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With an idle half hour, I have tried digging into the possible reasons for Capital's recent, and perhaps ongoing, reduction in their SXX holding - apart from having a lot of their eggs in the SXX basket as the Stage 2 crunch approaches.
Morningstar (http://investors.morningstar.com/ownership/shareholders-major.html?t=SRUXF®ion=usa&culture=en-US&ownerCountry=USA) don't seem to be very up-to-date in their figures - they are still showing Capital holding 380m shares, whereas the RNS of 22 Feb showed that down to 236m, and the 5 Apr RNS down to 147m.
If you look at the 3 funds they manage and which represent 99% of their total holding, two of them are Virginia "529" funds (albeit confusingly no longer labelled as such by Morningstar...but I kept the November version!). 529 funds are a tax-effective vehicle used in the USA to save and pay for (part of) college education. Combined, these two 529 funds held 398m SXX shares back in Nov 18, since when - per Morningstar - one has disposed of 64m.
My understanding is that 529 funds each have a target maturity date, based on anticipated college start date, and that managers will shift each portfolio into lower risk investments to preserve capital as the college age of that cohort approaches.
If that is correct, maybe Capital have to turn a large portion of the respective portfolios - not just SXX - into cash ready to be withdrawn/spent on college fees.
Any USA experts out there who could confirm or deny that?
Cranleigh that's a positive thought and hope it 's a valid reason , certainly sounds possible .. Whilst digging did you see any more share bought by L&G by any chance as I'm guessing they would have been offered some ? Regards ffc
No, ffc, no further increase in L&G's holding appears in the Morningstar figures....yet.
Like, you, I would expect them or one or more other IIs to have picked up the majority of Capital's recently-reported disposal of 89m shares, and that the transaction/s did not necessarily go through the market.
FWIW Reuter's figure for total II ownership of SXX remains pretty steady at currently 21.26%.
Thanks Cranleigh . like everyone here I have my eye on the Build and ST2 but I'm concerned that Tom does not yet appear to have enticed any "Big Boy's" in yet ... I know in a few years when we are getting nearer production then divs we will attract a few but all the same I would have thought there would be a few nibbles at this price ???
ffc - IIs work on their own risk thresholds. Until ST2 is finalised the risk is likely too high for them.
As soon as its announced I expect to see a raft of TR-1s as the risk moves more in their favour. From an II point of view a potential risky multibag is not worth as much to them as a risk reduced 20%.
Thanks DGR that's a good point fair enough ... thats me for the day so hope to tune in tomorrow for a nice RNS ? lol
Cranleigh I don't want to bang on about your 15.05 but that is a cracking bit of detective work and it's cheered me up a bit to think that might be a valid reason ..ffc
Cranleigh - I've just had a bit of a look as well. The December 2018 fund manager statement for American Funds New World Fund reads as follows:
'It's clearly been a tougher environment for emerging markets equities,
with China's economic slowdown, the strength of the dollar and
tightening U.S. monetary policy.
In this environment, I'm focusing on companies with stronger balance
sheets and cash generative businesses that still have decent growth
prospects and pricing power despite slowing global growth and trade
tensions. I've also shifted to companies undergoing fundamental
changes that can potentially drive future revenue and earnings growth
regardless of macro uncertainty. In some cases, profitable companies
with dominant market share positions have sold off and their valuations
have come down, creating compelling opportunities to invest with our
long-term view.
Despite some of the selloff in emerging markets, I believe longer term
trends in developing countries haven't changed and look sustainable.
These areas include the growth of mobile-based e-commerce and
services, the expansion of Asia's consumer class and soaring demand for
travel-related infrastructure and services within Asian countries.'
This is the fund that has sold off 64m SXX shares, which for context was 0.07% of their total fund asset value (i.e. a drop in the ocean for them). For further context, their main holdings are mainly the likes of Microsoft, Alphabet, AIA, banks, tech and financial companies. Of 589 holdings, SXX ranks approximately 480 in terms of the total fund %.
This fund is massive, and whilst a 64m share sale may seem huge to us, it's really rather insignificant to them. If you have a list of 589 holdings and you are looking to make a few changes, then the likes of SXX is probably going to be on your radar as it has dropped nearly 50% in the last 6 months.They have 11 fund managers, and SXX will have been one of their picks.
