in the decarbonizing space have been hit massively this year so far, just look at AMTX as an example of a listed but unprofitable company with a great runway of projects and revenue plans for the next 5 years, with offtake commitments.
Some recent research comments below on RSE which highlights the yawning gap to value:
The announced 31/12/22 NAV is in line with the 31/12/22
NAV RSE previously announced via its quarterly reporting in early February
2023. There is little new information in today’s results and we previously wrote
about the 31/12/22 in this note. At the time the 31/12/22 NAV was initially
announced, we made a provisional adjustment to our live NAVe, reconciling for
the difference in our 31/12/22 estimate and the actual. Yesterday, we published
another update to our RSE model (here) to include the performance fee accrual,
which reduced our live NAV by 4.3%. Today we are making another update to
reflect (a) the additional 0.2m of HHRS shares RSE owns if the market price
exceeds $10.53, which is a condition that was met at yesterday’s HHRS close,
and this adds 0.3% to our NAVe; (b) share buybacks that have occurred post
31/12/22, adding 0.9% to our NAVe; and (c) a slightly lower performance fee
accrual, adding 0.4% to our NAVe. Overall, our new live NAV rises from
$14.29 to $14.52 and, in Sterling terms, this is 1,185pps to 1,204pps. At the
current share price of 600p (@10:00), the headline discount to NAV is 50.2%. If
we take the cash and listed holdings out at NAV, the implied discount on the
unlisted investments is now 132%. This estimate includes treating Hammerhead
as listed, which is 23.2% of NAV and now the largest single investment on a
pro-forma basis, also including the DCRD sponsor investment. We remain
Overweight.
Anything private equity is being hit due to funding concerns this week. I have added here for the long run. RSE compliments my investment in the listed space with BERI.
Most money is made in a bear period and the financial situation with lending is providing downward pressure in the alternative stocks this is an good addition for the long run. I do wounder why MIGO have not invested in RSE at these valuations.
Agricore,
could you highlight where you obtained the MOIC multiples?
PD
MOST PROFITABLE - GREEN/TRANSITION ENERGY INVESTMENTS:
Based on the Riverstone Energy Limited Annual Report 2022, here are the these are the largest MOIC (Multiple of Invested Capital) (i.e. profitable) "green" or energy transition investments:
FreeWire Technologies - MOIC of 9.8x
FreeWire Technologies is a provider of electric vehicle (EV) charging and power solutions. Riverstone Energy invested $30.2 million in the company.
Ambri - MOIC of 8.4x
Ambri is a developer of liquid metal battery technology for grid-scale energy storage. Riverstone Energy invested $31.5 million in the company.
Enyo - MOIC of 6.2x
Enyo is a developer of hydrogen fuel cell systems for the transportation sector. Riverstone Energy invested $17.5 million in the company.
24M - MOIC of 5.7x
24M is a developer of advanced lithium-ion battery technology. Riverstone Energy invested $31.5 million in the company.
Stem - MOIC of 5.1x
Stem is a provider of AI-driven energy storage systems for commercial and industrial customers. Riverstone Energy invested $42.7 million in the company.
Renewable Energy Group - MOIC of 4.7x
Renewable Energy Group is a producer of biodiesel and other renewable fuels. Riverstone Energy invested $22.5 million in the company.
Rubicon Global - MOIC of 4.5x
Rubicon Global is a provider of waste and recycling services using technology to optimize the collection and disposal process. Riverstone Energy invested $50.0 million in the company.
Demand Energy - MOIC of 4.4x
Demand Energy is a developer of energy storage systems and software for grid and behind-the-meter applications. Riverstone Energy invested $30.7 million in the company.
Silverpeak - MOIC of 3.7x
Silverpeak is a developer of renewable energy projects, including wind, solar, and energy storage. Riverstone Energy invested $28.8 million in the company.
Ceres Power - MOIC of 3.6x
Ceres Power is a developer of fuel cell technology for power generation in the residential, commercial, and transportation sectors. Riverstone Energy invested $29.4 million in the company.
Started: Danger_Mouse, 1 Mar 2023 21:40
Last post: Danger_Mouse, 1 Mar 2023 21:40
Started: Danger_Mouse, 16 Feb 2023 15:33
Last post: Danger_Mouse, 21 Feb 2023 14:59
Latest holdings RNS is shows after a year AKRC Investments LLC have still been selling. Its been an anchor shareholder buying in at IPO 20,908,815 shares c. 30% @ £10.00/share. They have 9.5% to go.
I am not sure where I got the major holders list posted here... its false news.
