|Ex capital 8p this morning. That's nice!|
|Is it possible for someone to let us know how much Bluehone have taken out of this company in aggregate fees since launch, and how this compares with the amount shareholders have gained/lost?|
|Not having looked at this company for some while, I was amazed to discover the following. Any prospective investor in the shares of this company MUST read this carefully...
"When the Company was launched in April 2001, the objective was to return to Ordinary Shareholders 99.9p per Ordinary Share plus an amount equal to 7.5 per cent. per annum compounded annually (based on an issue price of 100p per Ordinary Share from the Company's launch date to the date of payment) by
31 May 2007. Following Shareholders' approval in July 2006, the target date for such return was extended to 31 May 2012. When the target date for such return was extended, the Board gave a commitment to provide Ordinary Shareholders with an opportunity to vote on the Company's future at the annual general meeting in 2009 if certain performance objectives were not achieved as at 31 May 2009.
"Following the Company's [or should it be investment manager BLUEHONE'S] FAILURE to meet those performance objectives, the Board consulted with the largest Ordinary Shareholders and subsequently considered proposals for the Company's future which were received from several interested parties, including BLUEHONE. Having considered the feedback received from the Ordinary Shareholders consulted and the proposals received from the interested parties, the Board concluded that it is in the best interests of Ordinary Shareholders as a whole to convert the Company into a realisation fund and that this would be best undertaken by BLUEHONE." [my caps.]
For nearly five years I have posted warnings about the performance of this company and highlighted the generous rewards for investment management failure. With each crisis, it has become ever more incredible that, somehow, BLUEHONE not only survives but continues to do so on generous terms. Even now, their flair in negotiating their own position seems to me infinitely more successful than generating returns for shareholders.|
|Haven't been here for quite a while, so it's reassuring to see that things don't change...
Today manager Bill Brown announced another 7.5% of NAV destruction (so why did the share price drop by only 4.9%?).
Laxey Partners and the other arbs might be looking forward fondly to forcing a liquidation later this year to cash-in on the NAV, but at this rate there won't be much left by then.|
|"The Trust is managed with the aim of providing investors with medium to long-term capital growth."
... resulting in - providing investors with a 75% LOSS in the seven-and-a-half years since launch.
But the latest fund factsheet...
shows fund manager Bill Brown still grinning, despite the Trust's poor showing against the sector average. Why? Possibly the accumulated fees of around 9% of total assets over that period?|
|As at 30 September 2008, AIT's top holding was Cape at 8.6%.
Cape's share price has since dropped by two-thirds, due to debt worries.
Given their expertise in that area, you might reasonably have expected AIT to have avoided the shares.|
|It looks as though AIT has indeed remained fully geared throughout the downturn. TrustNet today shows that AIT has destroyed more Net Asset Value than any other investment trust (of the 268 listed with data available) over 5-years (-54%), 3-years (-59.3%), and 1-year (-68.1%).
The stated objective of the trust is "to provide shareholders with medium to long term capital growth". However, NAV now is less than half the value at launch, seven years ago. The share price is at an all-time low. And, of course, there have been no dividends.
The management has failed before. It was given a second chance via the merger, and has now failed again. IMHO, if the board do not take immediate and positive action they could be regarded as negligent in their duty to shareholders.|
|Final results further delayed.|
|I came across something interesting today, on the AIC website: up-to-date data for AIT that shows gearing has reached 150. This looks like the level at which the managers have to take action to comply with the financial covenants of their loans. Total borrowings must not exceed 50% of NAV. If true, it could mean trouble ahead.
Remember that this is the team that decided, when running Aim Trust, to increase borrowing during year 2000, at the top of the last bull market. For the next two years, they kept gearing high as the market collapsed. They were up against their loan covenants so badly that by 2003 they needed to sell shares and hold more than 20% of assets in Gilts.
The solution was to merge Aim Trust with the ungeared 3PC trust, change the name, and forget about everything before 2003. Poor old investors in Aim Trust who bought at launch in 1996 (if there are still any left!) are today seeing no share price return and no dividend return over all that time. They must be hoping that history isn't about to repeat itself.|
|Review of Company website today.
Monthly Factsheet: Dated October 2007, for September 2007
Annual Report: Dated July 2006
IMHO another illustration of the lack of concern for shareholders.|
|This trust's aims are given as...
