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Have bought quite a few more today, so keen to see how this pans out.

Given the risk of a Reform renewable super tax there should be a premium for the high proportion of assets sitting outside of the UK.

Hi Terry

I have a wad of these and live with the geopolitical risk for the yield and huge discount to peers.

May switch some renewables here as the Reform windfall tax on them is probably greater than the physical risk..

TF

The interesting point now is that Saba and Jeffries own 26% between them.

That means no special resolutions requiring 75% can be progressed so these 2 shareholders have a large sway over the Board.

Still don't understand the lack of a full year update, what is going on?..

T F

Hi Trek

Reform could keep honour the subsidy commitments but introduce a windfall type tax instead - that would have the same effect.

I was very bullish about UKW but I worry that the political risk unwinds adversely as the election draws closer - and share price falls. Interesting how they sign off on capex right now..

I 'd be keeping the c £0.6bn of free cash flow in the next 3 years as a pot for opportunistic buy backs.

Even Starmer is better than Reform getting in..

TF

Hi BPM

Thanks for your note. My replies are:

(1) NAV understates real value as the discounted cash flow basis uses higher rates than are deserved whilst power prices are continually forecast to reduce. I don't buy that as we'll have delays on new build and no black swan events are forecast.

(2) Investing in new assets would be the bulk of any alternative investment plan. Of course they should invest at the margin on enhancements, along with empowering

(3) and (4) I do not mind that the company may become a little smaller, it is my share price that I am interested in. And I can guarantee you buybacks are accretive at this level. Should the share price increase to 80p plus then more capex projects may return more. So my points are based on capital allocation now. Indeed the BoD are using the IRR on buybacks at the current price as the hurdle rates for new investments.

More importantly, the NAV update today was really pleasing. If it carries on like this I will balance a little more to UKW.

TF

BPM

Am afraid you're confusing your metrics on the buy back and your analysis is wrong.

You cannot benchmark a return of the £13m buyback (absolute) against a £0.3p NAV uplift (absolute divided by share count).

The fact is each buyback is retiring a yield of 11% and crystallizing c 30% discount to NAV as an exceptional profit to remaining shareholders. The cost is a c 5% increase in tax deductible debt interest. This return is a no brainer and will be in excess of virtually all other investment opportunities except repowering - whose opportunities are limited by number.

Why currently invest in new assets when the market only values them at 70% of cost?..

I would want to selectively dispose of assets at par, continue to buy back shares at a discount and gradually watch the share price rise. The reduced share count allows the dividend per share to increase too.

The real winners are shareholders buying in recently. The losers are shareholders who have lost faith and crystallized their loss. I am yielding over 11% and will keep these for the long term.

TF

Hi Trek

I bought back into UKW today having taken my 6% on TRIG purchases in the week. I am still in TRIG 3:1 on UKW but believe the TRIG advantage of a higher yield and European exposure has diminished as (1) both share prices have moved making UKW more attractive (2) the UK govt has now made 3 announcements on renewable energy policy - they know we need to build more and there is a limit to discourage capital so I am hoping they've shot their bolt..

UKW has an edge over TRIG with more wind assets and therefore more upside on windspeed recoveries. Am hoping that may surprise to the upside at Monday's NAV update - we will see....

Separately I have bought more ENOG today as I think it's underpriced.

Hope everyone is enjoying this sunshine and has a relaxing weekend.

TF

Ps, sorry to see my team (West Brom) suffer a 2 points deduction today for Financial Irregularity.. The Football League should branch out into Investment Trust governance..

Trek

Just posted similar on UKW board. This looks set to advance.

TF

Folks

This is an extract from the TRIG rns on the windfall tax changes today. Exactly as per my observations on my prior thread, ie no issue:

"An increase in the Electricity Generator Levy ("EGL") tax rate from 45% to 55% from 1 July 2026 with the threshold level at which the tax applies remaining unchanged. The power price forecast used by TRIG in the portfolio valuation as at 31 December 2025 was below the threshold level in all future periods. This is expected to remain the case in the Q1 2026 NAV update. Therefore, no NAV or dividend cover impact results from this change."

They will also go in for the new cfds which is telling me it will be earnings accretive. As I have said before I don't buy the reduced power prices in the nav forecasts.

