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Post by Fletchsmile on Mar 14, 2019 10:55:10 GMT 7
As I mentioned a couple of posts back, the risk management function seems to have made some very basic mistakes. So agree with the article's comments:
The price at which the transfer was done (NAV vs share price) is unfortunately one of the negative quirk issues that comes along with investment trusts. It's just another example of how I dislike IT's structure in terms of discount/premiums, corporate actions and how they complicate life. Had it been a unit trust, the pricing at least would have been much simpler and done at NAV. Very clear.
But because WPC is an IT and WEI a unit trust: If done at NAV of then WPC shareholders are OK but WEI unit holders may be unhappy. Done at share price (of WPC) then WEI unit holders are unhappy and WPC OK (with the price at least)
I wasn't particularly bothered about that though, as the impact on 4.7 billion pounds of the premium is a small drop in the ocean. A question I was more interested in, was what was the value of the unquoted investments in the first place, how where they determined, and what controld were in place around that?
As it stands though, I see the numbers as small to try and get things back on track. Woodford should also stop investing in unquoted companies in the unit trust.
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The author of the article, "Secret CEO" seems to write articles for them from time to time / every few months.
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Post by rgs2001uk on Mar 14, 2019 20:50:21 GMT 7
Fletch puts his money where his mouth is and buys Bolton Wanderers, Nah, Preston North End FC is where it's at. Go Lillywhites, go. Theres a lot of truth in what you say, I have 3 different providers in the house, I prefer to watch the Championship these days, way better that the greed is good premier league, twats like sanchez on 400k per week, the sport of the working man my ass.
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AyG
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Post by AyG on Mar 14, 2019 21:50:02 GMT 7
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Post by Fletchsmile on Mar 15, 2019 14:02:10 GMT 7
The more I see, the more I think the problems are related to the set up and infrastructure at Woodford. At Invesco/ Perpetual he was a great quality fund manager in a solid fund management house. Invesco has in place governance, organisation, structure, risk, PR, management etc etc and his role was as fund manager. A key part of the equation, and perhaps the most important part, but the structure around him plays a role.
Now he seems to wear perhaps too many hats, and the organisational structure around him at Woodford seems weak in comparison to Invesco.
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AyG
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Post by AyG on Mar 17, 2019 17:36:33 GMT 7
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Post by Fletchsmile on Mar 18, 2019 17:02:12 GMT 7
Will be interesting what happens if/when something gets agreed on Brexit. UK div yields do look attractive barring disasters. Doesn't seem so long back people were worried about markets chasing yield. Doesn't look like UK yield has been chased ============================================================================== Beleaguered Barnett hails dividends at their cheapest in a centuryInvesco’s Mark Barnett is sticking with some of the UK's most unloved stocks that have cost the manager during a difficult run of performance, predicting they will benefit from a return to more ‘rational pricing’. .... citywire.co.uk/wealth-manager/news/beleaguered-barnett-hails-dividends-at-their-cheapest-in-a-century/a1210644?ref=wealth_manager_all_stories_list
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Post by Fletchsmile on Mar 25, 2019 18:58:04 GMT 7
Shame that Brexit got delayed. That could likely be a key event for whether I continue holding Woodford or not, as it could be a game changer. Either way I think this year has potential to shake things up in the UK performance tables. Woodford is coming up for 5 years. Would be nice to have a 5 years that included a "Brexit cycle" to see - at the moment we're just part way thru bigmango.boards.net/thread/14861/uk-dividends-cake-eat
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Post by Fletchsmile on Apr 3, 2019 16:18:48 GMT 7
Just over 3 months in to 2019, as at 3 Apr LF Woodford Income is 344/346 funds in UK All Share and UK Equity Income +0.8% LF Woodford Income Focus is fairing a little better +5.3% Median 173 place has returned +11%. First place is +15.1% So not exactly inspiring and not much sign of a turn around LF Woodford Income was launched on 19 June 2014, so 5 years isn't far away
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88
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making a list, checking it twice
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Post by 88 on Apr 4, 2019 6:39:05 GMT 7
How are some investment trusts trading at a huge premium to their NAV? I see one Lindsell Train trust has a premium of over 50%. Is this for real? If this is the case, is it not wiser to just buy shares in the same companies as the trust - with a similar weighting? Or am I confused about this premium to NAV? Conversely I see some trading at a discount to NAV which looks more tempting for the uninformed investor (me).
