Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Robleo, the decline in equities will turnaround once inflation looks like getting closer to 2% and central banks are expected to start reducing bank rates. The bounce back will be big imho. This probably won't happen this year but 2024 is a good bet. Assuming we don't get some sort of new geo political crisis before then. I've been adding recently, pound cost averaging. Today is looking good, so should bring some cheer.
Thanks for posting that link Laughton, interesting. I think they just need to keep calm and wait for central banks to reduce base rates, the rating will then turn back to a premium and they can start issuing shares again. I don't like the idea of them selling assets and reducing the NAV.
In reply to my own question: https://quoteddata.com/2023/07/thomaslloyd-energy-impact-board-calls-vote-continuation/
It seems voting against the continuation is the best outcome from a bad situation. Clearly the board can no longer work with Thomas Lloyd.
I've been presented with two options to vote by ii. One is the annual general meeting and the other is an extraordinary general meeting. They both have the same statements on which to vote and the same deadline. Do any of you know why there are two votes?
Gyroman, the answer to your question is here: https://hydrogenonecapitalgrowthplc.com/wp-content/uploads/2023/07/HydrogenOne_Capital_Bluffers_Guide_2023.pdf
Which is the situation for most of the ITs I own, either I'm very unlucky or the discounts on ITs are just too wide (over 17%). At some point the mood will change and the discounts will narrow or even get to premiums (remember them?).
When I first read the RNS I thought it meant they were planning a tender offer, wishful thinking. They are not even committing to buybacks, just setting up the facility to so do like I think all other investment companies do. They've got £35m to spend and listening to the Edison interview (thanks for the link unhooked) it's been allocated, so not going on buybacks.
The good news from the RNS and the interview is that at least 6 out of 7 portfolio companies have completed funding rounds at or higher than previous valuations, maybe 10 out of 11. This seems to suggest that the NAV is going to be maintained or increased, hopefully not more that 8% when the catch up and performance fee are triggered.
I wonder if the market makers misread the RNS too as well as some watch list investors which then got the day traders and algorithms excited.
I'm overweight by cost in this IT, I think there's a great story and potential here, Seraphim are doing all they can to educate the market (interviews, newsletter, podcast). I'm hopeful that once the market turns the sp will rocket back to a premium and it'll be business as usual. Anyone buying and holding at these prices are probably going to make a lot of money.
So the journalist says "My guess is that after the board cut its dividend, a private equity player will pounce and buy the quality assets, especially its fast-growing Icelandic data centre business." So he is suggesting that DIG9 will sell all the quality assets and keep the poor quality ones, this doesn't make sense, the PE firm miight as well put an offer in to buy DIG9. I'd vote against any offer less than NAV.
I’ve topped and here’s why. Yesterday’s RNS.
82% debt is fixed at an average of 3.8% (this should be total interest/total debt but could be the average of each tranche’s interest rate which isn’t correct). So that’s £352 at 3.8% = £13.38m, that leaves 18% floating (say SONIA at 5%), £77m at 5% = £3.85m, so total interest payments are about £17.23m, 1.7% of NAV (£999m Dec 2022). At 10% this number would be £21.08, giving a rate of 5.2% of debt and 2.1% of NAV, not too bad and certainly doesn’t justify the discount.
The reported net initial valuation yield (NIY) is reported as 4.3% (of NAV?) so that’s £43m. If this can be counted as taxable profits (which it isn’t and is probably an over estimate) that gives a possible dividend of 7p, assuming there are 550m shares issued and using 90% of £43m the REIT dividend rules. As new homes have been constructed and rented out this year the NAV has probably increased and the NIY would have too. So I’m expecting an increase in the target dividend next financial year.
At the moment this is yielding a below inflation 5% but I think this is a really well run business offering affordable rented accommodation in an environment when it’s getting increasingly difficult to get a mortgage and there isn’t enough housing stock. I think that over time the discount will get to a premium, the dividend will keep increasing. Also, inflation will start to slow and eventually get close to the magical 2% seeing a reduction in the base rate. Worst case: wind up and sell the homes at a profit.
IMO, DYOR.
Matador78, you might want to have a look at OIT and RKW, investment trusts that try to identify good UK listed smaller companies and AIM shares. I hold OIT but not RKW, so far OIT has been worth the management fee. I got lucky with BCN, other than that I've been burnt by direct investments, EML is my final one where I should have sold half at 11p.
"pretax profit plunged to GBP14.7 million in the recent half-year from GBP38.6 million a year ago.". Alternatively, PRSR are still making significant profits in difficult times.
"gain from fair value adjustment on investment property plunged to GBP5.8 million from GBP31.1 million". Given that the blame for wide discounts is the markets expectation that NAV will decrease, surely this is good news. Again the company are still making a profit on the property portfolio.
The best news is: "Rental income grew 22% to GBP24.2 million from GBP19.9 million.". That's why I'm invested in this trust.
Thanks for the suggestion WiseOwl, I notice the price is 8.75 on his video so already 13% up on the day. So his tip doesn't account for the early rise but may have helped the price later in the day and today.
I've got a few private equity investment trusts, all on big discounts and mostly doing badly except this, NBPE and HGT. One reason for the wide discounts suggested by a guest on the money makers podcast is that the market is expecting the NAVs of PE IT to fall due to the reporting delay. He mentioned that OCI were going to be the first to report.
It's excellent news that the NAV has actually increased by 24%, not only for OCI but the other private equity ITs. I am really impressed by the speed at which OCI have produced the update, it can take others 2 or 3 months rather than just over 3 weeks.