The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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I was initially hoping that the main market listing would make a difference to DGOC tax situation, but I don't think it will in my case.
So, news today. Doesn't sound good for dividends -
The Board will work with KKV to determine the timing and quantum of any reinstatement of dividends and foreign exchange hedging once there is greater clarity over the impact of Covid-19 on the Company's borrowers.
That will presumably be after the end of June, so I guess we are in limbo until then.
Sorry just back tracking on the yank ones, I thought they were heading towards a main market listing (although that may have gone a bit quiet with the commodity price crashes!)? If so presumably the tax issue won’t apply going forwards?
I guess it varies from broker to broker although I have to say I haven’t had that issue so hope you get it sorted at some point.
This one languishing against a wider market bounce but noticed some larger trades and the liquidity offering more two way trade than of late. My strategy is sit tight here and add a few here and there and ultimately a return to monthly divs will be the time we see a rerate and our patience rewarded,fingers crossed!!
A few good days in the wider market much talked about but from a massive sell off/low point but hopefully some substance beyond a relief rally!
Yes DGOC has been a nightmare for the tax problem. I posted and sought advice many times. It took an awful lot of research, and help from DGOC and (no) help from their registrars to get anywhere. It turned out my brokers I-web, the same as Lloyds/Halifax are not authorised to deal with this particular type of tax, and after a years battle they paid me compensation of the tax I had paid, but I still have to pay future withholding tax. I could move to a different broker, but I've done that several times in the past. I still hope DGOC can find a way round it. The problem seems to be the fact they are listed in the UK and it's an unique problem.
Anyway... still can't believe the markets are up again, getting itchy fingers.
It’s certainly been an odd one on liquidity with buys shown as sells etc,added a few more first thing and that was the case for whatever reason but I’m happy to chuck a bit more in as I like the diversity of projects and more importantly the potential for juicy monthly divs at some point on the horizon.
The March dates were like a supermarket free dash for sure and I managed to get a load of trusts and reits for the longterm too and since then I’ve tinkered around with various bits and bobs thinking longterm as I learned the lesson from ‘08 not to sell everything that went up a few pence just to claw back other losses...time will tell!
I haven’t had any problem buying the others mentioned in a nominee account although had to do some tax forms for DGOC aa they’re American I assume.
Fingers crossed that massive discount to nav narrows and we get our monthly divs again in the near future. If they went to wind down I’d like to think the constituents would raise more than 20-odd pence for sure.
Strange times currently and if experts can’t put values on property assets and just about every asset class because of the virus,this is bound to be a difficult one to value too but my thinking(hoping lol) this will come good as we all need power sources and anything with a hint of green energy from waste is very investable and increasingly these days!
Thanks for sharing your views jamesmaggs. Strangely enough my broker won't allow investment in SSIF or SREI. They are among around 20 such companies on my quarterly/monthly dividend payers who are "not allowed", without any reasons ever given.
Yes I saw the "cornish pasty" programme. Although I don't know much about AD, my interest was stirred in the subject because 50 odd years ago my father was a clerk-of-works, and a couple of his projects were new sewage work builds. He used to often dump me at a laboratory in school holidays where they experimented on the bacteria, gasses and by-products. Wish I had got into that game at such an early stage, unfortunately I blew my school chemistry lab up, so wasn't encouraged to progress down those lines.
I made some initial notes from the SQN report that their top ten investments/loans were 1,3,4,7 AD Plants, and 5 was Suniva. So they definitely need sorting. No. 2 was a "diversified portfolio", then Glass manufacturing, Combined Heat and Power, Marine vessels, and paper mills.
I want to get back to read about the rest, which were another 6 AD plants, 4 IT and telecom, a Mobile modular, 2 Hospital investments, Lending, Remote Vehicles, Helicopter, Construction equipment, and 3 wind turbine investments. So there is plenty to go at if the company is put into wind-down.
As for the buys and sells, I am puzzled - my 4000 buy at around 2.56pm on Friday was the lowest price of the day up to that point - and it was a buy. There seems to be plenty of trades continuing today.
I'm sitting on what cash I have left until we get another big fall. I got a few amazing deals on 18th and 23rd.March, way below the prices shown at the time. Next time I'll be ready !
Thanks for your insight here. I originally invested along with SSIF,BCPT,SREI etc for the monthly divs and as far as I can see only one currently behaving itself but I’ve added more in all as I share your penchant for regular income and would like to think they’ll all come back at some point. Interesting you’ve also got Hadrians Wall as I got some dosh from them the other day although I haven’t added there to date.
On topic it’s quite a complex set of investments and I have to say the 73 page recent report was hard going!
Saw a snippet of an AD plant on ‘Inside the factory’ on tv recently(I think it was the Cornish pasty one) and the concept of producing clean energy from waste is certainly on the money these days.
I read somewhere that JLEN had invested in a plant recently but don’t think it was one of ‘ours’ but reassuring nonetheless as they’re well known and respected.
When you read into it they seem to have a lot more going for them and fingers in lots of pies.
My only thought is there’s still a big seller lurking which is hammering the SP but if and when the overhang clears then hopefully that discount to nav will reduce somewhat?
It always seems bizarre to me when we all know the SP will rise once the seller clears including the seller,so why does the seller keep selling as no one else would if they knew the price will pop back up when they’ve sold!
I'm probably one of the few people supporting SQN at the moment. I think the recent half yearly report and other RNS's make interesting reading. I look forward to going through the details more when I get time. I added 4000 shares yesterday to bring my average down. Showed as a sell of course.
