Abrdn Diversified Income... Share Discussion Threads

[essentialinvestor] 21/12/2023 14:06

* would ask on the abdn bb.

[contact2fsnetcouk] 21/12/2023 13:45

Hello

I was in the Abrdn regular share savings scheme but then they advised it was closing and I could transfer to Interactive investor or a platform of my choice. I chose HL. The shares were transferred but I did not receive the dividend that was paid on 1 December into my HL account so I called Abrdn who said it would be with HL in 5 working days.

Needless to say, it isn't. I've tried calling the customer service number I had but all I get is a record message then the line goes dead.

Has anyone else had this experience??

[hohum1] 21/12/2023 13:10

I saw that, Riverman. They didn’t explain what those IRR figures were but I think they were since investment to date. The 35% IRR fund has a big stake in Action, the discount retailer so beloved by investors in 3i, which has been a rocket…

[riverman77] 21/12/2023 11:25

Looked into this a bit more and might be interesting - the key thing is that the private assets actually look ok and relatively vanilla (eg institutional infrastructure and property funds) - no reason why they shouldn't deliver 8-10% annualised returns while they are in the process of being realised. So even if this takes several years, they should still be generating a reasonable return. On their last udpate they give an estimated IRR of some of their private assets - one of these they've put at 35% which sounds a bit optimistic!

[hohum1] 20/12/2023 19:28

Thanks, Skinnypope. Having a clear path towards NAV gives us long suffering shareholders a decent uplift in returns. I hope that decent upside from the better private assets, especially Burford Opps, will more than outweigh the duffers. It would also be nice to think that the Board could negotiate their way out of some of the undrawn commitments, particularly as many of those funds are managed by Abrdn entities but that might be too much to ask.. We could even see double digit annual returns from here for the next 5 years or so.

[skinnypope] 19/12/2023 14:02

[First time poster, hello everyone]

I’ve held ADIG for about 3 years now, mostly for a passive income. The underlying portfolio is I suppose “eclectic̶1; but nothing that seemed uninvestable. With the heavy discount to NAV that the market has imposed on the share price, an orderly wind down seems the right strategy.

I see the wind down in its simplest form as three discrete cashflows:

1. £115m due in H1 from the sale of the liquid bonds and listed equities. I have looked through the portfolio and all of the holdings are straight forward to sell. I have high confidence in this part of the portfolio being sold at NAV, I assume payment on 30Jun24.
2. Private assets Tranche 1. I will assume that all undrawn commitments will draw (£17.8m from my calcs), but then all assets will redeem at current NAV + new cash i.e. cashflow of £125.1m. I will use a worst case scenario on the cashflow date of 31Dec27.
3. Private assets Tranche 2. Again assume a full draw, grossing up to £104.8m. The unknowns here are the sale date and the discount to sell the assets. I assume a 30% discount to current NAV + new cashflow, and cashflow date of 31Dec28.

As an ex-fixed income market maker and investor, this now looks like a bond! So I have the three cashflows and dates, so it’s easy to discount back to today and compare to current share price.

Using a price of 83p (current offer as I type) then those cashflows yield 8.6% per annum

This is I believe very much a low ball estimate due to:

a) If you assume some dividend income, this is clearly additive over and above this yield.
b) I also have assumed that all cash and working capital gets used up and not returned to the shareholders, which may also top up the yield if this is untrue.
c) Less conservative assumptions on the private assets would also improve the return e.g. dropping the discount on cashflow 3 e.g. a 20% discount improves the return to 9.7%
d) I have used the longest dates for the cashflows, in practice they should crystallise much earlier.

[essentialinvestor] 17/12/2023 08:28

Spec, on UK rates re the late 80s boom and bust, the % increase is also important. This time we started from ZIRP. Also membership of the ERM resulted in UK rates at levels that
were higher and for longer, than necessary - and arguably by some margin on both level and duration.

[spectoacc] 17/12/2023 07:53

@RCT2 - it really isn't. Price stability via monetary policy that acts with a 12-18 month lag, good luck achieving a consistent 2.0%. The average is almost the only stat that matters.

@topvest - agreed - but the bigger point is, why was it allowed to go on for so long? What did the major shareholders think was going to change? Tilting it more to private assets with very long realisation runways was about the worst thing they could do.

[topvest] 16/12/2023 15:25

If you look back at the history of British Assets it's been a truly awful quarter of a century. The dividend and NAV were both higher in 1997! It's been a rubbish performance since the mid-90s. Looking at it in this context, you have to wonder how its managed to do so badly!

[rcturner2] 15/12/2023 19:57

"Averaged 2% over 20 years" is a truly meaningless stat.

As you can see from that chart it was relatively stable around 2.5% from 1993 to 2007.

Since 2007 it has been all over the place, often well below the target.

[spectoacc] 15/12/2023 16:14

It's all here but takes some digging:


Averaged 2% over 20 years I believe.


Edit - as an aside, it's striking seeing the comparison with the late 80's/early 90's, pre-independence, when it took 10% unemployment, keys being posted back through building society doors, and mass bankruptcies to get inflation out the system. Will be very glad to avoid that this time.