They will have come to a quarterly review, and the main fund manager will have said 'Steve; what the heck is Sirius Minerals and why is it 50% down?'. Steve would have then started eulogising about the benefits of POLY4, and then mid-sentence gets shut down by the main fund manager who says 'Steve; I don't care if it provides all the macronutirents under the sun, it's 50% down and I'm focusing on companies with stronger balance
sheets and cash generative businesses - we're selling.'
Lesson - listen to Steve, be patient and stay strong.
Thanks Phil - didn’t find that. Another plausible explanation...
PhilBanks,
Can you provide the names of the fund managers please? I have a genuine reason for asking.
Populationexpect - according to their website, the fund managers are: Steven G. Backes, Wahid Butt, Mark E. Denning, Bradford F. Freer, Nicholas J. Grace, Carl M. Kawaja, Jonathan Knowles, Winnie Kwan, Robert W. Lovelace, Robert H. Neithart, and Christopher Thomsen
Cranleigh
Just looked at their web site - where you can look up all their holdings- and they now own 220m SXX shares in two funds - 192m in one fund and 28m in another - so it looks as if recent sales have all come from the one fund - the funds have total assets of about $40 billion and $35 billion so indeed SXX is tiny on their scale of things
Verde
Thanks, Verde.
Please could you provide links to the relevant pages on their website? Thanks.
Myo - think you should do one of your very long posts on the train! Reminded me of when I was trying to write emails while on the trains in India - ended up writing a load of rubbish and feeling ill! Last week I had a feeling the Capital Group sell off might have a connection with Stage 2 (even posted it as a stupid question) - it just all seemed a bit strange to me - I guess we’ll soon find out!
Cranleigh
try www.capitalgroup.com/institutional/iinvestments/holdingssearch
sorry I don't know how to cut and paste the web address (aged person!)
Verde
what do you know - the machine did it all by itself:)
Verde
Myo
Capital Group have JPM in 13 different funds - total over $11 billion - a mere nothing :)
Verde
Cranleigh
sorry - it won't let you do that without a password but you can with a bit of a fiddle get to
www.capitalgroup.com/instutional/investments/fund/rwigx
scroll down to equity breakdown and you can click on a link to all holdings
Verde
thanks verde,I tried, it should be
https://www.capitalgroup.com/institutional/investments/holdingssearch/
in the search box, enter
sirius minerals
the results:
SMALLCAP World Fund ® 191,851,849 $50,075,439.00 0.12%
New World Fund ® 27,595,843 $7,202,818.00 0.02%
Tnx PhilBanks,
Do u know if there is a connection with Cam Capital founded by Bruce Kovner
I do not have time to research. My wife has had a stroke due to terminal cancer and I am full time 24 hour carer..
I was at college with Bruce back in 1960's
Good work, Cranleigh/Phil. Many thanks for sharing your efforts.
Regards,
per ardua ad astra
population expect - sorry to hear about your wife, my best wishes to you both.
Regarding Cam Capital, I have no idea unfortunately. My post yesterday was just a bit of research triggered by Cranleigh's postulations about why the fund might be selling.
Population, I don’t think there is any link between Bruce Kovner’s CAM Capital and our (still) big shareholder.
CAM’s website states “CAM Capital is a fully independent, private investment company that invests assets of entities related to its founder and senior employees”.
Can anyone tell me when Capital Group in the US FIRST owned shares in Sirius or when it first came to light.
Was it before January 2018. I think it was but please confirm.
Tnx Cranleigh but can u or anyone find out if any shares are owned by Caxton Associates , managed by Andrew Law in London and if so when he first invested.
Good morning, popex. I trust you are well, although I was sorry to read that your wife is so ill and that is compounded by her recent stroke. I hope she is not suffering terribly and you are coping with her care.
As for Capital, they have been involved with Sirius for a good number of years. I don’t know when they made their first acquisition, however, they were key contributors to ST1, and I seem to recall them at least being around for a good few years prior to that — perhaps going back to the pre-planning stage in 2015 also.
I wish you well and hope you find the strength to manage what is a terribly sad situation.
Kind regards,
per ardua ad astra