SVG Capital Share Discussion Threads

[cerrito] 29/9/2015 23:11

Not sure the reason for the disconnect between the NAV of 606p and the current share price of 465p odd especially given the robust position of SVI’s balance sheet and total liabilities of £47m comparing with Net Assets of £1046m.
One reason no doubt is that for some reason they have gone quiet on share repurchases-the average price they paid in the 6 months to July was 495p and they do not seem to be taking advantage of these lower prices. Could not see any comment in the interims about returning capital to shareholders. I do appreciate we will not be getting the capital receipts that there have been over the last 18 months.
Good to see performance so far of post 2012 investments.
Too bad that the interims had no detail on their FX exposure especially given that in the six months they had a FX hit of £56m
Have bought some in the last weeks..may buy a bit more.

[cerrito] 02/6/2015 13:38

a balanced article

[cerrito] 09/4/2015 22:20

Just gone through the year end figures
Clearly have had an excellent run with the NAV up from 521p to 588p between 30.9.14 and 31.1.15, despite the issues with the deval of the Euro against £.
Given that the company has so little borrowing-just £88m odd of convertibles at the moment compared to total assets at 1.15 of £1.2b a mystery to me why the discount continues to be so large, especially as they promise another tender offer.
For the first time noted that the Chairman gets well remunerated in my view as it is a pretty simple company. He got £140k for the 13 months work-in line with the previous year. One imagines that the 2 largest shareholders Koller and Schroders accept this so who am I to complain. Incidentally I checked the pay of Schroders Chairman and he gets 300£ pa+ and that is a clearly far more demanding role
The investment decisions are made by the Aberdeen team ie they select the Managers. I note that the CEO also works for Aberdeen. The annual report says that we build strong relationships with the Managers but then says elsewhere that the company has no employees and the Directors are the only key management personnel of the company. If I organize myself to make the AGM will want to thrash this out.
Given the big historic concerns I have had on the weight of the Hugo Boss shares in the portfolio was interested/pleased to read this. Quote The significant realisation activity at the larger end of the portfolio has also served to de-risk the portfolio with the Top 10 underlying investments now representing 66%[18]of the gross investment portfolio, down from 88% at December 2013. Unquote

Note that the non core portfolio has done well; this is largely the SVG Diamond Funds-managed by Aberdeen-which have more leverage and had a good 2013 and 2014.
Interested to read the following. As the portfolio is becoming more atomized and less lumpy I would have thought they could have paid a dividend-but do not have strong views on the subject:Quote Given the nature of private equity investment and realizations, we anticipate that capital returns will be through share buybacks and tenders, rather than through a fixed dividend. Unquote

[deadly] 23/3/2015 18:12

Results look good:

- Fifth consecutive year of double digit returns

-- NAV per share growth of 14% to 588p
-- Continued strong performance of the investment portfolio

- 10% total return in the 13 months, despite the significant headwinds of foreign exchange

- In constant currencies the portfolio generated a total return of 17%

- Further tender offer of up to GBP70m in May 2015[4], taking total capital returned since December 2011 to GBP540m, well in excess of target

[skyship] 04/2/2015 08:32

Cerrito - Buyback Scheme during "close" period announced last week; and they've
been buying back in 50k chunks ever since:

[cerrito] 03/2/2015 23:02

Good to see share price comfortably above 440 and still well within the Sept 14-latest one we have-NAV of 521p. Do reflect that the euro weakness against £ will have been a drag on the NAV-just the weakness in the third quarter 2014 cost the NAV 8p odd. Also note that between March 31 and September 30 last year the NAV only increased from 517p to 521p.
Started wondering when we will get the Dec 31 NAV and was reminded for reasons I do not fully understand they have changed their year end to Jan 31.
Also saw again in the Oct 23 IMS that they say that they will get to their £470m return of capital target by March. Anyway we may have a couple of months with no buy backs but assume will announce a new programme at the AGM.
I myself would expect the share price to meander up but do not have enough conviction to buy more but certainly no desire to sell.

