Strategic Equity Capital Share Discussion Threads

[mad foetus] 26/9/2016 11:49

I liked the annual report, thought it was candid and bought some more on the strength of it. I think SEC goes to the heart of fund management: were they just lucky on a couple of calls or are they capable of truly adding value? And the answer to that question determines whether they should be on a discount or premium. All I can say is that I looked at these for a couple of years and the premium put me off: I am delighted to have accumulated what I regard as an ideal allocation at around a 10% discount.

[mad foetus] 21/7/2016 07:15

hxxp://www.strategicequitycapital.com/secapital/uploads/presentations/160630-sec-q2-presentation-v2.pdf

[mnomis] 19/5/2016 15:41

@ Mad - likewise this week (in the SIPP, so def a lt hold)

[mad foetus] 11/4/2016 13:52

bought in today, have been watching for a fair while and am very pleased to get in at a 5% discount to NAV. Now looking to hold for a few years.

[edwardt] 17/2/2016 16:30

nice move in tribal today circa 2% position here. sec has worked with new ceo there before at allocate which we used to own before it got sold to private equity.

[luckymouse] 06/12/2015 03:56

Looks a like a turn

[edwardt] 04/8/2015 08:47

there you have it - not too bad and manager not raised a silly amount.

[bigwilly1986] 16/7/2015 17:15

Thank you all for the informed discussion. We will just have to wait and see what the issue price is!

[edwardt] 16/7/2015 17:00

why would I be bothered about pre-emption rights when the raise will be accretive to nav of the company. pre-emption rights should only apply when raise is dilutive and comes in the form of a rights issue. to take this to 200m market cap is great as improves liquidity, however we want the raise to be as close to the share price as possible to help boost existing holders by increasing nav pure and simple. also the manager will no doubt bid up some of the existing stock with the new cash which will help. all in though, the premium at current rate is a little ott imo.

[mad foetus] 15/7/2015 09:52

pete,
I was discussing the disapplication of pre-emption rights recently and the general view (from people like ISS, who publish voting guidelines for shareholders) is that pre-emption rights should only be disapplied if shares are issued at a premium to NAV and even then limited to a maximum of 10% of the share capital.

The problem with pre-emption rights is that they are costly. SEC has a market cap of £150m. If they wanted to raise £25m and had a placing programme agreed, they could call their brokers, the brokers could call 2 or 3 key investors and they would probably be able to issue the shares at 230-235p within 2 days, possibly through an auction. I don't know who SEC's major shareholders are, but the brokers would be able to cherry pick institutions that the company might value as long term holders but who haven't invested to date because they only invest in £10 or £20m chunks.

To do a placing with pre-emption rights, you would probably need to set a fixed price and would have much higher costs, a longer time period and much more management time.

There are pros and cons either way, but I know from sitting on the board side, it is much easier (and cheaper) to raise funds quickly if the rights are disapplied.

[silverpete] 15/7/2015 09:40

edwardt - the premium on the new shares issued is to cover the cost of the share issue - placing fees etc. The 'real' price of the new shares is 'estimated' NAV. Whilst SEC share price remains at a premium to the NAV any new shares issued will tend to depress the share price Reading between the lines of the circular to shareholders the BOD view this as a desirable outcome. This is only of concern to those who bought shares at a premium to the NAV as they face a loss, hopfully only short term.

Of more concern is the proposed 2nd resolution to disapply statutory pre-emption rights to the new shares so that they do not have to be offered to existing shareholders first, as there is no obvious reason why this is necessary and none is given in the circular. I know I'm a suspicious so and so but this does look peculiar to me, so unless a clear reason is given I'll be voting no to resolution 2.

[edwardt] 14/7/2015 12:56

as stock will be issued at a premium, accretive to nav is the logical and correct answer. however the extent of the premium has to be questioned long term. that said, who cares if the nav keeps ticking up via good stock selection!

[tiger20] 14/7/2015 08:09

Any views on the introduction of £20m poundsworth of shares shortly.

How will the share price be affected and also NAV

[coul909] 02/7/2015 12:30

edwardt : agreed, with a current NAV around 217- 218, the trend up to 240 (offer) was strange and understandably re-traced back to 230. I expected it to retrace further than that, but it has moved forward again this morning with an increasing offer price of 236 - 237 ; this seems overcooked for SEC. However, with a clear majority of buyers on level2, positive sentiment seems to be in charge.

[edwardt] 08/6/2015 10:27

i suggest newbies avoid buying closed ended funds if they can not grasp the moving parts involved. As for the dangerous over generalisation, i hear you but stand by my comment. A wide discount can be that assets are opaque and the market is offering a better representation of fair value. However, most of the time it offers a margin of safety -this is absent when buying assets at a premium when the underlying assets are quoted and have their own respective bid price on an exchange. Paying a premium like the one on patient capital at the moment has to eat into the future returns - small investors often over pay for the 'magic source' of fund managers.

[m.t.glass] 08/6/2015 07:18

"..a wide discount therefore is an opportunity not a 'worry'..."

That's a dangerous over-generalisation. A marketwide widening of discounts certainly offers opportunities - but discounts on some funds are well deserved and indicative of problems. I'm sure you know that, but I mention it in case any newbies take it as applying across the board ;o)

[fergus9] 08/6/2015 00:08

Tracker funds seem to be buying as it's been promoted to higher levels.
FT 5th June.

[lozzer69] 05/6/2015 19:57

i am also not sure about implications of placing program. But the performance has been been so good recently i am just going to stay for the ride. On their website there is a superb document about how they analyse potential companies and you cannot fail to be impressed with their due diligence.

[edwardt] 05/6/2015 17:23

my view is don't add on a large premium - but hold and wait till they drop at or below nav. the manager is doing a good job but only pay a premium for a fine wine

[peter27] 05/6/2015 12:00

It must be a good deal to be issuing shares at a higher price than the buy-back. Shares are at a premium and it is tempting to take profits and wait until they are out of fashion - but I don't want to miss the bus - so quite a quandary.

[bigwilly1986] 05/6/2015 08:03

Any thoughts on the placing programme?

[edwardt] 15/5/2015 15:51

been a real winner for me, wish all my funds did this and i would be on a beach!

[bigwilly1986] 01/5/2015 15:54

200p hooray! Bring on 300p