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DSM Downing Strategic Micro-cap Investment Trust Plc

59.00
0.00 (0.00%)
Last Updated: 08:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Downing Strategic Micro-cap Investment Trust Plc LSE:DSM London Ordinary Share GB00BF0SCX52 RED ORD GBP0.001
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.00% 59.00 0.00 08:00:00
Bid Price Offer Price High Price Low Price Open Price
58.00 60.00 59.00 59.00 59.00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Trust,ex Ed,religious,charty -1.69M -3.74M -0.0734 -8.04 30.03M
Last Trade Time Trade Type Trade Size Trade Price Currency
14:22:31 O 5,095 59.00 GBX

Downing Strategic Micro-... (DSM) Latest News

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Date Time Title Posts
26/3/202409:35Downing Strategic Micro-Cap Investment Trust plc465
07/9/200109:25DORSET SHARE MEET34

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Downing Strategic Micro-... (DSM) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
08:24:2159.005,0953,006.05O
08:24:2059.005,0953,006.05O
2024-03-27 16:35:1659.002414.16UT
2024-03-27 16:27:1759.5010.60O
2024-03-27 16:24:2858.0012,0006,960.00O

Downing Strategic Micro-... (DSM) Top Chat Posts

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Posted at 23/3/2024 11:24 by red ninja
As per the 20/3/24 Circular, 1st payout of 26p around 4th April :-

"The Board, therefore, anticipates that it will be able to undertake an issue and redemption of B shares on or around 4 April 2024 so as to return capital of approximately 26.0 pence per ordinary share to existing shareholders. This is significantly improved on the previous anticipated return of approximately £10 million in aggregate (representing approximately 21.5 pence per ordinary share), as set out in the Circular."

As they say :-

"The remainder of the portfolio comprises investments in companies where there is a clear path to greater value than that currently reflected in the Company's NAV. Some of DSM's investee companies are currently in strategic review or bid situations that are likely to realise value over coming months."

hopefully they will be able to deliver more than the current share price, Milkwood must believe that.
Posted at 15/2/2024 17:20 by red ninja
DSM January 24 factsheet :-



"January 2024 Commentary
In January, the Company’s NAV decreased by 1.7% versus the share price which declined by 2.1%. A formal notice has been sent to shareholders to vote on the return of capital strategy for the company and we would urge all shareholders to vote. At the time of writing, cash is over 30% of NAV and we remain confident, subject to completion of the offer for FireAngel, of returning 50% of NAV before the end of June."
Posted at 02/2/2024 20:39 by red ninja
Read the text and you will see they are promising for MID CASE the first repayments at NAV ie a 13.5% premium to current share price.

Now the MID CASE is usually the most likely, but that scenario implicitly allows a HIGH and a LOW CASE.

It is possible some share prices will rise and they will get more than the current price, but some are not so desirable and will quite possibly be sold at a discount.

The incentive plan rewards early sales, but they get more for the highest price obviously so how it well end up we'll have to wait and see.
Posted at 02/2/2024 15:57 by red ninja
Indicative returns for Shareholders and estimated timescales
In the absence of unforeseen circumstances and subject to the market conditions, the Board, in consultation with the Investment Manager, is currently estimating that the Managed Wind-Down could be completed within 2 years. Further, the Board believes, in consultation with the Investment Manager, that within the first six months of 2024 up to, or exceeding, 50 per cent. of the Company’s NAV could be returned to Shareholders in cash (assuming current bids for certain of the Company’s investments complete by then) with more value remaining in the NAV of the residual portfolio to be realised through the process of complete wind-down.

