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Another Investment Trust board who need to look at themselves and decide if they are up to the job. This seems to be an increasing problem in the Investment Trust space where the board either don't ask the right (tough enough) questions or don't have the competency to do so. Either they have failed in their duty of care here or they aren't up to the job.
I've been looking around for some decent buying opportunities and am wondering if this is one. It appears to be one of the few in the sector trading at a decent discount to NAV. I hold JLEN, DORE and GSF amongst others so familiar with similar funds. I'd be keen to understand why this is at such a discount to its peers given there are no obvious red flags and it was at a premium not that long ago.
I have to admit I was quite annoyed by the recent raise. First off, institutions only (not uncommon I know) but this fund is aimed at more sophisticated investors. I think my main irritation was that it was at such a discount to the price just prior to the announcement and also at the IPO price. Personally I think they should have pitched this at 102p or even 101p so that those who supported the IPO didn't feel like it has been a 9 month hold for nothing.
Fortunately I was able to pick some more up when it dipped below £1 but that doesn't improve my moo regarding the placing. I think this is a great fund and has huge potential - I see it as a way for Ineos to assess hydrogen tech before snapping companies up at hopefully a decent premium for us.
I assume there will be an RNS at 7am tomorrow provide far more detail and clarity for investors. Unfortunately I can't see anything other than a bad day for those of us who are shareholders, but hopefully they can put it in a way that isn't too bad and calms some nerves.
Thanks saintly, I've been looking at AEW but will investigate the others too. I had overlooked AIRE as it produced negative returns in 2018,2019 and 2020 but checking again, the NAV actually increased all but one year. I'd be interested to understand why it has always been at such a big discount. It is a shame that there aren't any groups that discuss REITS generally as I feel that would be a real benefit, either on here or elsewhere. I hadn't come across RLE as I tend to look on AIC or Trustnet, so will see what I can find.
Currently I hold LXI, HOME, EBOX, SUPR, LABS and ASLI. I have also put my brother into SREI and THRL. I do want to consolidate somewhat so will likely make changes as discounts/premiums diverge. I am happy with all the ones I hold, although I am a little disappointed in EBOX as the last few assets they've bought were offering relatively low yields (under 4%). I'm more in favour of ASLI as a result. Supermarket REIT and LXI are probably my two favourites and SUPR are very good at providing updates through Proactive and Investor Meet.
I like SREI at the moment as I think there is a good opportunity for the discount to close. I'm also positive on AEW although it is trading at a slight premium. To be honest I think most are pretty similar, hence looking to switch around more.
It is worth following 'The Commerical Property' thread on advfn bb. The discussion is pretty much all on REITS and there are some really knowlegable people sharing their thoughts.
I thought I'd take a look at this IT due to the big discount to NAV compared to its peers. After looking into it and reading the end Jan update, it does not make good reading. Over 6 months from launch and not even 20% of funds invested does not read well. It would be interesting to understand more detail regarding the two NEDs who resigned - that is not a good look. I was wondering if anyone has any views on this Trust? It still looks tempting as most the peer group trade at premiums, but there are definitely some red flags atm.
I've held these for over a year and added in the recent raise. Whilst I am disappointed to see the price fall below 142p I am still comfortable with it as an investment. There seems to have been a general squeeze on premiums that many Reits were trading at, in fact Supermarket Reit seems to be one of the only ones trading at a large premium in the UK Commercial Property space. I put this in part down to inflation (there is an upper limit to index linked rents), general markets and rising interest rates. Despite this, the evidence is that this is a well run Reit that has continued to grow the NAV and offer a decent yield. To be fair though, I hold far too many Reits, so should probably consolidate into 2 or 3...
I think one concern that I do have is more general and is being seen across the investment trust and REIT space, more so around property, infrastructure and renewables. I think we have reached a point where these funds are raising money too often. I know that personally I don't see any value in buying in the open market now, unless there is a decent discount to NAV, as you know that the next raise is possibly only a few months away. Whilst most got away lightly with a couple of raises in 2021, we have seen with a number, e.g. LXI, EBOX and ASLI that following the raise they have fallen to below the placing price. I'd like to see a change in tact now - focus on what you have, sell less attractive assets and add value with what you have.
The Board of Hipgnosis, the first UK listed investment company offering investors a pure-play exposure to songs and associated musical intellectual property rights, and its Investment Adviser, Hipgnosis Song Management Limited (formerly The Family (Music) Limited), are pleased to announce the Company's interim dividend (the 'Dividend') for the period from 1 October to 31 December 2021 in respect of the Ordinary shares.
