Uil Share Discussion Threads

[vacendak] 04/8/2016 09:50

dave

Interesting, I had not realised the company was that old. The earliest I have read about Utilico/UIL/Duncan Saville and Resolute is that article I linked earlier (post 209). In turn it linked to (Resolute is mentioned at the bottom of the page).

For all the current fever, getting back to the 1993 peak may be a bit optimistic though.

[davebowler] 04/8/2016 09:35

Resolute share graph

[vacendak] 04/8/2016 09:27

Yep, good points from Morton on the dividend issue, which had fallen by the wayside.

Dividends: The early dividends were all "specials". They have become regular (quarterly) and steady at 1.875p per share since November 2013.

Also remember that ICM (the managing company) is by mutual agreement (with the board) motivated to reach/recover a share price of 284.81p to be able to charge their full management fee. Splashing out on special dividends or could attract more investors.

Percentage are indeed funny: 654% up on a YTD basis for Resolute... and it has not fully recovered yet! Resolute was slightly above $AU 2.00 back in Early February 2012 (gold was on steroids by then). It see-sawed a bit until mid-2013, collapsed pretty seriously from there (shadowing gold of course), then stayed anaemic below $AU 0.50 until this January. Now Resolute is doing even better than gold, because it has cleaned up its balance sheet.

[backwoodsman] 04/8/2016 09:16

Many thanks for your information, Morton
BW

[rambutan2] 04/8/2016 01:17

Actually it was just over a year ago, 7.9m ords at 116p. Took out an overhang. Has proved very beneficial to holders. But capital structure means can't use buybacks as a discount tool.

[rambutan2] 04/8/2016 01:01

mad foetus, they bought back a big chunk of shares at a good price a few months ago.

[luckymouse] 03/8/2016 23:11

If an investment is sold (crystalised at true value) and returned that can have a sky rocket effect as the nav gap is closed.

[mad foetus] 03/8/2016 21:38

Also, to use really simple figures, if you say that the NAV today is 3.00 and the share price is 1.50 (just keeping it simple) then if the discount narrowed to 25%, which would still be pretty wide compared to most investment companies, and the NAV stayed where it is, the share price would rise by 50% (1.50 to 2.25). Funny things, discounts and percentages.Those lths here, does the company have any history of trying to manage discounts? I'm assuming not, but when it is so wide there must be an argument for buying and cancelling shares rather than paying a dividend

[mad foetus] 03/8/2016 18:58

I would say it is size but the companies you quote are minnows. I think it is, as you suggest, because the offering here isn't quite clear. I think it is about 20% invested in the utilico emerging markets fund, then quite a chunk in small goodies and bits elsewhere. If it was more focuses the discount would probably reduce. But ultimately, if the nav does well and the discount narrows rather than widens (and it looks very wide atm) then investors should do well. Can I suggest you ask them the question at the next agm? In Bermuda!

[anthony16731] 03/8/2016 18:50

Thanks. Yes it tracks that one very closely and Resolute tracks Gold - it just did something odd / disconnected in 2008 and UTL went with it.So fair to say Gold rises, Resolute rises and this does what Resolute does. Why the constant massive gap to NAV? Is it because the collection of funds are so diverse - I.e. Others like GPM or GCL are obviously Precious Metals and Uranium respectively so easy for investors to pile in on signs of a bullish market so trade -10%\-20% or even at a premium to NAV on occasion but here it's less clear what's moving it?

[mozy123] 03/8/2016 17:05

Resolute Mining

[anthony16731] 03/8/2016 16:59

Folks what's driven up the NAV in here? It loosely tracks a few futures including Gold but something has accelerated the NAV over the last few weeks.

[stupidboypike] 03/8/2016 16:30

eeza - thanks and apologies, I was trying to get up to speed quickly and hence skip reading a few posts. Best regards SBP

[spectoacc] 03/8/2016 16:28

@vacendak - thanks for the informative posts, I tend to shy away from trusts with ZDPs without someone more knowledgeable than me to explain them.

(Though as a side-issue, on the likes of BTEM etc with their expensive debenture stock - I quite like them if I can reasonably assume the rollover borrowing will be at much lower rates. VIN another - cash will free up as long-term expensive borrowing expires or moves onto lower rates. This contrasts to eg CYN, who have been hamstrung in their investing by their CULS redemption date, having to stay more in bonds/GILTS, not that either have necessarily been bad & CYN one of my larger holdings).