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AyG
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Post by AyG on Apr 4, 2019 8:28:12 GMT 7
How are some investment trusts trading at a huge premium to their NAV? I see one Lindsell Train trust has a premium of over 50%. Is this for real? If this is the case, is it not wiser to just buy shares in the same companies as the trust - with a similar weighting? Or am I confused about this premium to NAV? Conversely I see some trading at a discount to NAV which looks more tempting for the uninformed investor (me). The Lindsell Train trust is unusual in that it invests almost half the company in the Lindsell Train Limited company. You can not buy shares in this company directly, so this is the only way for the public to access it. Investors probably think that the company is undervalued and/or has amazing prospects, hence the willingness to pay so much for it. It's very much an exception. Other ITs with a hefty premium tend to fall into one of two categories: venture capital or private equity. In both cases the underlying assets are opaquely valued, and some investors may think the true value may be substantially higher than the published value. Again, you can't buy the underlying assets yourself, so your wiser strategy again wouldn't work. Buying ITs at a discount can be a good strategy. The discount might close (you gain), and you get 100% of the dividends after buying the underlying stock at a discount (in other words, an enhanced yield). Note, however, that the discount might increase, which works against you. There is one fund that specifically buys ITs which the fund manager thinks are at a discount which will close. Can't remember its name offhand. That said, I'd never buy an IT simply because the discount looked attractive. Fundamental performance and quality fund management is far more important. One IT which I have bought fairly recently and which is at a hefty discount of ~18% is Caledonia Investments [CLDN]. This trust is run for the benefit of the obscenely wealthy Cayzer family and is designed the preserve wealth across generations. The family has no incentive to decrease the discount. But there again, it's unlikely to get much wider in the long run. In this case, for me, the level of discount was neither a plus nor a minus.
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Post by Fletchsmile on Apr 4, 2019 13:54:51 GMT 7
On Lindsell Train: AYG is spot on with Lindsell Train Trust. It's unusual and an exception for the reasons he highlights. Its by far the best-performing fund in the IT global sector when you look at 5 years, 10 years etc. I tend to exclude it in a lot of comparisons as it's really not apples to apples. I've been a fan of Lindsell Train for years - slightly concerned at the rate their popularity has picked up in recent years - and it's a quality fund management group which is well focused on their own areas of expertise rather than trying to have funds in all sectors all over the place. Of their funds: - I hold their UK unit trust and the investment trust equivalent FGT (Finsbury Growth Trust, from Frostrow Capital, managed by Nick Train) both run along similar lines with similar performance - I hold their Global Equity unit trust. When I first started looking for the IT equivalent like the UT, I came across Lindsell Train IT which is also global. When you analyse it though, the two are very different, unlike the UK counterparts. The investment in itself/ own private management company is attractive to gain access to the Fund Management Group, which being a private company you couldn't otherwise do. However, the premium is just so far out of whack with NAV, and it really is difficult to assess what an appropriate NAV would be, there's just too much uncertainty. Up to say a 10% premium, I would have make an exception for and gone for it. It's way above that at close to 70%. The premium seems to be still growing though, so who knows how far it can go With hindsight not having invested in the investment trust feels like having missed out. Thing is though, while I struggled with the premium and uncertainty a few years back. The premium is more than ever now, and the uncertainty hasn't gone away. www.trustnet.com/factsheets/t/lb04/lindsell-train-it-plc- Lindsell Train Japanese equity UT is also worth a look. Japan is a market the fund manager has worked and has a good understadning of. I like this about LT the way they focus on what they know and understand. For their global fund it is invested in 4 main countries (UK,US, Netherlands and Japan) where they have expertise instead of going for all global markets In the past I've looked at LT Japan, but as I hold another Japan specific fund already (Shroder Tokyo), and as I already have some of LT's Japan expertise via the Global equity fund I've passed. Schroder Tokyo's performance has dropped off a little in recent years - although still beats the index - and as the fund manager is departing I will like move out of it. LT Japan is one of the possible replacements So LT are basically are involved in: Unit Trusts: Global, UK, Japan Investment Trusts: Global (but very unusual), UK