"To provide shareholders with medium to long term capital growth..."
By my reckoning, since launch in May 2001, shareholders are currently seeing a share price return of approximately...zero. And there are no dividends. In real terms they have lost money.
For this performance, the investment management fees over the past three years alone have cost shareholders more than £6m on net assets of under £100m.
It makes you wonder for whose benefit this trust is being run.|
Sorry, haven't been here for a while.
Those are AIT's own numbers from their published factsheets:
There the benchmark is stated as "AIC UK Smaller Companies"
On Trustnet it is given as "Lipper - UK Sm Companies SA"
As many of their invetments are on the AIM market it is not clear to me why they do not use an AIM index benchmark.
Meanwhile the NAV and share price have been romping away. I see that on 23 February, near their peak, the Board announced that the Company purchased for cancellation 350,000 ordinary shares of 0.1p at a price of 145.50p per share.
They could buy some today at 135p.|
|Foster, what sector are you comparing AIT's performance with?|
|From December 2006 factsheet:
Average annual return figure since inception 4.30%
Cumulative performance to 30 Nov 2006
For 1 Month, 1 year, 3 Years, 5 Years
Fund -1.7%, 3.7%, 36.6%, 23.4%
Sector 0.9%, 24.9%, 88.2%, 72.6%|
|From November 2006 factsheet:
Average annual return figure since inception... 5.21%
Cumulative performance figures...
1 Month Year to date 1 year 3 Years Since Inception
AIT 3.2% 6.4% 14.2% 36.2% 28.9%
Sector 4.7% 17.8% 28.3% 77.0% 71.6%
Source: Datastream & Lipper, percentage growth, bid to bid, net income reinvested to 31.10.2006.|
|Manager's Comment on monthly Factsheet, September 2006:
"No commentary available this month."
Manager's Comment on monthly Factsheet, October 2006:
"No commentary available this month."
Share price cumulative performance:
Factsheet still shows underperformance relative to sector over every stated period:- 1 month, 1 year, 3 years, and since inception.|
|The Manager's Comment in last month's Trust Factsheet, July 2006, was a market commentary only, and included nothing whatsoever about the activities of the Trust itself. In this month's, August 2006, it is the same. In fact it is word-for-word the same.
F&C and the board of directors should demand from its fund management company some comment every month about the performance of the Trust itelf. This month it might include, for example, some insight into...
o why the level of gearing is shown to have increased to 140.3, for a trust that F&C rates as being of only average risk.
o why the share price is shown to have underperformed relative to its sector over every stated period:- 1 month, 1 year, 3 years, and since inception.|
|The Trust was due to repay its £30m loan on 19 June 2006. By the end of April the fund had liquidated about £25.8m. The manager then commented "Active Capital has taken the opportunity of a buoyant market to commence the consolidation and realisation phase for the Trust. The manager remains focused on ... realising cash from the investments". By the end of May, the fund had liquidated about £33.5m.
The timing of this enforced elimination of gearing seems fortuitous. Since the end of April the Trust's NAV has fallen by an estimated 18%. Had it been fully invested this could have been more like 22%.
If I were the manager, I would be concerned about three things. Firstly, achieving the hurdle rate for my incentive bonus due next year is starting to look doubtful. Secondly, if assets were to be returned to shareholders next year I could be out of a job. And thirdly, meanwhile, my fees, based on £30m less in assets invested, will drop by £375000.
It looks like a lot of thought and effort has gone into the recently proposed scheme to extend the life of the Trust, extend the loan facilities, and redefine the manager's incentives. Happily this appears to overcome all of the above problems.
But what about the performance of the Trust? One can only conjecture why the Trust's latest fact sheet on the F&C website has "No [Manager's] commentary available this month".
(all my estimates only ...DYOR!)|
|Those boys over at www.fairshare.biz seem to be in the know as usual|
|How can a board of directors think it acceptable that on the day of publication of their January 2006 Interim Report, the download on the website is the Interim Report for the period ending 30 November 2003 - two years out of date?|
|Highlights of 2005...
Active Capital NAV Performance for the year 2005 :- up 2%
Investment management fees (Annual Report 2005):- £2,138,000|
|Sold yesterday, no reason to believe things are going to get better. Thoroughly disappointed but that's life.|