On the face of it, they have made some questionable loans, namely the AD Plants (which interest me) and Suniva, but reading further into the actions they have taken, they seem to be very hands on with sorting out the problems. Not shy of putting companies into administration or using the US Courts. There seem to be a few other loans in crisis as well, so that is why the share price is at such a discount - and also, as I only invest in quarterly dividend payers, and SQN have suspended dividends, it was touch and go if I sold out of stuck with them. I sold out of HSBC, British Land, Land Sec, etc etc because I didn't like the way they handled the dividend suspensions, but I stuck with SQN and added because I "think" it will turn out well eventually. Basically they either turn it around fairly quickly, or the major shareholders will vote to sell the assets off and return the capital to investors. And I believe there will be more in the returns than the current share price, but that is what I want to spend more time studying.
I am also in Hadrians Wall, which has been through the same, with Biomass companies it invested in going into administration, and the company is now returning capital to investors. I got 19p per share yesterday from them, and that is from just one of the 20 investments they have.
One thing on my mind about SQN, without going into the documents, is that they are only allowed to invest a certain percentage in particular industries. I suspect that with the AD Plants, they have over invested ? They list the British and Scottish plants as AD, but are the Irish plants down as "Agriculture" to get round the investment limits ? It's a bit naughty if that is the case. Time will tell. It's either sort it out and get back to high dividends in a few months, or sell everything off and return capital, hopefully of at least 60p per share.
Any thoughts from fellow holders on the huge discount to nav on this one?
is the tender offer worth taking up?
Added a few G today.
Seems oversold at these levels IMO.
Leaving it a few weeks now.
Much similar here to the situation at Hadrian's Wall- HWSL. A couple of poor investments and the reputation is in tatters.
SQN need to bring in J.Laing Environmental Assets to help sort out the AD problems before JLEN or someone else picks up the assets on the cheap.
The way this is being sold down, 40’s could be here rapidly.
If it’s Schroders selling they still had over 9% on the holdings RNS.
Depends what their ulterior motives are and what % they want to go down to, if any at all.
Eyes Down!
Worst case scenario from the RNS was a NAV of 75p. With the usual 10% discount to NAV we see in the market we have 67p. The continuation vote may fail to pass. Then we would see the assets sold of, and a return of capital. That could be at c62p a share. Buying now at 52p gives a possible 20% profit. Is there a special situation developing here? Should we be brave or fearful?
I doubled my holding already. Went through as a sell of course. Will come good eventually, or sold off. Surprised they can't get the AD right. There is so much research and profit making ventures about. Someone should be able to sort it out.
Ridiculous selling at this trashed low price now...Well that’s the mentality of II’s ?
I’m ready to pile in more very shortly.
Bargain time.
This is getting seriously trashed, Institution-s ditching...seems rather pointless until we know a more definitive NAV.
Low 50’s possible at this rate. Typical, I doubled up the week before the RNS started this sell off.
Timing of RNS wasn’t to our advantage 08.26.
Continuation vote in Nov. SQN are losing credibility IMO.
Too far down now to sell holding. Watch and wait for the bottom. I’m not really tempted to average down until the picture becomes a bit clearer. Too many AD plants on the books.
I’m not seeing a bargain at the minute! Low 50 maybe.
The Suniva investment can be written off, giving a NAV of 89p. The impairment today of 14p per share (worst case) therefore now gives a realistic NAV of 75p. Thus the fall seems overdone. The dividend will have to be cut, so there will be more sales, and possibly a further drop. Realistically this will drop below 70p, and then it will be a bargain.
Ah well out came the holdings RNS and also another estimated NAV of 94.32p.
Possible bottoming process now.
An uncovered dividend cannot be held indefinitely, and there is a precedent for reducing the dividend. So, I stick with my "realistic NAV" of 89p, and note this normally trades at c10% discount to NAV. That suggests fair value at 80p; and with a sustainable dividend at 5p, we have a yield of 6.8% while we await a re-rating.
There is perhaps ore risk here than some would want, and the Suniva investment is illustrative of what can go wrong, but the concentration on wind, waste and digesters seems rather forward looking. Time to add, at what seems to be an all-time low?
Hopefully the chairman will stick to his word - although this obviously results in the NAV dropping, and the price in the short term. "and recognising the importance of income to our investors, the Board intends to continue to pay the annual 7.25 pence per share for each class on a monthly basis, even when not fully covered. The Board and the Investment Managers believe that this policy remains sustainable as the shortfall in income from certain transactions is expected to be recognised on their conclusion. "
The track record here suggests a dividend cut has to be in the pipeline. Cover is only at 75%, so a yield at this price of almost 7% is sustainable. Still quite handsome!
Have a fairly large holding in SQN. Amazed that this still declines with daily sells and yet no Holdings RNS. Reading the last update it seems they are confident in resolving the solar co. issue.
Above a 10% divi I’m going to add yet more...not far off now. Worth the risk? I think so for a long term monthly income.
The company claims a NAV per share of 94.55p. However it has lent 5.7% of that to Suniva and other solar power enterprises. This may have to be written off. That suggests a truer NAV of c89p. But the shares trade at 77p.
EPS has averaged around 5.2p pa over the last four years, while DPS has been around 6p. A dividend cut seems likely, perhaps to a manageable 5p. That suggests a yield of c6.2%. For those comfortable with the risk, this may be a decent income play?
SQN Asset Finance Income (SQN) is one step closer to recovering $2.5 million (£2.2 million) that it loaned to US solar cell manufacturer Suniva, which has been rescued from bankruptcy.