Quilter Investors Ltd. 12,292,141 24.2%
Moore Capital Management LP 8,430,490 16.6%
Alaska Permanent Fund Corp. 6,308,990 12.4%
Riverstone Investment Group LLC 3,615,170 7.10%
Brooks Macdonald Asset Management Ltd. 1,965,397 3.86%
Pacific Capital Partners Ltd. 1,725,879 3.39%
Progressive Capital Partners Ltd. 1,432,250 2.81%
Schroder & Co. Ltd. 1,220,000 2.40%
AXA Investment Managers (Paris) SA 941,000 1.85%
BlackRock Investment Management (UK) Ltd. 403,394 0.79%
Started: Danger_Mouse, 19 Jan 2023 15:50
Last post: Danger_Mouse, 2 Feb 2023 21:49
Agricore I must have incorrectly calculated the NAV. The report was hard to understand and family life was and still is hectic. Draft Unaudited Net Asset Value $739 so that is £652.38 million when I calculated (today £659.23) vs last quarter's $759 million (£681million). This is nomore than a 5% change.
But doing a quick check on the GBP vs GDP for the period I got a 7% increase in the GBP so I am non the wiser. Happy to use your calculations.
Agree this is the most undervalued energy trust vs say BERI the closest comparison.
Very exciting. One day the market will see it.
To put some colour on what a "small decline" means and given that there's not the customary summary box in the RNS showing NAV per share in £ and in $, I've done the maths.
So the NAV per share dropped from $14.58 Q3 to $14.52 in Q4. However the $/£ rate means the NAV per share in GBP dropped from Q3's £13.08 to £11.71 in Q4.
A 10% drop in GBP terms isn't a small decline but is explainable by Q3 being flattered by the Trussonomics crisis and Q4 reverts to where the pound is back to $1.24/£1.
The "bigger picture" also referred to in my mind is the Inflation Reduction Act in the USA. The effect this will have on Goodleap and all the others as it begins to kick in during 2023 and then for 10 years will be a huge tailwind for the decarbonisation portfolio. There's absolutely no reflection of this in the price. In fact the discount to December's NAV in GBP terms is 47.4%!! Another factor is the buy backs. In 2022 RSE bought back 8% of its shares. If this happens again in 2023 then a further 8% bought back (4m shares) would lift the NAV from $14.52 to $15.50.
On the basis that this should be at no more than 20% discount, the target price is £12.40, or double today's share price.
GLA
Results out. A small decline that dwarfed the share price fall. Share buybacks to continue. I am a pessimistic sort but with the bigger picture, the share price should move upwards from here.
A selection of today’s trades. Someone playing games or falling asleep on their keyboard whilst drunk? (!)
23 16:21:28 591.18 205,961 Unknown* 1m O
30-Jan-23 16:13:38 591.18 -205,961 Unknown* -1m O
30-Jan-23 16:02:21 590.00 -105,961 Unknown* -625.17k O
30-Jan-23 15:48:56 590.00 -100,000 Unknown* -590.00k O
30-Jan-23 16:13:38 591.18 205,961 Unknown* 1m O
30-Jan-23 16:04:29 596.00 5 Buy* 29.80 O
30-Jan-23 16:02:21 590.00 105,961 Sell* 625.17k O
30-Jan-23 15:49:18 591.563 147 Sell* 869.60 O
30-Jan-23 15:48:56 590.00 100,000 Sell* 590.00k O
£1m bought at 591.18p, the seller(s) selling at 590.00p. No longer filling me with confidence for tomorrow morning.
Started: SD235, 2 Jan 2023 13:27
Last post: Danger_Mouse, 5 Jan 2023 08:50
Agree Tobin. For me I could do with a nice pie chart showing sector allocation as this is no longer an "Energy" holding what with plant nutrition and decarbonization as much as O&G. This makes it hard to value but oddly still attached to the oil price. Suppose I could create a pie chart myself. One to hold on to extreme weakness and it often has relatively short periods of that.
We don't have a current NAV, oil and gas prices are down from what they were.
Buy backs have got to help but they have not been particularly large. Having said that they have been somewhat bigger in the last couple of months that may suggest that they think the discount is still high or higher. It may mean there are more sellers and they can buy more. The stock is not heavily traded. This was given as an excuse by the CEO of another highly discounted stock that I own, Pantheon International. But then it should mean buy backs should have more impact??
If the buy backs do not reduce the discount .... great, the company should keep buying as it certainly increases the NAV that ultimately will drive the SP.
Regardless of the great performance driven by the sector, the discount is so wide any major holders wanting to make what can only be described as a massive gain will vote to wind up the company. I would simply increase the share buybacks and begs the question why are the buy backs not working.
From aic "The Discontinuation Resolution was not passed at the EGM held on December 2020. The Board will continue to evaluate the Investment Manager's performance before 31 December 2022 and decide whether or not the Board should call for a Shareholder vote to wind up the Company."
