Member Info for tichtich

This whole wind down has been a fiasco. It was a mistake to start it in the first place.

"About 70% of the portfolio’s revenues or cash flows rise in line with inflation."

That's not quite what the figure means. According to the last INPP fact sheet, the inflation linkage figure is "calculated by running a ‘plus 1.0%’ inflation sensitivity for each investment and solving each investment’s discount rate to return the original valuation. The inflation-linked return is the increase in the weighted average discount rate. "

My interpretation: if future inflation is 1 percentage point higher than currently assumed (say 3.5% instead of 2.5%), then the nominal return on investment will be 0.7 percentage points higher than currenty expected. That means that the real return will be 0.3 percentage points lower.

I believe that this only applies to the first additional percentage point of inflation. It tells us nothing about what would happen if inflation was 2 percentage points or more higher than assumed. If, for example, a lot of assets had inflation indexing capped at 4%, the inflation linking above 4% inflation might be very poor.

I used to have an investment in BBGI, a similar infrastructure fund. I recall that they explicitly stated that they had no caps on their inflation indexing (but not all revenues were indexed). I've seen no such statement from INPP, so it's possible they do have some caps.

Just when I had allowed myself to hope that the the next NAV update would be an increase, after a long string of falls...

I was expecting significant adverse changes in electricity pricing policy eventually, but not so soon.

Sufcessex. thanks for your honesty. I can't help thinking that some people who tell us about their trading successes may be only mentioning their wins, and keeping quiet about their losses. No offence intended to anyone. I'm sure some people are net beneficiaries from trading. Personally, I admit to being no good at it, and I try to stick to buy and hold.

Thanks for the link, Tamlin. From the article:

"What happens when those contracts finish, and the assets need replacing? Where’s the cash going to come from to renew the asset base if you’re paying it all out as dividend income?"

Fortunately, UKW (mentioned approving later in the article) is not paying out all of its cash as dividends. Last cash dividend cover was 1.4x IIRC. Hopefully it will be a little higher this year.

"These higher yields are a double whammy.

"First, they increase the risk-free rates built into the valuation models, and secondly, they make the dividends paid out by many funds less attractive, especially if you can get, say, 5pc for lending to the Government long term and risk-free (although fans of the sector might argue that gilt yields are fixed whereas many fund dividends might grow with inflation)."

That's actually the same whammy described in two different ways. (And it only affects NAV and share price, not the sustainability of dividends.) The second whammy is the higher interest costs paid by the funds, which the arcticle mentioned elsewhere and which potentially does affect dividends, though in the long run it's _real_ interest rates that matter. If interest and inflation rates both increase by the same amount, then what the fund loses in short-term interest costs it gains in the inflating away of its debt.

Bearraider, thanks for drawing my attention to ENRG. I sold out of that last September, and haven't looked at it since then, until now, so it's interesting to see how it's done since then.

ENRG saw a substantial price jump after the wind down was announced, as have some other trusts. I sold after that jump, and the share price is currently just slightly up from my sale price. Judging by the latest report, the prospects for selling the assets sound good, so maybe I should have held on. On the other hand, AERS, where I did hold on, has done very badly.

I'm still reading this board, even though I've sold, as I would consider buying back again at a lower price.

I just wanted to mention a point that I sometimes forget about: leverage magnifies gains and losses. By my calculation, given the current leverage, if the share price is at 50% of current NAV, then the assets need to be sold for about 70% of their current valuation to get back this share price.

This doesn't take SEIT's future earnings into account. But bear in mind that if we don't have our money in SEIT, we can have it in another company which is earning for us. So we should only take into account the excess earnings we expect from SEIT over those of a possible alternative investment.

For me, the question is whether SEIT will realise at least 70% of current asset valuations, after costs. That may depend on how patient the institutional investors are, and I'm not sure I want to gamble on them being patient!

Good RNS today. This is the sort of thing I was hoping for. I note that the new charter rates were agreed before the war in the Gulf, but it's good to hear that "spot rates have firmed further since these renewals were agreed". That said, it's not clear what the longer term effects of the war will be. Higher energy prices and possible recession could reduce demand for both tankers and dry bulk. So it's good to know that Tufton is focusing on the long term. (I have sold all my other shipping shares and have no intention to buy any other shipping shares in the near future.)

I decided to sell all my SEIT shares. Given the current geopolitical situation and talk about recession, I wouldn't mind having some more cash in reserve. SEIT was 8% of my portfolio (at current prices), and I made an 11% average loss on share price, but at least the high dividends received soften the blow a bit.

Good luck to those who are still in.

Damn. The RNS got my hopes up by describing the Strategic Proposal at length, before dashing them. The Strategic Proposal had some rather worrying talk about new share issuance, but I would still have preferred it to a wind down.

This leaves me wondering whether to sell now. Is there any point in waiting?

Tufton (SHIP) mentioned in the Guardian:

https://www.theguardian.com/world/2026/apr/08/us-iran-ceasefire-mass-exodus-ships-strait-hormuz-analysts

Hmm... ADM down today. I think that supports my hypothesis of high petrol prices being good for ADM, at least in the minds of investors.

Ha ha. I've seen it called CRUD before, but not POO. 😉

Hi Monkeyjack. As with other investment trusts, the management fee/costs are taken out of the trust's funds, not out of dividends. An investment trust is a kind of company, and as with other companies, the dividend goes into your ISA with no deductions.

I'm not sure whether 18k followers is enough, but maybe FUTR will become the new Game Stop. 😁

Trump said yesterday that he is now prepared to walk away from the war without getting any agreement from Iran and without reopening the Straits of Hormuz. Obviously this is a U-turn from his recent demands for unconditional surrender and threats to bomb Iran's energy infrastructure if they didn't reopen the straits. In other words, he's telling us that he's going to TACO. No surprise there.

My prediction is that the fighting will end, but the new normal will be Iran demanding and receiving a big toll charge from ships going through the straits. This will mean a permanent increase in energy prices.

"How is Norway able to produce so much in the same region when the UK can’t?"

The UK used up the bulk of its North Sea oil and gas in a big splurge, leaving only less accessible reserves. Norway has conserved its reserves. Of course they do have a far lower population. I don't know whether they've used up more or less than us on a per capita basis.

It looks like Zilonis was right, back in Feb. I should have sold then. Ah well, won't be my first investing mistake, won't be my last. 😉

Well, I said recently that I would add at 350p (if it got there). I didn't expect to see sub-300! As a man of my word (😉), and even after lowering my target price for the poor report, I've just doubled my share count, at 296p. That's it now. No more. I'll just hold for the long term (barring the unlikely event of a big bump in share price).

I was reading about the LDI crisis the other day, as I wondered whether something like that could affect LGEN in the future. As I understand it, LGEN was a big provider of LDI to pension funds (as an asset manager), but was not itself exposed to them. Still, it's a bit worrying that no one had considered the possibility that LDI would blow up in that way, until it happened.