Specifically, the Board and Investment Manager estimate that, on a mid-case scenario, the Company will return:

on or around the end of the first quarter in 2024, 25 per cent. of Shareholders’ capital at NAV which, given the Company’s discount as at 31 January 2024 of 11.9 per cent., would be a 13.5 per cent. premium to the Current Share Price;
a further 25 per cent. of Shareholders’ capital at above NAV by 30 June 2024, which on current discounts and NAV would represent a greater than 13.5 per cent. premium to the Current Share Price; and
beyond 30 June 2024, a mid case scenario for the current market suggests a return above the current NAV and hence a significantly better than 13.5 per cent. premium to the Current Share Price. In order to keep up a timely rate of returns, the Board has constructed an incentive scheme for the Investment Manager (further details of which are set out below) to ensure that Shareholders receive their returns in a timely manner consistent with recovering value and rewarding appreciation above the current NAV.
Posted at 28/12/2023 08:18 by weatherman
28 December 2023

As announced by the Company on 9 November 2023, the board of directors of the Company (the "Board") has been considering the best means by which the Company can meet its commitment to return capital to shareholders and had concluded that it would advantage all shareholders equally if the Company were to commence a managed wind down of its investment portfolio. The Board has worked closely with the Investment Manager to determine an appropriate managed wind down strategy and is of the view that within the first six months of 2024 up to or exceeding 50% of the Company's current market value can be returned to shareholders in cash (current bids for investments assumed to complete by then) with more than the remaining portfolio market value still to be realised through the process of complete wind down.

The Board continues to consult with its advisors on the most tax efficient method of returning capital to shareholders pursuant to that wind down, whilst also remaining open to any alternative options for the future of the Company that merit consideration. Good progress is being made on the former, and the Board notes that bids for portfolio companies continue to be made at premiums to their share price.

The Board expects to update shareholders further by mid-January 2024."
Posted at 10/11/2023 11:06 by riverman77
Regarding investments that are already involved in corporate actions - yes OTM and FA have recently received bids at a premium but the share prices have already adjusted - eg OTM up 77% in last month. This would therefore already be reflected in the NAV of DSM, so not sure there would be much further upside on top of this.
I don't disagree there is good upside potential here, but just not convinced there aren't better opportunities out there right now given you might have a long wait and the extremely cheap valuations in UK small caps (so a lot opportunity cost tying your money up here).
Posted at 10/11/2023 09:00 by 888icb
The final part of the very detailed article and Buy recommendation:
“ Although Ramsdens continues to outperform analysts’ earnings expectations, prompting another round of upgrades post results last summer, the shares are only priced on a forward PE ratio of nine and offer an attractive prospective dividend yield of 4.9 per cent. A price-to-book value of 1.3 times is modest for a cash-rich company generating a post-tax return on equity of 17 per cent and one that is performing well during a cost-of-living crisis. Liberum’s target of 290p is more than a third higher than Ramsden’s current share price.

It’s worth noting, too, that DSM’s largest holding is a liquid £2.9mn (8.5 per cent of NAV) stake in cable manufacturer Volex (VLX:285p), a £511mn market capitalisation company. In other words, the investment trust’s cash. Proceeds from the two agreed takeovers and investments in the above five holdings account for 54 per cent of DSM’s NAV.



Scope for narrowing of share price discount to NAV
The point is that there should be scope for a narrowing of DSM’s share price discount to NAV as cash distributions are made. There is also the real possibility that other portfolio companies will succumb to takeovers or corporate events at share price premiums during DSM’s wind-down process given that their listed market valuations are well below the intrinsic value of the holdings.

Indeed, investment manager Judith MacKenzie has identified key catalysts within investee companies that point to an estimated intrinsic value of the portfolio, which if divestments are carefully managed, indicates an upside of at least 50 per cent to DSM’s current market capitalisation of £28mn (59p). True, a complete wind-down could take time given the nature of some of DSM’s investments and liquidity. However, this could work in shareholders' favour as small-caps have historically outperformed strongly after downturns.

The bottom line is that there is potential for capital returns to shareholders well above DSM’s current NAV of £34mn (71.5p), a factor not reflected in the 18 per cent share price discount to NAV. Buy.
Posted at 10/11/2023 08:57 by 888icb
More from the IC article where Simon Thompson has separately issued buy recommendations on a number of companies in DSM’s portfolio:
“ In recent weeks, portfolio companies OnTheMarket (OTM:110p), an online residential property portal, and FireAngel Safety Technology (FA.:6.73p), a home safety product supplier, have attracted recommended cash offers at bid premiums of 261 per cent and 56 per cent to their previous day’s closing prices. DSM will receive £2.7mn cash proceeds from each holding which, when combined with its cash holdings of £1.9mn, represents 21 per cent of DSM’s net asset value (NAV).