[cerrito] 12/12/2014 23:02

The way I see it good that Hugo Boss holding reduced and that Hugo Boss share price is still north of E100

[cerrito] 05/11/2014 17:33

While SVI's exposure in Hugo Boss now at £170m has been reduced in the reent past, it still represents about 14% of total assets and as such was interested to read the following in Lex of the FT today


Hugo Boss: the rational consumer
Another piece of bad news from the luxury clothing maker
Hugo Boss is a case study in stock market irrationality. Reasons to avoid shares in the luxury clothes maker abound: a year ago, it pushed back one of its profitability targets and since then earnings forecasts have been falling; it generates 63 per cent of its sales in the economic disaster zone that is Europe; the shares, at an average of about 18 times forecast earnings this year, are not particularly cheap; and Permira, the largest shareholder with a 39 per cent stake, has been reducing its holding. So what has happened to the shares? Before Tuesday they were up 9 per cent in a year, outperforming the Dow Jones Global Luxury index by 21 percentage points.

But its ability to defy gravity may be limited. The shares fell 5 per cent on Tuesday as the company had more bad news to report. Revenue guidance for 2014 fell from “high single-digits” to 6-8 per cent. Profit guidance dropped a little more. The end of the third quarter was not good, with tourist numbers falling and warm weather leaving stock on shelves – who is going to buy an €80 scarf when it feels like summer?
Put in the context of other luxury companies, though, Hugo Boss has its attractions. Although heavy exposure to Europe is worrying, heavy exposure to China (with its recent disdain for conspicuous consumption) would be even more worrying. Hugo Boss generates just an eighth of its sales from the Asia-Pacific region, and the businesses outside China are doing nicely. A global shift from wholesale to retail also looks smart. Same-store sales growth in the retail business is running at a respectable 4 per cent. Add all that together, and even after the downgrade Hugo Boss is still growing faster than many of its rivals.
That should give some support to the shares. But the European Commission has just cut its economic outlook for the eurozone. Permira sold an 11 per cent stake in September. November downgrades are starting to be a habit. There is no reason, rationally, to expect the shares to have a big jump.

[skyship] 25/10/2014 08:53

Jaws - Looks as though your broker note was fairly accurate.

At the improved 412p the discount is 20.9% with a c5% Tender Offer in prospect.

[cerrito] 25/10/2014 00:17

Good to see NAV at 521p and good to see tender offer-good if it was to be more than £50m

[jaws6] 21/10/2014 10:44

skyship
I got that nav number from todays broker buy note.

and price is 365 so may be you right at 395 p 21 % .Tks

[skyship] 21/10/2014 10:39

jaws - reading Cerrito's very detailed and useful post above, then @ 395p the discount is 21% to an estimated 500p.

[jaws6] 21/10/2014 08:49

Cerrito
Tks.
I think there scope for further near-term cash realisations to get discount down from 25% now.

[cerrito] 20/10/2014 22:47

Yes Jaws6 very good news though too bad that they are going to have to wait till next year for the cash but does give SVI a good deal of financial flexibility.

I have seen the share price weakness in recent times and had assumed this was because Hugo Boss' shares have been hit by the general malaise in luxury brands-perhaps Hugo Boss is not deemed as luxury..not my field; anyway pleased to see that the price today was 99-up from the recent low of 96 on Oct 16th and not all that short of the 104 it was on Sept 2 the day before the recent sell; of course down from the summer peak of 112 but well in line with the range of the last 12 months.

Need to recognize that NAV will have taken a hit from third largest portfolio company Freescale whose price has fallen from US$23.5 at 30.6.14 to a current 16.85; the 30.6.14 valuation was £82m and with FX and the fall in share price this will be about £55m ie a £27m decline ie a hit of 13p in NAV-feel free to check my maths.

Another thing that will deflate somewhat NAV is the continued strengthening of GBP against the Euro from 1.25 at June 30 to 1.263 today-remember that there was a £37m loss in HI because of Euro weakness.

Bearing in mind the June 30 NAV of 535p and even after making all the adjustments today's NAV-assuming the Arysta deal goes ahead- must be well north of 490p so the significant discount remains.

