The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Investment trusts can only issue shares when the share price is above the NAV, to do either wise is to sell 15p for 14p. Previously when the share price was well above the NAV they sold 5p for 30p but this cannot be repeated unless the share price improves.
It is true that the underlying companies will need more capital but as it stands ANIC will only have its cash reserves, my guess this is why we have not bought any new investments as capital is needed to support the existing holdings. Once our cash is spent then the underlying companies will need to find different share holders and our stakes will be diluted.
As mentioned before the underlying companies appear to be doing well. Now is a waiting game for the underlying companies to succeed or fail. Their results will feed through to our NAV and even the share price, in the end….
I would hope that everyone here understands that zero is not an unlikely. I still think the result will be good but there is a fair chance the result is poor. I will not be averaging down, to avoid putting good money after bad, hopefully all will be wel.
Let’s see in 5 years
None of the portfolio companies appear to be going bust. This is a very positive statement for a VC firm. I have no inside knowledge but if you hold the course I think there will be good returns.
I am also 40% down and unwilling to realise the loss which might be influencing my view.
LL does not need to make any money to benefit the fund. If LL is driven out of business by bigger players offering lower prices then the rest of the portfolio benefits greatly.
Given ANIC has seats on many boards JM will know the issues and the fund currently has enough cash to try to fix issues that the individual companies cannot.
I had hoped for quick big returns but it does look like 5 years to a good return and 10 to a great one.
Thanks. I doubt they will be diluting our holdings
Hi,
I know there are warrants at 23p with expiry at the end of 2023. Can someone remind me if there are some at 28p that expire sooner as well?
Thanks
https://web-assets.bcg.com/6f/f1/087a0cc74221ac3fe6332a2ac765/the-untapped-climate-opportunity-in-alternative-proteins-july-2022.pdf
Boston Consulting Group paper on Alt Protein. I have not read it in detail yet but appears to support the direction of travel we are all hoping for.
Unfortunately not one of our companies but Big Jim was liking this on LinkedIn:
https://www.theguardian.com/environment/2022/may/25/worlds-largest-vats-for-growing-no-kill-meat-to-be-built-in-us
Real progress either towards profit or bust. It the answer is coming closer.
Also there is a lot of cash to be spent but they decided not to buy into this round. I am pleased that there appears not to be pressure to get the money in the market, better to keep dry powder.
There is a good 30 minute update from Anthony Chow on “The Art of Investment” podcast from Vermeer Partners.
Little news but a good recap and reminder why we own this company.
While I am as pleased as anyone with the increasing share price, I wonder if there will be more issuance when the price exceeds 30p.
I hope they wait for the cash pile to be spent this time but there is a huge volume of cash needed to mature this industry and ANIC will want to grow fast and huge.
Best to watch the NAV not the price.
The guy who posted the links looks to have written the article. Either way it was a clear piece and hopefully more people will hear about ANIC.
RTW2 - thanks for the reply.
I must be missing something but is dog food not the bits of the animal we don’t eat?
It is hard to undercut the price of a waste product.
Thank you for the detailed list, although I don’t agree with them
1. I think it is NAV per share rather than NAV so the issuing of shares at a premium to NAV will generate some fees but he does not get 15% of any money raised. I like the lack of a management fee, he only makes money when we do. 15% is quite high but the costs are lower than many hedge or PE funds.
2. This was fixed for the last capital raise.
3. I would view this the other way round, the share price gets very high so they decide to issue more shares, at a premium which is good for the NAV per share. This allows the fund to get get deals on new purchases. It is a logical decision and I expect it to happen again if the share price move a long way from the NAV.
4. There is a risk here but this is a regulated fund and will need to show the FCA how they manage conflicts.
5. I agree that he is a salesman and is probably over promising. Today’s promise of commercially available dog food in 18 months is another example.
I am bullish on the sector but please remember that Cenkos is paid by ANIC so consider what they say on that basis.
The new shares are issued by the company so we are all slightly diluted, meaning we own a slightly smaller percentage of the company compared to yesterday.
I think this is good news and a clever way for ANIC to deal with the rather light capital raise last year. Also it is good that the shares were issued above the current price.
The research from RethinkX should be taken with a bucket of salt, they have a paper on their website written a few years ago saying we would have self drive cars a couple of years ago. I am still waiting for mine.
In terms of the share price, I don’t think it will move from here until the rest of the cash is invested. Then will come the leg up, hopefully to the sky, but the floor is still possible if the tech does not deliver.
I think the reason the price is not moving is that ANIC has raised money twice and so far has not put it to work. The only justification for the premium is that Mr Mellon will allocate the cash soon and well. I think the price will drift until the cash is in the market.
Annoyingly given the movement of interest rates, long duration assets, like ours, are falling in price at the moment so Mr Mellon may get a better price for the new purchases if he waits a little.
Mazk231
While I agree that 10 years is very quick for this type of change once you think of the hurdles. Building factories, gaining approval and getting buyers happy etc
The motor car went from concept to broad use in about 10 years so these things can move very fast when the economics work.