Abrdn Diversified Income... Share Discussion Threads

[hohum1] 26/7/2023 09:12

Neilyb - HDIV is too small and Henderson have been here before with Henderson Value Trust which they took over from SVM Global and turned into a complete disaster. JP Morgan might be a better bet - some kind of mix and match involving MATE, JARA and a slug of cash funded by the realisable assets?

[spectoacc] 26/7/2023 08:46

SHRS & ASCI, abrdn banging a few more together. Not so great for SHRS s/holders, but they owned a chunk of ASCI already.

[neilyb675] 25/7/2023 18:31

above is from the HDIV annual financial report....

I wonder (in reference to ADIGs RNS today) whether a combination of some sort would be worthwhile.

[neilyb675] 25/7/2023 18:31

At inception in 2007, the objective of the Company was to invest in a wide range of fixed income instruments including secured loans. This would allow the Fund Managers to take advantage of the credit cycle to increase the allocation to loans when interest rates rose, protecting investors against capital losses. It was also envisaged there would be opportunities for capital growth in periods of falling interest rates which would enhance total returns.



Quantitative easing and the persistence of negative real interest rates during the last decade were not envisaged at launch. As a consequence, returns from loans have looked relatively unattractive and the Fund Managers chose not to invest in loans because they felt a reasonable reward was not available for the risks taken. It is not clear whether this will change in the near future.



Of greater concern is the challenge to income in the future. We are very aware that shareholders are principally interested in the yield offered by the Company's shares. The sustainability of this yield, and the risks necessary to achieve it, are an area of increasing focus for the Board, especially as revenue reserves have diminished.



The Board are therefore concerned that the structure of the Company as originally envisaged does not allow the Fund Managers to preserve the real value of the capital of its shareholders, and feel that perhaps an alternative investment process could offer greater scope to provide a more consistent return to our shareholders. The Board have not reached any conclusions on these matters but will be considering options for the Company in the near term. We will report any recommendations to you as soon as we are able.



Outlook



As has been communicated before, the Fund Managers have a distinct view of the economic outlook. This has served the Company well in the past. As they describe in their report, they have positioned the portfolio to have longer duration and lower credit risk. This is consistent with their view of the global economy.



Their thesis is described in detail in the Fund Managers' report and I would urge shareholders to read it carefully. Such active management can result in significant deviation from the benchmark, hopefully positive but also, as we have seen, negative.



Angus Macpherson

Chairman

[thrugelmir] 25/7/2023 18:24

Liquidate the realisable assets , distribute the cash. Then merge the remainder.

[riverman77] 25/7/2023 13:36

Trouble is it is full of private/illiquid assets that wouldn't make a good fit for a more traditional equity fund to absorb.

[hindsight] 25/7/2023 13:29

Best outcome is a premium trust like cty or mrch takes it on 🙏🏾

[topvest] 25/7/2023 12:10

Of course there are lots of interesting possibilities for a trust of this size which was formed in 1898. In my view, the Board here is woeful. Let's hope they don't make another poor choice, after 2 bad options so far! Personally, I'd like to see a UK equity income mandate with a value style like Temple Bar.

[spectoacc] 25/7/2023 07:27

Swipe right (so my younger friends tell me).

[tiltonboy] 25/7/2023 07:14

I will take that for now

[spectoacc] 25/7/2023 07:10

Pleased to give us an update - yet giving no clue what any of those proposals are, other than that the buy back is being stopped:

"..Credible, attractive and varied.." - sounds more like they've been on Tinder.


"The Board of abrdn Diversified Income and Growth plc ("ADIG" or the "Company") is pleased to provide shareholders with an update in respect of the strategic review process announced on 20 June 2023.

Following the announcement of the strategic review, the Company has received a number of credible, attractive and varied proposals for actions that we believe should enhance shareholder value. The Board, and its advisers, are actively exploring how these various proposals could best deliver value for ADIG shareholders and are engaged in productive discussions with a selected shortlist of parties. The Company will provide an update in due course, noting that at this stage there can be no certainty as to the outcome of the review.