The Dividend of 1.3125 pence per Ordinary Share will be payable to Shareholders on the register as at 18 February 2022 with an associated ex-dividend date of 17 February 2022 and a payment date of 15 March 2022.
I received a response from the Director of Investor Relations at Hipgnosis late last night. I am not going to cut and paste the full response but will summarise what he said:
Streaming is only be a part of their revenue (for SONG as a whole it is c33%), and Spotify will only be a part of the streaming element. Variety magazine quoted an estimate from Billboard that Neil Young earns $754,000 each year from Spotify, in which case Hipgnosis’ share would be half that, which would put it at 0.25% of annual income. They are fine with that assumption.
Hipgnosis bought 50% of all writers copyright & income rights (ie publishing side, not masters). There are 590 songs, as listed in the annual & interim reports.
As a result of recent publicity, Neil Young’s profile has never been higher and his music is actually seeing a significant increase in consumption despite being removed from Spotify. Other digital service providers have been promoting him actively; In the 7-day period after Neil Young asked Warner to take down his music from Spotify, the US streaming of Neil Young was up 28% and album sales were up nearly four-fold. Neil Young is also being listened to by a new younger audience that support his position on vaccination – a core part of Hipgnosis’ thesis has always been that introducing music to a new audience will increase the long term revenues.
The use of music on streaming platforms is controlled by the Master Right’s holder i.e. the record label.
In the case of Neil Young this is Warner Music who have the master recording rights and they made the decision to remove their recordings from Spotify at Neil’s request.
In the context of whether Hipgnosis can control the use of our songs, we structure the contracts such that the writer cannot do anything that would negatively impact earnings. In this case (quite aside from the fact the figures show a positive impact), SONG supported Neil’s decision, given that intrinsic in the value of his songs is the way he conducts himself, and to not do so would alienate his audience who make the attractive income on his catalogue predictable and reliable, and in the context of this being a temporary measure. This should also help attract other important songwriters of Neil’s stature and importance to Hipgnosis. They fully expect this to be a temporary one off. Finally, he noted that Spotify (on their earnings call) apologised and noted that there was "still work to be done" which could hopefully lead to constructive dialogue with Warner/Neil.
I actually find it interesting that there is still no comment at all from Hipgnosis. It makes me think they are having to think very carefully about what they say and how they position their response. I am disappointed that the email I sent to their investor relations on Friday got no response at all, not even an acknowledgement.
Neil Young threatened to pull his music from Spotify because of Joe Rogan's show. Spotify have decided to side with Rogan and are removing Neil Young's catalogue. What I didn't realise is that in Jan 2021 Hipgnosis bought 50% of the rights to Neil Young's entire catalogue for $150m. This is obviously not good for Hipgnosis and I wonder what recourse they have?
Just an FYI. If anyone has an account with AJ Bell and has their Trixtax Eurobox shares set up for dividend reinvestment, there appears to be an issue. It seems that dividends received into AJ Bell accounts are now being separated into two payments, an equity component and an interest component (as per the split in the dividend announcement).
The DRIP automated process only reinvests the equity part now, so you will not get all of your dividends reinvested as desired. They seem to admit this is a bug, but it doesn't really resolve matters. For me this is a big issue as my investment strategy for REITs and infrastructure/renewable investment trusts is the compound through dividend reinvestment. As such, I just want to highlight for anyone else so you can check to ensure you are not facing the same issue. Just to note this will affect any dividend that has an equity and an interest component where they are received as two payments.
I noticed that the dividend just received was split into two payments. It appears that this is because 65% was deemed to be an interest payment for UK tax purposes. I am not sure as to the detail of this but assume it must be similar to PIDs with REITS? Even then, the dividend comes as one payment. Anyway, I have my DORE dividends set up with AJ Bell for dividend reinvestment. I noticed today that they have only reinvested the smaller compenent of the dividend (the 35%), so have raised a query. I am only noting this so that if anyone else has DRIPs set up for DORE they can check their own account.
That is what these types of investment trusts seem to do, a raise once or twice a year. It is inevitable as they need more capital to buy new assets (and increase their fees). The lesson is to remember that if the IT is performing well a raise is coming so don't go buying in the open market at a large premium as you are likely to be caught out in a few months. My only frustration is that too often these cash raises don't allow us retail investors to get invoved, although to be fair I picked these up through Primary Bid.
Reading the results, I thought they were pretty good. I know the market is bad today, but I didn't expect such a big fall. I even considered the takeover of II might add some value, but maybe this has caused concerns over the value attached to AJB?
Article from Investment Week:
https://www.investmentweek.co.uk/news/4040719/seraphim-space-trust-value-technology-battle-climate-change