Caledonia Investments Share Discussion Threads

[qs99] 11/4/2024 11:08

Unlikely as you say, but the squeeze should help the underlying share price by taking liquidity out IMO/DYOR

[jaf111] 08/4/2024 16:24

Maybe BUT the scope for buybacks actually seems very limited (see section in the RNS) unless they buy back from Cayzer family which is surely unlikely!

[qs99] 08/4/2024 15:57

Maybe just maybe the buybacks will start nudging this higher? DYOR

[coolen] 28/3/2024 23:33

Is there an irony here in that the sellers may be those institutions who have been vocal that the family board is not performing well enough, yet each share buyback purchase immediately increases the nav of those very shares they've just sold.

I agree that you could make the same argument in respect of all the present investment trust buy-backs but, in this case, buying back at such a huge discount will eventually have a material effect on nav and may leave the sellers a little red-faced, especially if they are so-called "professional" managers.

[jaf111] 28/3/2024 15:27

Well buyback programme confirmed…..it will be interesting to see how aggressive it is……
🤞 it has some success in reducing the discount 🤞

[riverman77] 25/3/2024 12:15

Yes hopefully start of a proper buyback - the discount is much wider than usual and the sell off over the last few months is comeptlely at odds with the rally in both private and public equity markets. They have 9% in cash so lots of firepower for a decent buyback.

[qs99] 25/3/2024 08:48

Hopefully the start of something a little more meaningful

[jaf111] 25/3/2024 08:26

10,444 shares bought back & will be cancelled…..a one off or the start of a buy back programme to try to reduce the huge discount the shares currently trade at?????

[riverman77] 13/3/2024 13:49

The fact is markets are not rational - for whatever reason there is currently a 38% discount on the shares, but if you drill down you realise this means the private assets are being valued on a 60% discount, which clearly makes no sense.

[lowtrawler] 13/3/2024 12:21

CousinIT, what you are effectively saying is that the investment company discount applies to cash as well as other asset classes. Hence, if cash is held at a 20% discount, you will get an improvement in share price simply using the cash at face value. Logically, if markets were efficient then no discount would apply to cash but as we know markets are not efficient, we can improve valuations simply by spending the cash.

[cousinit] 13/3/2024 11:52

Trawler - I'd normally agree, but there is almost certainly an investment company sector discount being layered on top.

So in you example, the private assets can probably be really sold for at least 80p/£ to obtain an accelerated exit, so through buying back shares that imply it's 50p is genuinely accretive in a world where the sector discount eventually unwinds

[lowtrawler] 13/3/2024 11:19

There is a danger that buybacks using low or zero discount to NAV assets (cash) to buyback shares that are heavily discounted to NAV does not change the overall situation

e.g. consider a trust with £100 cash and £100 of private equity assets. It trades at zero discount to cash and a 50% discount on the private equity assets - so has a market value of £150 and overall discount to NAV of 33%.
The company spends £50 buying back 1/3 of the shares, they then have £50 cash and £100 private equity assets with a market value of £100. The £50 spent has not altered the discount or changed the value of the shares.

The only way to improve shareholder value from buybacks is to use assets that are discounted to NAV for the buyback

eg, as per above except they monetise 50% of the private equity assets in order to buyback the same £50 of shares. They end up with £100 cash, £50 private equity assets and a market value of £125 which creates a higher share price and lower discount.

[cousinit] 13/3/2024 10:54

Riverman, I believe they have the firepower, but a bit like the position CGT were in they don't currently have the legal authority following the AGM. They would need to have another vote that the proxies wouldn't block to be able to start buybacks

[apparition1] 13/3/2024 10:39

With the Cayzer family still owning 48% of the almost £3 billion trust and an unbroken 55 year run of rising dividends I'm quite happy to stick with this as I feel they know what they are doing. I've noticed over the years that the price seems to spend quite long periods of time range bound and then suddenly spends 6 month steadily rising to a new area.
With unrealised capital gains and dividends over the last 3 years my returns amount to 8.3% p.a. which for a small diversification in my portfolio is quite satisfactory.

[riverman77] 13/3/2024 10:33

You're right, compared to the other PE funds CLDN seem to be making very little effort to tackle the discount, eg through buybacks. Hopefully they might announce something, but probably won't hold my breath. They have plenty of cash so certainly have the capability if they wanted to.

[cousinit] 13/3/2024 10:29

I'd just add, at current discounts I'd prioritise RCP over CLDN as they are buying back shares (admittedly, at a lower discount) but once there are some PE realisations I would expect the buyback to accelerate (so either would be accretive to NAV or start to close the discount)

[cousinit] 13/3/2024 10:25

I think at the recent AGM the approvals required to permit share buybacks were not passed, so the lack of life in the shares may be related to that. Most of the private equity funds which have had a bounce are, to greater or lesser degrees, buying back shares. Market seems to want a catalyst to buy currently, given the plethora of wide discounts available.

[riverman77] 13/3/2024 09:23

The direct private holdings all seem to be trading well, with the exception of Cooke Optics which was hit by the writers strike. This sounds like a one off, and in any case they cautiously marked the valuation down by 15%. AIR serv is trading ahead of expectations according to last update. The only one I'm not too keen on is the pubs business but this only accounts for around 5% of NAV.

[essentialinvestor] 13/3/2024 09:11

They also have private investments,
such as the air tyre business acquired last year, they own a small pubs business, etc.

Perhaps the market applying a hefty discount to those..?.

[riverman77] 13/3/2024 09:06

Most of the PE funds have rerated a bit recently, while CLDN has gone the other way, so starting to look interesting as a trading opportunity if nothing else. About a third is in public equities so CLDN normally trades on a tighter discount than a traditional PE fund. Also I think the argument that the market distrusts PE valuations is becoming less plausible given the recent strength in stock markets.

CLDN now on a 38% discount. If I apply a 10% discount for the public equities and a zero discount for the 9% cash position, the market is valuing the private holdings (the PE funds and the direct holdings) on a 60% discount. These all look pretty solid positions so looks to be significant value here.

[steve3sandal] 11/3/2024 16:50

There is apparently a good reason. Most of the assets are in PE and the market distrusts PE valuations at the moment. Well all the time but especially so at the moment. I do hold and I would top up lower. I had a £32 target but I’m not rushing in at the moment. There’s lots of evidence Caledonian know what they are doing in PE so I’m not concerned at all by the share price falling.

[stevegrass777] 11/3/2024 13:37

TBH no reason at all to not buy these shares, great company at a massive disco to nav for no good reason.

[chc15] 11/3/2024 09:17

Getting v close to my my buy trade going through, can't see any good reason for the recent price decline.

[skyship] 29/2/2024 11:23

IMO Fair Value at a 35.3% discount; but hardly cheap. QS99 seems to think the "yield is great" - bizarre or what! Yield a mere 2.01% - even less when he posted in December.

In the sector the highest yielder is the microcap MVI - Yield of 10.3% & Discount of 50.3%.

More routine would be APAX on a 7.3% yield and 31.8% discount.

PEY another good yielder at 6.9%; but discount just 25%

Highest discount from a major player is HVPE on 42%...but they are a stand-out - still no dividend as managers prefer to maximise their fees rather than reward shareholders!

[chc15] 29/2/2024 10:20

What's the view out here, still looks good value, but can't get going..