For me with the Arysta cash and the reduction in the still large Hugo Boss holding the riskiness of SVI is at its lowest in the 5 1/2 years that I have held it.

[jaws6] 20/10/2014 15:00

cerrito
Hope you seen RNS re----
Arysta and 70 p nav rise

[cerrito] 15/8/2014 09:16

Worth a buy at these sub 410 prices in my view
Interesting that yesterday the company bought back 170K of shares at 429p..perhaps they did not anticipate that the placing would have provoked such a fall. Also interesting that in last week we have had a small director buy and a bigger sell and one would have thought they knew what Permira were thinking about

[cerrito] 17/7/2014 17:31

I note that Permira had as at 31.12.13 12m shares nd I guess after these two RNS's they remain with 12m shares

[jaws6] 14/7/2014 09:15

late up reaction to rns ?

[cerrito] 11/7/2014 10:48

Point taken Skyship
For those wanting a good chart with historical E/£ fx rate go to

Total value of SVI's holding in Hugo Boss of £332m pre re-capitalization sounds right adjusting for fx rate
The valuation of their third largest holding would be down somewhat today from 31.3.14. The share price is basically the same but the £ valuation would have fallen in line with the appreciation of £ against the $. It would however in £ terms be well ahead of 31.12.13 valuation

[jaws6] 11/7/2014 09:31

RNS on Hugo boss

[skyship] 10/7/2014 18:20

With further Euro weakness an almost inevitable outcome of Draghi's QE and an overvalued currency, perhaps better to hold off a while yet...chart suggests a fall to support at 370p/380p level.

[cerrito] 10/7/2014 17:54

Wondering if I should increase my holding here given recent share price weakness
Portfolio de risked with further sale of Hugo Boss shares on May 28; shares doing well ie today at E106.5 compared with approx E96 at 3.14. Indeed valuation post the May 28 sale at E 322m as higher than E303m at 3.14 which suggests they may not have sold all that much.
Bond conversion would also have derisked portfolio
Good that in each of the last 6 business days they have repurchased 150k shares
Cannot find anything on Google ref Permira sale of Arysta LifeScience since March 10 14 FT story
What is holding the share price down I guess is the exposure to the euro; we were told that last year currency effects increased the portfolio by £27m given last year's depreciation of £ against the Euro. The 2013 annual report tells us that a 10% appreciation of £ impacts shareholder funds/income by 8.3%
Remember £5.169 was the NAV at 3.14

[cerrito] 12/3/2014 14:31

Interested in reading yesterday's FT to see that Permira in early discussions to sell its holding in Arysta via an IPO or possibly a trade sale. The article talked about a $4bn valuation including debt compared to $1.95n 2008 acquisition price.
Early days-ie if they go down the IPO route the article discussed Arysta changing its domicile from Japan but would be important for SVI given that the valuation of its holding in the company went up from £190m to £208m and represented 15.8% of Total Assets.

[cerrito] 14/2/2014 21:40

Going through the financials to see what struck my mind.
For such a liquid low geared company, the discout to NAV at current prices is on the high side-see that NAV at 31.12.13 was 514p and that had fallen to 500p at 11.1.14.
One reason for the fall was he decline in the share price of Hugo Boss from 103ish to today's 94.5. I guess the strength of £ will have been a small factor-remember that 13@ weakening of £ against the E and $ gave an FX gain of £27m.
As the Directors mention in the key risks portfolio concentration is an issue; Hugo Boss accounted for 25% of total assets at both 31.12.13.and 31.12.12.
To me unfortunate that the second largest holding-Arysta representing at 31.12.13 15% of Total assets is private and so we have little clarity on its position.
The third largest holding Pro Sieben worth £88m
was liquidated in Jan 2014-I guess looking at the share price movement this year at a small discount to this figure.
One thing that rather caught my eye was the performance of SVG Diamond funds-their leveraged funds which I would have thought in the market conditions of last year would have been a star performer; yet while they did not do badly-a 17% gain that did trail the increase in the investment portfolio of 28.9%.
I am comfortable with what I have and do not see myself selling-certainly not until the tender

[skyship] 31/12/2013 08:48

An extension of the existing share buyback scheme