TF

Hi Trek

I topped up another load of TRIG at 64.3p yesterday so quite pleased about that.

Seit is getting interesting with both Jeffries and Saba topping up today, and now have 24% between them..

I haven't bought more SEIT as am forecasting a 30% dividend cut following the earnings dilutive disposal. TRIG gave me an 11.7% yield yesterday so I will keep them until the share price bumps up more. Surprised you're not in ENOG Trek..

Will look to ride the L&G share again once they drop back. Thinking about another go at Taylor Wimpey too as their strategic land bank is benefiting from the improved planning environment.

Still forecasting 60p for Seit before the end of the year so remain largely positive. Am loving all the TR1s as each one brings us closer to crystallising value.

TF

TF

Hi Trek

If this is Gemini Google's AI product then I am not out of a job just yet..

The cost of capital 'trap' point is garbage. ITs have historically used share issues to get some scale but you do not ordinarily need them to run your business. How many FTSE 100 companies are using rights issues to fund ORGANIC growth? None. How many FTSE 100 companies are constantly retiring equity to boost EPS? Loads. IMs love capital raises as it increases aggregate NAV, not NAV per share, and guess what? Yes they charge more in fees.

TRIG and UKW have excellent revenue visibility and a pile of free cash flow coming back in the next 5 years. With a 25-35% discount to NAV guess where does that cash will go? Whilst the IMs (especially UKW) will be desperate to grow the business, it will go on buy backs as you cannot build for the same IRR returns when you peak outflow in the construction typically comes in year 6 [solar is quicker]. With buybacks at these prices you get an 11% return each year and you'll have returned a colossal sum before you even get to your first electricity sale by year 6 when you look at your construction business case. The ability to fund large buybacks at this discount to NAV is hugely accretive for existing holders. Yes the absolute business will shrink but I will have a disproportionately larger share of the pie.

As per my previous posts, we don't need to worry about windfall taxes unless they're retrospective.

ITs will still invest some funds in repowering, as this is disproportionately cheap and quick as the infrastructure and connections are in place. ITs should talk about how many leases they have that they have the right to extend - as distinct to having to negotiate when a savvy landowner could do the development themselves, and their negotiating power reduces as the clock runs down. The other easy win is co located batteries to the extent to which they can sweat the connections.

What the above means is that barely any of these investment trusts will be building new energy infrastructure as the financial engineering returns are too great. What does that mean for prices - well guess what, reduced supply means price accretion. Is that in the NAV with these forecasters? No.

TF

I am not worried about decoupling electricity prices from gas - as this current/historic increment is phased out in forecast prices and therefore nav, as gas increasingly does not set the marginal price. It is these declining prices that free cash flow and dividend forecasts are based on.

The Nesf NAV is based on prices dropping to £60 pmh from 26/27, this is shown in their last quarterly rns where they detail the proportion of future income that is fixed.

My points are (1) These future prices never anticipated a future energy 'event' like we have now (2)They don't assume delays in nuclear new build (3) They don't price in reduced inclination to build renewables given the increased risks that the government are imparting. As a business you price for risk, so new renewable costs are rocketing with the govt changes in the playing field. Any sensible business would divert all cash to buy backs.

Therefore (1) I believe this chatter is for a risk against a benefit that isn't yet in the forecasts (2) The lowly prices that are in the forecasts are undercooked.

As an investor I relish scenerios like this. As Buffet said, "Be fearful when others are being greedy, and be greedy when others are being fearful"..

TF

The article talks about a 45% tax above £75 per Megawatt hour - and the paper speculates the concern that prices may rise above that.

However, the NAV for most trusts are based on future prices dropping to £60 pmh. None of the trusts have uplifted NAV for higher electricity prices yet - whilst most are fixed going forward under PPAs at around this £60 level.

This can only be a real risk if it is retrospective. As I have said on other boards, I prefer TRIG due to its European assets and less exposure to Labour and then Reform.

Upshot is, a genuine windfall tax is not unreasonable as why should shareholders profit from a war? My point here is none of the Trusts have benefited yet from this gulf crisis.

TF

There are some points I'd like answering from the Board/Investment Manager when the annual results are out.