[eeza] 03/8/2016 16:23

See post above yours, sbp.

[stupidboypike] 03/8/2016 15:48

Anyone got any (sensible!) thoughts on why the discount to NAV is so high?

Best regards SBP

[vacendak] 03/8/2016 15:43

Mad foetus

Not a pro, just a guy who started to put a few pennies a month when he started to work in the late 90s. Those pennies were put in something supposedly boring, the Special Utility Trust with Foreign & Colonial (now F&C). When I began to realise that I had bought magic beans (the growth was totally mad even by pre-crash standards for staid investment trusts anyway) I started to read those annual reports...
The way UIL, and its previous instances, has juggled money makes those ZDPs a piece of cake to understand. In the past we had CULs (Convertible Unsecured Loans), kind of bonds that paid a coupon and offered a choice or redemption or conversion to ordinaries at the end of life. These were dicier bets as the "U" in their name indicated, but the conversion rate was nice and the coupon was above 8%.

While not in the league of BTEM when it comes on piling on the discounts (funds of funds like), the "Focused on uncovering investments with underlying value" spiel found on the UIL website is suprisingly correct. The slight problem is that the value can be 'underlying' for quite a while: Resolute being an example.

I do not wish to talk down UIL, but the discount has always been there and I would not expect it to narrow any time soon. Sure 50%+ is exceptional and should go back up to 35-40%. Some earlier contributors have pointed out that the discount could be linked to emotions related to the structure (ZDP, split-capital), the amount of gearing (only recently brought below 100%) and the relative opacity of the main shareholders (lot of secondary vehicles which are hard to track: GPLPF, etc.). Basically the votes for all the AGMs are already in the bag before the paperwork is sent (same people showing-up on the boards of companies in the portfolio or as shareholders through various holdings). The choice of the Bermuda location is also likely more linked to the fact that some can earn big chunks of UIL (more than 40%) without having to buy the rest out, than the issue of taxation (a lot of investment trusts are domiciled in Jersey/Guernsey anyway).

Funny bit about UEM is that UIL used to be the UEM for developed markets (utilities, roads, airports, energy, etc.). They sort of spun it from the old Utilico Trust and UEM is now bigger than UIL Ltd. Same managing company: ICM Ltd. They won a lot of awards in the Emerging Market category.

[mad foetus] 03/8/2016 14:36

thank vacendak.
I work in the funds business and even I struggle to understand the precise structure here, so your comments are appreciated. But I know Utilico through its emerging markets reputation, and they are a respected outfit. Obviously though, the main attraction is the discount and the asset class exposure, which appear to be a good counterweight to a more orthodox portfolio which would have a UK/trading company bias.

I also hold shares in NBPE, which, though you would struggle to ever know it, appears in Money Observer as being a split capital fund with ZDPs in issue. I do prefer a more straightforward structure, or the modern alternative which you see in the likes of Burford, which is to issue a fixed rate bond which stands entirely outside of the investment vehicle. But in a sense it doesn't matter: if the underlying assets do well and the discount to NAV reduces, we will do very well here.

LMS is a shocker, don't get me started!

[silkywhite] 03/8/2016 14:30

Ive bought some also.
MPO also well worth a look. It's at a 50% discount to NAV and poised to re-rate.

[vacendak] 03/8/2016 14:28

Mad foetus

Being curious I found that you were posting on the LMS thread and complained about the directors bleeding the company dry.

UIL is not like that but if you rewind the thread a bit, you will find the structure (portfolio/main shareholders/management company) a bit opaque. The saving grace being that those in charge appear to have a lot to lose, and they still buy in the company (they were buying into it earlier this year when things were not as rosier as they are now with regards to the share price).

The ZDPs do not proliferate, they just endure. :)
The original classes were ZDP 2012, 2014 and 2016. The '12s became the '18s, '14s the '20s and recently (end of June) the '16s rolled over into the '22s.

[mad foetus] 03/8/2016 13:51

you following me eeza? hope the corporate governance is better here!

[eeza] 03/8/2016 13:40

Also bought a small few earlier.

[mad foetus] 03/8/2016 13:36

I've bought in. I don't much like the complexity of the share classes and the proliferation of ZDPs, but love the discount and like the underlying investments. Thanks for those (LM, davebowler spesh) who flagged this up.