The ADIG Board has also taken the decision, in the light of the ongoing review process, to suspend the Company's investment-led share buyback policy. Subject to the outcome of the strategic review, the Board will consider resuming share buybacks in due course. "

[tiltonboy] 24/7/2023 08:13

So, the consolidation of Abrdn funds continues, with the merger of New Dawn with Dragon. In line with my hopes for ADIG is a 25% cash exit for holders.

I cant see ADIG as a fit for another Abrdn fund, but let's hope they can negotiate a partial cash exit!

I've not heard off them yet!

[essentialinvestor] 19/7/2023 13:18

It would take an age to wind this up now. As mentioned already a tender offer somewhere near NAV for a % of holding would be the big upside potential (short term). Even that might be hopeful.

It's the only highly speculative buy case I can see. People bang on about the divi
and ignore the NAV performance.

[spectoacc] 18/7/2023 15:01

Inclined to agree, but isn't it just another sop to shareholder angst at the poor performance/poor returns? There's things they could do - ideally, offer a cash exit and roll the rump into another vehicle - but I agree with the market on the likelihood of that.

[hugepants] 18/7/2023 14:55

The strategic review is not in the price imo. A favourable outcome is likely to send the shares higher, perhaps considerably so. Up to say 95-100p. And if nothing changes I can't see the downside argument from here.

[essentialinvestor] 13/7/2023 09:18

As Spec rightly points out very large NAV discounts are available on specialist
funds and tbf would put ADIG in that category. While it's not a listed PE business, many of their holdings would take time to liquidate and the track record in itself arguably warrants a fat discount to NAV.

[hugepants] 07/7/2023 16:55

The portfolio is only 12% PE

[spectoacc] 07/7/2023 15:15

GCP is realistic in the sense that's what it's currently worth.

The trouble with the PE stuff is no one trusts the valuation - like REIT NAVs, it's determined by other than open market participants.

The PE ITs would argue the valuations are actually conservative, based on realisations. I'd argue that was true for 14 years of ZIRP.

[hugepants] 07/7/2023 15:13

ADIG do release a daily NAV unlike many alternative type trusts which release a monthly or quarterly NAV so Id argue NAV more reliable then many. 54% private markets with the rest are listed equities or funds. Some of the private stuff could be marked down given the recent increase in rates but just because something is listed does not mean it's valued accurately eg they hold GCP which is on a 40% discount. Is that realistic?

Sound prudent re valuations.

abrdn Holdings Limited announces the unaudited net asset values (NAVs) of the following investment companies as at close of business on 6 July 2023. Unless otherwise disclosed, the NAVs have been calculated in accordance with the recommendations of the Association of Investment Companies. In particular: (1) financial assets have been valued on a fair value basis using bid prices, or, if more appropriate, a last trade basis; (2) debt is valued at par and, where applicable, debt is also separately valued at market value (3) diluted NAVs are disclosed where applicable (for this purpose, treasury shares are excluded for the purposes of calculation); and (4) provisions for performance fees are included where applicable.

[spectoacc] 07/7/2023 15:01

@HP - agree re review BUT they shifted more into PE-type stuff on last review. That means they can't be easily wound up, don't easily slot in with anyone else, and deserve a discount bassed on how genuine, successful PE IT's trade at up to 45% discount.

Probably a discount nearer 20% than here, but still - ADIG seems to lack a purpose.

[essentialinvestor] 07/7/2023 13:39

Yup that's the question, how 'accurate' is the NAV?.

Market arguably appears to have questions.

[atlantic57] 07/7/2023 13:28

If that 29.5% discount is realistic then adig is a raging buy given the 7% yield.
However the fact that the share price is falling suggests that it is not realistic.

[hugepants] 07/7/2023 13:14

The buybacks have stopped since the strategic review so not much share price support when the market sells off. I think it's significantly oversold given there is a strategic review ongoing on how to realise value for shareholders. It's on a 29.5% discount and 7% yield at this price.

[cc2014] 06/7/2023 14:22

80p. Wow. A month ago I'd have taken this price. Not now. Or at least not today.

All the buyers seem to have dried up. Lots of opportuntities elsewhere perhaps.

Spending all that money buying back the 2031 bonds at a huge loss doesn't seem very clever now.