|Large jump in discount to NAV today. Now at 10% the highest discount for some time. Not only does CRS own 15% ordinary shares in HUR but they also have 23m warrants valued at 6p/warrant to be converted within 3 years. Significant upside IMO with good downside protection due to those warrants.|
|After recent advances by Hurricane Energy (HUR) share price, nearly 30% of CRS net asset value is represented by HUR shares. Since that report, last week it was announced that CRS will be subscribing many millions for the latest placing in HUR. Plus CRS hold warrants in HUR to subscribe for over 23M shares at 20p (currently 40p a share in the market).The managers must be having split loyalties between running their big winner and derisking the percentage holding as a proportion of overall net assets!|
|Good tip by ST|
|"I feel investors are grossly underestimating the upside potential in Aim-traded investment company Crystal Amber (CRS: 148p)."
Just been tipped by Simon Thompson.
|Perfect holding share judging by the charts here.Anything that moves gracefully from the lower left to the upper right is a hold, and buy on dips.|
|Nice move today.|
|lol on sainsbury idea.|
|I C article;
ning small-cap profits
Shares in Aim-traded investment company Crystal Amber (CRS: 142p), one of my winners from last year when the price surged 56 per cent on my buy-in price ('Small-caps to buy now', 3 December 2012), have drifted modestly since the spring. When I updated my advice at the end of the year the price was 154p and I recommended running profits on the basis that more than half of the company’s investment portfolio was held in 10 companies, the majority of which I saw clear value in. That gave me enough confidence to believe that the shares would continue to track upwards with the market and offer scope to maintain their outperformance.
In the event, Crystal Amber’s share price peaked out at 157p at the end of the first quarter, in line with the company’s net asset value at the start of the year. Small cap indices have been struggling to make headway this year, so given its weighting to this segment of the market Crystal Amber has not surprisingly put in a more subdued investment performance too. The company’s latest net asset value is 156.3p, down from 160.8p at the end of June and unchanged from the start of the year. Currently priced on a bid offer spread of 141p to 142.5p, the shares are rated around 8.8 per cent below end of July book value.
I would expect that discount to narrow in the event of an autumn stock market rally and one I have already gone on record as stating is likely (‘Simon Thompson’s market outlook’, 11 August 2014). In that scenario, I would also anticipate an improvement in sentiment towards the perceived higher risk small cap segment. There is scope for enhancing book value through an ongoing share buy-back programme too.
For instance, in the second quarter this year Crystal Amber bought back 1.44m shares at an average price of 149.09p as part of its previously announced buyback policy. It was smart business because a couple of months ago 1.15m of these shares were sold at a price of 158p per share, which equated approximately to the net asset value of the company at the time, in consideration for the acquisition of 5.7m shares in NBNK Investments (NBNK: 45p), representing 10.6 per cent of that company’s issued share capital.
In 2011, NBNK competed against the Co-op to acquire 631 Lloyds TSB and Cheltenham & Gloucester branches, in earlier rounds. However, when the Co-op failed to complete, Lloyds went ahead with plans to float the business, culminating in the recent IPO. Since failing to buy the branches, or find another banking business to acquire, NBNK's operations have been scaled back and costs reduced to a minimum. As a result, the shares had fallen out of favour, so much so that over the second quarter this year, Crystal Amber increased its stake in NBNK to 25.11 per cent, having acquired its holding at 15 per cent below the value of NBNK's reported net cash.
It was an opportune purchase and a low risk one too: NBNK's share price increased by 43.8 per cent between April and June this year, fully justifying Crystal Amber’s investment. The investment accounts for 8.3p a share of Crystal Amber’s net asset value of 156.3p.
Crystal Amber's portfolio at 31 July 2014
Top 10 holdings
Pence per share
Percentage of investee equity held
Leaf Clean Energy
Total of ten largest holdings
Cash and accruals
Investments with potential
Of the other investments Crystal Amber holds, I am keen on prospects for both Aim-traded property company and marina operator Sutton Harbour (SUH: 31.5p), a company I updated my view on last month (‘Set fair for gains’, 10 July 2014); and also Aim-traded packaging materials group API (API: 73p), a leading manufacturer and distributor of foils, films and laminates used to enhance the visual appeal of products and packaging. I updated my advice on API last month too (‘Packaged for gains’, 15 July 2014). Sutton Harbour accounts for 11.2p a share of Crystal Amber’s book value and API a further 8.1p a share.
I also see upside in the Aim-traded high-yielding shares of Juridica (JIL: 134p), a company that provides funding for civil corporate litigation in cases where the plaintiff has a strong case but lacks the finances or time to proceed. Crystal Amber owns a 4.5 per cent shareholding in the company to account for 8.7p a share of its net asset value.
There is recovery potential in the shares of chocolate maker Thorntons (THT: 108.5p) if the company can deliver the 30 per cent EPS growth analysts predict in the current fiscal year to end June 2015. On this basis, the PE ratio drops from around 13 to 10. Thorntons is one of Crystal Amber’s top 10 holdings, accounting for 10.1p a share of its net asset value of 156.3p.