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Post by Fletchsmile on Apr 4, 2019 14:22:50 GMT 7
On investment trust discounts: They are one of the most annoying things to me about ITs. Though they can bring opportunities as well They make assessing ITs more complicated than UTs, and someone really needs to understand this aspect. It's why ITs are often touted as best left to more experienced investors They also tend to magnify performance on the upside and downside.: - Generally in good times where markets are doing well discounts narrow and even move to a premium as share price increases at a faster rate than NAV, with demand ahead of supply = a double win. - On the downside though in bear markets the losses can get accentuated. Demand falls off, Share price falls faster than NAV, premiums decrease or move to discounts, discounts widen = a double whammy. This becomes a triple whammy as liquidity can dry up as no-one wants to buy, and bid-offer spreads widen So some thought needs to be given to where we are in investment cycles, where the IT is in its own trend etc. You can see the opportunity if you get it right, but the risks if you don't. As a general rule. Don't look just at whether there is a discount or premium. More ITs trade at discounts than premiums and this has been the case historically. If you think 2 to 3 ITs at a discount for every 1 at a premium (it varies at different points in time) you get an idea. So if anything the "norm" is for the "average" IT to trade at a discount. So if it is trading at a discount this doesn't really mean much at all, that's "normal" or "average". There are quite a few ITs with strange premiums and discounts, so you need to understand why. Unlike UTs just traded based on NAV Hence if you are looking at if a discount offers an opportunity. I would suggest the discount is quite normal and in itself doesn't necessarily represent an opportunity. Be aware on the income side if it trades at a discount you are getting div income say based on 100 but paying only say 90 for it if at a 10% discount. But by the same token charges are based on NAV not share price, so if you buy at 90 you are paying charges on a NAV of 100 Rather than just discount or premium. Have a look at the historical averages for an individual IT's discount or premium. Each has it's own long term average. There is by no means any guarantee it will revert to that average, but it at least gives an idea of where it is now compared to its own history. This helps assess a little better whether an opportunity or not, i.e what has been its norm in the past. There are some massive premiums at one end of the scale like LT. There are some massive discounts at the other. No way should anyone buy on these alone. They are just factors/complications to be understood as to why before buying/selling.
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Post by Fletchsmile on Apr 4, 2019 14:41:47 GMT 7
How are some investment trusts trading at a huge premium to their NAV? I see one Lindsell Train trust has a premium of over 50%. Is this for real? If this is the case, is it not wiser to just buy shares in the same companies as the trust - with a similar weighting? Or am I confused about this premium to NAV? Conversely I see some trading at a discount to NAV which looks more tempting for the uninformed investor (me). BTW. Yes you're theory is sound. Just LT is an exception and among other things you can't buy the same companies
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Post by rgs2001uk on Apr 4, 2019 20:54:32 GMT 7
How are some investment trusts trading at a huge premium to their NAV? I see one Lindsell Train trust has a premium of over 50%. Is this for real? If this is the case, is it not wiser to just buy shares in the same companies as the trust - with a similar weighting? Or am I confused about this premium to NAV? Conversely I see some trading at a discount to NAV which looks more tempting for the uninformed investor (me). BTW. Yes you're theory is sound. Just LT is an exception and among other things you can't buy the same companies
Been there done that, tried that, over these last few years all the shares I cherry picked from the ITs have been sold and the money reinvested in ITs
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Post by Fletchsmile on Apr 5, 2019 15:15:47 GMT 7
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