In addition, another investee company, Aim-traded fintech payments group Equals (EQLS:119.5p), has entered talks with potential bidders that could lead to a takeover of the fast-growing challenger brand in banking and international payments. DSM’s holding in Equals is worth £2.1mn, or 78 per cent higher than cost. It could have a 45 per cent further upside if analysts’ 175p fair valuations are hit (‘Equals offers opportunity for 50 per cent upside’, 8 November 2023).
Lowly rated portfolio offers material capital upside
DSM holds positions in three other companies I am particularly keen on: Hargreaves Services (HSP:418p), an industrial group and land developer; Journeo (JNEO:205p), a transport systems provider; and Middlesbrough-based financial services group Ramsdens (RFX: 212p). Combined the holdings are worth £6mn, or 17.6 per cent of NAV. I have target prices materially higher than the current share price for all these holdings, highlighting the value opportunity on offer.

For instance, Hargreaves is being valued on a 33 per cent discount to NAV of £201mn (618p) even though the group’s renewable energy assets (three wind farms, six access agreements and two solar farm leases) have been valued between £27.2mn and £28.9mn (83p to 89p). These assets are in the books for only £6.6mn (20p). The shares are rated on a forward price/earnings (PE) ratio of 6.7 and offer a five per cent dividend yield, too. Sum-of-the-parts valuations are 84 per cent higher than the current share price.

Following two recent earnings upgrades, house broker Cavendish expects Journeo’s full-year pre-tax profit to almost quadruple to £3.7mn to produce earnings per share (EPS) of 19.7p, rising to £4.2mn and 22.7p, respectively, in 2024. On this basis, the cash-rich company’s shares are rated on a 2024 price/earnings (PE) ratio of 9.1, an unwarranted 32 per cent discount to peers. My 300p target price represents a premium of almost 50 per cent to Journeo’s current share price (‘Journeo is en route to quadrupling its profit’, 18 September 2023).
Posted at 10/11/2023 08:48 by 888icb
Buy recommendation from Simon Thompson of IC. This is the beginning of it:
“ Downing Strategic Micro-Cap Investment Trust (DSM: 59p) is planning an orderly wind-up of the company and to return capital to shareholders. The first distribution will be made early in 2024 and will be at least 20 per cent of DSM’s current net asset value of £34mn (71.5p).

DSM retains a portfolio of 17 well-run, niche businesses that continue to generally perform well even in a more challenging economic environment. The manager has been outperforming a falling stock market, too, reporting an 8.3 per cent decline in NAV since its last financial year-end (28 February 2023), or half the 17.1 per cent decline in the FTSE Aim All-Share Total Return (TR) index over the same period. Moreover, although the holding is 12.9 per cent below the entry-level in my 2021 Bargain Share Portfolio, the FTSE Aim All-Share TR index has shed 39 per cent of its value in the same 32-month holding period, highlighting DSM’s outperformance.
However, there is no avoiding the negative sentiment towards UK small and micro-cap companies that has led to some of the deepest investment trust’s discounts to NAV in the past 20 years, nor the fact that there is little interest in small specialist investment trusts like DSM. This explains the investment manager’s and the board’s decision to pursue an orderly wind-up of the company.



Initial distribution fully funded
Importantly, the board has the cash on hand to make the initial cash distribution. That’s because more than 20 per cent of the portfolio by value is under offer or in a strategic review process.
Posted at 09/11/2023 16:25 by cousinit
Interesting post Sphere. We may do.

I do think DSM have to some extent been architects of their own downfall though. The return of cash has been talked up in previous reports. This invites tourists/'bob each way' investors and to some degree DSM then becomes a hostage to fortune when the much vaunted delivery lags. Clearly the markets can remain irrational for long periods so making statements which are almost in defiance of this aren't particularly advisable.

See also ARIX. Loads of cash on balance sheet. Strategic review initiated. Fails to return said cash. Share price wilts in face of tourists feeling, somewhat understandably, aggrieved.
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