[rcturner2] 15/12/2023 16:08

I'd love to see a chart of inflation over the last 30 years highlighting when it was actually 2%. I bet not very often.

[spectoacc] 15/12/2023 16:04

If you unilaterally change the target, it'd be like tossing a grenade into the financial system. It can be done, but you'd best know where the damage is going to be.

For eg all bonds, Gilts, pensions are going to instantly reprice/revalue. Would make the Liz Truss debacle (Truss brilliantly described by Private Eye recently as "the supply prime minister") look like a tea party.

But agree that 2% (2.5% on RPI when BoE independence first came along) is slightly arbitrary, albeit it is what it is.

Also, were it to be changed to eg 3%, it'd be helpful if every other major economy went at the same time, and it was done from a position where inflation is sustainably back to 2%.

Otherwise, what's to stop a 3% or 4% target that, when inflation is running at 7% or 8%, becomes a 6% target? Or rather, what's to stop the markets thinking that.

No, inflation has to be forced back down to 2%, and it can only be painful - hopefully not early-90's painful, but it's the best comparison.

For those on the bull side on rates - the £'s stronger, oil's week, the money supply's collapsing, GDP just printed -0.3%.

For the bears, wage rises are far too strong, oil can go anywhere, unemployment is too low, and consumer confidence just randomly came out well.

For me, none of that much matters - what matters is that inflation is more than double target, underlying inflation is even higher, and the BoE knows it has a reputation to restore even if that means recession and seeing CPI down to 1%. I don't see how it can't mean recession.

Easy to stimulate from here, very difficult to engineer the second halving (and more) of inflation.

[rcturner2] 15/12/2023 15:53

But why is 2% desirable. Isn't 4% better?

There are many ways to look at inflation.

[spectoacc] 15/12/2023 11:11

Nope:

"Cutting interest rates will likely mean that inflation will remain slightly above target for longer. While this is obviously not ideal and could further tarnish the Bank’s credibility, inflation that is slightly above target is surely preferable to stagnant economic growth, higher unemployment, and a damaging recession"


Indeed it will, and the longer inflation is permitted to be elevated, the harder it'll be to get back down, and the stronger will be the wage demands/wage settlements.

The BoE lost a lot of its reputation in being far too slow to raise - unfortunately we now all suffer the consequences.

The remit is 2% CPI. It isn't "I think we'll let it run at 3-4% for a while".

But don't get me started ;) To be fair to Ollie Bailey, the MPC were pretty definite about rates staying elevated for an extended period.

[essentialinvestor] 15/12/2023 10:53

Spec, I'm guessing you won't agree with the above.

[spectoacc] 15/12/2023 10:05

I've the disadvantage of still being in loss here, not that that should influence investment decisions. But suspect I'll wait until after the first big payout, then see if the mood music has changed on timescale/likely quantum.

Agree re Opportunity Cost but sat on a lot of cash already - the market's completely wrong on UK rates IMO (not for the first time).

[essentialinvestor] 15/12/2023 10:02

Also got to factor in the opportunity cost of holding v investing elsewhere.

I sold yesterday and tbh had given up hope of exiting without taking a loss - had bought back in over 80 pence.

I recently posted the last British Asset's monthly NAV, before it went to BlackRock. If you look at that number, account for inflation and equity market increases since then...shambles is being very kind indeed.

[mwj1959] 15/12/2023 09:55

There are probably easier realisation stories out there and I'm sure there will be more in due course as the IT sector goes through a much needed realisation / merger process to deal with the massive and persistent discounts that currently exist. Large discounts are clearly attractive for the LT investor, but getting hold of the money in a timely manner is the challenge, particularly as these large discounts are almost exclusively in funds holding private and illiquid assets. But at least boards seem now to be succumbing to investor pressure to do something, even if it is not necessarily optimal. Plenty of opportunities for the patient I suspect.

[spectoacc] 15/12/2023 07:02

Been a shambles, backed it has to be said by the major holders.

Big question is how soon they can offload all the private stuff - significantly sooner than 9 years, and at not less than current NAV, is my guess. Be surprised if it's not all done & dusted within 5 years, with a decent income along the way.

[topvest] 14/12/2023 18:59

Well today's announcement underlines what a sub-standard board we have here. First they move from a BlackRock poor strategy to an even worse abrdn one that takes 10 years to unwind, no doubt with the incentive of keeping things going and then they mess-up the Strategy Review. British Assets, a 125 year old golden olide, deserved much better. Anyway, I suspect we will get a 2024 partial return and then things may change again with the private assets portfolio.

[riverman77] 14/12/2023 11:39

I'm thinking of the overall return if you invested today (and factoring in the share price rise this morning). I guess there is scope for the value of the illiquid investors to increase over time, plus any income they produce. Might look into it a bit more when I get a chance.

[hugepants] 14/12/2023 11:34

But its a 50% uplift (after cash return), plus dividends

[riverman77] 14/12/2023 11:28

Can't say I'm tempted - you might have to wait a good 5 years for a c30% uplift (assuming they can eventually sell around NAV). Much better opportunities elsewhere.