First, why is the IM fee a flat % of NAV/market cap rather than a fee that is tailored to its constituent investments and the differential workload they drive? Ie, Onyx [one of the principle investments] is a completely separate and autonomous entity with its own funding and its own CEO, CFO, COO and 5 Senior Vice Presidents. Management of this business has to be light touch as compared to a business when the IM is sourcing, obtaining planning, developing, operating, maintaining and selling the output of renewable assets itself. Therefore, is the IM fee greater than it may need to be?

Second, what are the diseconomies of scale that have arisen from the recent sale of the asset portfolio? Nothing has been mentioned but there must be a cost - so how much is it and who is suffering it. I suspect the answer is shareholders.

Third, will the Board look into the performance of the IM in how the RCF was maxed out - and how a forced sale was then required below NAV? If there are performance issues will there be a remedy for shareholders? Again this is currently a shareholder cost.

TF

Topped up at around 65p today. This is a bargain and I continue to value it higher than UKW given 41% of its operations are outside the UK.

It's encouraging that their NAV had already priced in most of the Carbon haircut. UKW were less prudent given their bigger NAV write down, even allowing for the larger UK business. Having said that about UKW, I did top up a few today for some balance.

As a final thought, TRIG have the firepower to take out one of the tiddler investment trusts and shred their IM fee and add more scale - so there is upside to play out as the sector consolidates.

Good luck all

TF

I have topped up today as I think the value from the reduced security threat is materially in excess of the downside from reduced pricing - which their caps and collars mitigate anyway.

This share price is a real outlier with the rest of the sector and I can see that Phoenix Financial topped up by 0.5% to 10.4% today.

It's a buy from me and I'd expect this to return to £9 soon as it constantly yoyos up and down..

TF

Morning Trek

Have got back into UKW today 3 days after shifting the lot at north of £1.06. Annoyingly it's not in my ISA pot so it makes for a nightmare CGT calc - though 24% CGT is an easier pill than 39.35% tax on the divis.

A benefit for TRIG is that, for once, we have a company targeting a big buy back at the right share price. £0.5m a day eating the 35% discount to NAV is easy profit whilst extinguishing the 11% dividend going forwards. UKW should follow suit but their IM isn't so warm - well it reduces aggregate NAV and their fee.. I am only interested in NAV per share.

Anyway back to SEIT.. I would buy more but I want to wait for the news flow first as the next update will be substantive. I've learnt that I'd rather buy after results and have less upside. Am interested in their comments about the marketability of their portfolio. I won't have sympathy here as if you can't shift them in the middle of an energy crisis when can you? ..

I also want to know about the conversations with General Atlantic as a cornerstone investor. What terms were they prepared to invest on? The IM has a potential conflict here as it will want to sell as a going concern and charge its recurring fee in a new world with private investors. The board have got a difficult job appraising the merits of alternative scenarios when they are (1) non execs so don't work full time (2) get the vast majority of their standing information from the IM.

This will be fascinating...

TF

Have also been nibbling at Impax as their cash balance is now a disproportionate % of the market cap and they are ripe for consolidation - whilst the price doesn't reflect the value in their environmental energy asset approach given the current crisis.

TRIG is my

Hi Trek

Am not saying Onyx won't deliver decent returns, it's just they haven't so far...

I believe there's a decent return with SEIT and have a large position. It's annoying that this will now be a capital play as I'd rather have taken the yield had they not over extended themselves.

I've had two good slugs of UKW recently and would ordinarily hold - however we are in volatile times so I'll always take 5% in a month and recycle elsewhere. Have just invested a decent amount in ENOG as that's a belter for a quick buck with a great yield. I do want to get back in to UKW so will wait for a bit more of a fall. I may switch a few back from TRIG and take profits from buying at under 65p yesterday.

It feels like SEIT has momentum with the increased major shareholdings. Am also curious as to why they haven't released their year end update yet - is there other newsflow pending?

TF

The delay in production has elongated the project and so extended and increased the overheads - and deferred and held the revenue. The hit is in this financial financial year as we retain a year of overhead but only have 10 and half months of revenue. That puts strain on net debt now and means the dividend will not be covered this year. As this is a long term business with contracted revenue certainty - and with that revenue now benefiting from better pricing - I hope the board maintain hold the dividend by taking a long term view.

The big picture here is an excess concentration risk in a politically hot geography. If they have any sense they will mitigate this by further geographically disperse acquisitions.

TF