I note it says investment managers performance not share price performance.
Also it's full name is "RIVERSTONE ENERGY LTD (RSE) REDEEMABLE ORDINARY"
If so when are they redeemable?
Nice discount if there is a redeemable date and price available or a vote in favour of discontinuation?
Started: RussellSprout, 3 Nov 2022 13:56
Last post: Tobin, 12 Nov 2022 18:19
Investment trusts seem to be out of favour, and investors seem to want ESG, no risk and the world to be different than it actually is. Fortunately this leads to opportunities…
Questor Trust Bargains by Richard Evans in the Daily Telegraph - suggests share price is at a 90% discount under one metric.
Anyone aware of any reasons apart from the fact that there is a such a massive disconnect between the share price and the net asset valuation?
Started: ColinL1 , 1 Jul 2022 09:48
Last post: Mr.Flibbles, 4 Oct 2022 16:31
Posts made here are well out of date. Centennial in the portfolio has been on an uptrend. Energy up. Strong buy today.
RSE is the biggest shareholder in Centennial (25% of the company), which has dropped 45% from the peak and still going down. Unfortunately, that's going to be reflected in NAV at some point, along with the other holdings.
We've had the biggest drop in oil and gas for a long time over recession fears. Hugely frustrating for new investors into any O&G. When these new investors and seasoned speculators are done selling (including RSE holders) the share price here and in the sector will drift from oversold to fairer value. Tremendous value with RSE but the conditions need to be right for shareholders to benefit... so we wait and hold, sell or buy more. If things don't improve I don't know if we have the votes to liquidate the holdings and cash in on the discount.
RSE has also stopped buying back its own shares over the last few days as well.
One theory is that the listed energy companies have suffered lately; that's going to cause a drop in NAV.
Last post: Agricore, 13 May 2022 13:56
The latest NAV update to £11.40 and news around the Fertiliser investment tempted me back in here. The discount of 41% remains very large and the continued buy backs should eventually dent this. To be fair the uplift of NAV has widened the discount so I expect the market will eventually realise and catch up.
Last post: CaneToad, 27 Mar 2022 17:41
I expect that the rise is being being driven by the buyback - which has a long time to run yet!
doesn't appear to be any stop to the continual rise. "China’s Worsening Virus Threatens Commodities Supply and Demand."
"There’s also a flow-on risk for other commodities markets. Coal is China’s mainstay fuel and a key determinant of metals prices, which will only strengthen if the cost of production rises because of scarcity of the fuel".
Started: Agricore, 8 Feb 2022 17:29
Last post: Agricore, 8 Feb 2022 17:29
Sale of Pipestone (which enjoyed an 80% uplift between September 21 and Jan 22) from $2.50 CAD to $4.50, means that £40m will be available for buy backs (£36m+£4m). At the current market cap (£289m) will buy back around 15% of current shares.
Net assets £512m - £40m = £472m. Assume shares decrease from 55m to 47.5m shares at a constant £5.34/share.
Based on current NAV £9.31 that will further boost future NAV (assuming price remains around £5 a share) to around £9.93
(i.e. £472m/47.5m shares).
That places today's share price on a 46.2% discount to future NAV (£9.93-£5.34/£9.93)*100
Astonishing discount, considering this has been tipped by Questor and has had a nibble of interest but as RussellSprout said people bought on the rumour and sold on the news..... so no wonder RSE have decided to continue buy backs. I've averaged up again today. Averaging up is a new habit of mine - if the fundamentals are there then back the winners rather than cut the winners and support the losers. It's a lesson hard won, but if you take emotion out of the trade then it's often the right decision to make.
GLA
Started: RussellSprout, 1 Feb 2022 13:52
Last post: RussellSprout, 1 Feb 2022 13:52
Buy on rumour sell on news, perhaps.
Have to say, on the back of the rise over the last few days I fully expected this to go over £6.
Await results and news on the next buyback plans.
Started: Agricore, 1 Feb 2022 07:23
Last post: Agricore, 1 Feb 2022 12:40
Market reaction is to stretch the discount to NAV back to over 43% (£9.31 cf current £5.26)
Bit of short term profit taking going on.
Quite hard to decipher the RNS but taking NAV of $682m / 549m shares = $12.41 ~ £9.31 NAV so an uplift of around 12% in 1 quarter.
Very positive aspects I'm taking from it is the "green" investments (i.e. the future) are paying off richly. Great result and oil has moved even higher since Dec 2021 - see my previous post on this - so extrapolating the NAV it is likely to be approaching £10/share.
A 30% share buyback is phenomenal!!!! I wish some other investment trusts would do this!!!!