Another core holding is Tribal (TRB: 174p), a company providing schools and universities with student management systems, inspections and surveys. The shares are rated on a modest 13 times earnings estimates and are a live IC buy tip. Crystal Amber owns 4.6 per cent of the company’s share capital and this accounts for 9.3p a share of its own net asset value.
Keeping an open mind
I do have reservations on some of the other top investments though and I am keeping an open mind on Crystal Amber’s largest holding, AER Lingus (AER: €1.35), the Irish flag carrier whose trading has been negatively affected by the threat of strike action by cabin crew. True, a resolution to labour issues, and clarity surrounding pressure on Ryanair to dispose of its 29.8 per cent stake, could provide the catalyst for realising shareholder value especially as the company retains €585m of net cash on its balance sheet, or the equivalent of 80 per cent of its market capitalisation is €731m. However, given the uncertainty caused by the labour dispute, the board’s current guidance is that operating profit will be 10 to 20 per cent below last year when the company reported adjusted profit of €61m. AER Lingus accounts for 14.3p a share of Crystal Amber’s net asset value.
I am also keeping an open mind on the company’s 15.9 per cent shareholding in Aim-traded investment company Leaf Clean Energy (LEAF: 40p). This stake accounts for 9.9p a share of Crystal Amber’s book value per share. Interestingly, Leaf Clean Energy’s board has just announced that it will pursue a strategy to realise value from its portfolio of investments and return capital to shareholders. If successful, and there is significant execution risk here, then you would expect Leaf Clean Energy’s share price discount to book value to narrow significantly in time given that net asset value is more than double its current share price.
Six weeks ago Crystal Amber increased its holding in Leaf Clean Energy from 10.3 per cent to 15.9 per cent, acquiring over 7m shares at around 30p. Crystal Amber initial acquisition of 11.612m shares in Leaf Clean Energy in October last year valued each share at 46.5p, so I reckon the carrying value of the stake is around the current share price, or well under half Leaf Clean Energy’s net asset value of 85p a share.
Importantly, the team managing these interests are ready to bank profits where they believe maximum value has been realised. That’s always a good sign. Positions exited in the second quarter included newspaper and magazine distributor Connect (CNCT: 154p) and shower supplier Norcros (NXR: 18.2p). Crystal Amber realised profits of £2.7m and £3.9m, respectively, not insignificant for a company with a market capitalisation of £111m.
So having assessed the merits of each company in Crystal Amber’s current portfolio, on balance I can see further upside potential in its portfolio which is now 98 per cent invested in equities. Therefore, if you followed my advice to buy Crystal Amber shares I would continue to run your profits.|
|not entirely suprised this has derated to more in line with its peers. i suspect it will keep derating as they appear not to have had a activist related win for some time..|
|LEAF's share price has halved in 7 years.
CRS has only been going for 6 years and is up nearly 60% and pays dividends.
I think if CRS does pay a performance fee its all in shares. I see the CEO of LEAF has taken CASH bonuses of $700k in the last two years- nice darts!|
|given CRS has underperformed since it launched (the current 5 year NAV performance is c.+72% vs +265% for the ftse small cap ex investment trust index and 143% for the All share - staggering), and a £1.9m performance fee is accrued in the interims just released (leaving total expense ratio for this year looking like an excessive c.4% of NAV), not sure they are in the strongest moral position to call an EGM at Leaf, despite what appears to be a number of corporate governance issues at Leaf.|
|...and a fascinating tussle with the LEAF BOD about remuneration costs, the wide discount to NAV, and the desire of CRS to run off LEAF and return the procedes to shareholders:
|Interesting to see that CRS now has a small holding in AER Lingus. I'm not sure what the rationale is for this - I wouldn't have thought the holding was large enough to support any activist involvement, so maybe they just see the company as undervalued, and/or picked up a few shares on the cheap from Ryanair...?|
|Cheers Dashton - I missed it due to Investegate service not picking up it's RNS|
|An interesting NAV update today, and a couple of names new to me (Plus500 and NBNK).|
|CRS has upped its stake in STV (I didn't even realise it had a stake!)
|Some CRS coverage in the latest Simon Thompson article, in which he advises running profits:
|the reason this was on a whacking great discount was he screwed up with jjb and most of the city did not want to know|
|CRS got mentioned in David Stevenson's Adventurous Investor page in the weekend FT, about halfway down.
"...at 147p I think Crystal Amber could be a great geared bet on the UK small-cap market by a respected manager keen to rebuild bridges with investors after the JJB affair".
It's only just over a year that the CRS share price was at a 24% discount to NAV, i'm not quite sure what the reason was there!! :-)|
|what i missed on the leaf deal, is that it was an asset swap with shareholers of leaf taking a stake in crs - deal done at nav and issued with shares out of treasury, so i suppose a good deal for us , albeit dependant on this leaf holding not being a complete dud - 50% discounts are there for a reason!|
|A top-up of LEAF by CRS, who now have just over 10% of the voting rights:
|That's quite some holding by Invesco...
|LEAF's share price is up modestly (low volume so far though) on this news. Might be worth a punt, on the assumption that CRS will be able to hammer it into shape and narrow the discount. I'd probably take a small position, if I had any spare cash knocking around.