Abrdn Diversified Income... Share Discussion Threads

[wunderbar] 28/9/2022 18:50:38

I previously described ADIG as the rock of my portfolio given its low volatility in previous market turmoil. And up until mid-August it was doing what it is does best, plodding along in its usual boring fashion. Unfortunately it has succumbed to the latest market mayhem which has seen the stock plummet 6% in the space of a week and 8% over the month [sp closed at 90.8p, intraday low 88p]. The timing of this fall couldn’t have come at a worse time for ADIG’s management team noting financial year end is 30 September. In essence ADIG’s yearly performance has been derailed at the last minute and unless the share price rebounds sharply in next couple of days then results for 2022 will read as very poor, showing a share price decline of 9% over the year [vs 100p, y/e 2021], discount to NAV widening to over 20% [17.9%] and NAV falling to c.116p [122p].

Since portfolio manager Nalaka De Silva's investment strategy was implemented 18 months ago [c.98p] the share price has fallen 7%. Prior to recent falls the share price had spent most of the year bobbling between 98-101p, not really gaining any traction. The large discount to NAV continues to be a major problem despite buybacks. The board have stated they are targeting a discount of less than 5% [subject to normal market conditions] but this currently stands at over 20% [vs 12 month average 16.85%]. As for the NAV, there's been no sign of any growth in past 12 months which goes against the trust's objective. As ever I can’t complain re dividend income but I am getting increasingly impatient with the ongoing discount to NAV and general lack of growth in asset values.

On announcing his new strategy in Feb 2021, De Silva said “Private Equity/Market investments won’t yield/bring instant rewards, I’d expect these to start bringing in a generous income/return on equity within 3-5 years”. All being well these investments will start bearing fruit within the next couple of years, and in doing so should considerably narrow the steep discount to NAV. However, if there's no real progress come the end of his five year plan then both Nalaka De Silva and chairman Davina Walter will have a lot of explaining to do. Bottom line is both NAV and shareprice need to significantly improve or I'd expect heads to roll.

On a final note, this decline will be particularly frustrating for shareholders as we are now back to where we were almost two years ago. I topped up at 90p hoping the market sees sense in due course. Whilst ADIG is now my biggest holding I'm looking to cut my stake by 50% around the 100p mark. In fact I’m looking to divest 50% of my portfolio in the next 12-24 months simply as a de-risk measure. With the BOE base rate predicted to rise to 5.5% by next summer I suspect many investors will start moving funds into fixed rate savings offering returns equal to [if not better than] typical dividend yields [current FTSE100 average yield is 4.18%], all without the stress or worry of incurring significant capital losses as demonstrated by many stocks this year.

[krowelet] 14/9/2022 10:33:48

This does seem attractive to me in some respects for it's lack of volatility and yield in the present climate, though the large discount to NAV makes one wary. If this was to be wound up now at today's values what could shareholders expect to get back, would it be nearer NAV than the prevailing share price at the time? Any opinions welcomed.

[essentialinvestor] 01/8/2022 17:25:17

Spec, this was British Assets Trust back in the day, then went to Black Rock from memory, before Aberdeen.

[spectoacc] 01/8/2022 15:48:38

Thanks both.

Hoping for a more robust defence to get me in ;) But seems I'm not missing much.

@tiltonboy - agree re the 5% discount - and isn't as if they're over-geared. But then, if they bought back far more shares, that would be less money to punt on other ABRDN funds.

[tiltonboy] 01/8/2022 15:20:06

Specto,

A lack of value elsewhere, and the hope that there is some serious corporate action in the next 18 months is about as good as it gets.

I spoke at length a couple of years ago to the board, and was persuaded earlier this year to support a continuation.

The re-start of poxy, occasional buy-backs shows the board has lost the plot....and as for defending a 5% discount...I need say no more.

IMHO it is a gross dereliction of the board's duty in keeping this one where it is. The manager appears to have done a half-decent job, but it's time to fold it all up and pack it away.

[essentialinvestor] 01/8/2022 14:30:54

Spec, what are you getting here - a consistent record of failure to hit
frequently changed bench marks?.

The only case I could make for ADIG, is perhaps some outperformance
in market downturns which also pays a nice divi while holding.

NAV appears to be banging itself against a brick wall of late and
there has been little progress on that front for well over 12 months.

[spectoacc] 01/8/2022 14:20:34

I still can't get excited about ADIG.



1.76% ongoing charge (is that right? HL figs, Edison different), uncovered divi (but not by much). Looks the usual vehicle to direct more money into the manager's own funds (ABRDN, in this case, but they all do it - Schroders, Columbia, JPM etc), whilst trying to persuade you that you have "access" to their network/skill. Really? What, like the performance of ABDN's share price?

Opaque, less frequently valued things like property. A yield that looks great until RPIX hit 11.8% the other month.

Discount - that's the only thing that may draw me in.

@tiltonboy - persuade me! Their equity picks look mostly fairly safe. But other than discount, a bag over my head, and risk, what am I getting here?

Edit - Edison's p.6 peer group comparison rather painful, not sure I'd pit ADIG against the genuine wealth preservers like PNL, CGS, RICA. Strip out the two JPM's with short records, and they're bottom (6th of 6) over 3yrs, 5yrs, and 4th out of 6 over a year.



"The trust’s ongoing charges are lower than the peer average
and it does not charge a performance fee" - be interested to know why HL think it's far higher.

[davebowler] 01/8/2022 13:38:22

Same link but reviewed 18 July.

[riverman77] 21/6/2022 22:42:13

They don't really hold private equity, only a few per cent. The private funds are mainly infrastructure and real estate. These should have held up in the pretty well.

[hugepants] 21/6/2022 22:25:15

The NAV here has barely changed unlike the NAV of PE trusts which soared. What makes you think the value assigned to the private assets is not to be trusted?

[spoole5] 19/6/2022 19:51:55

Thing is the discount is largely irrelevant with a large slug of pe as they are effectively marking their own homework.

[hugepants] 15/6/2022 12:41:17

It has performed rather well. Still on a large discount and a high yield

[petewy] 15/6/2022 09:31:43

Half year results. Not over ambitious, markin time with a slight increase in divi

[pherrom] 08/4/2022 18:08:06

Certainly, capital loss is more their skill. I have held these from British Assets days (2006); my average buying price £1.19.

I believe that the management changes every so often and no doubt their salaries are not tied to the share price.

[rich1952] 07/4/2022 10:41:09

Is it safe to assume that the useless management have given up any plans for modest capital growth?

[rcturner2] 24/2/2022 12:01:28

In my opinion, ADIG has its place in a balanced portfolio.

[essentialinvestor] 24/2/2022 11:26:07

exel, given some of my holdings today I perhaps should have considered ADIG !.

This used to be British Assets Trust back in the day, from memory,

[exel] 24/2/2022 11:11:18

Thanks EI, I should have checked a post (above) which explain the divs (last year and this) very well. Homework! So, 5.52p last year and 5.60p this year (with Q1 declared at 1.40p). VBW ex

[essentialinvestor] 24/2/2022 09:51:21

RCT, point well made, although I had in mind a longer term view, - 15%
over the last 5 years is pretty wwrful.

Yes if you had swapped some high beta stocks in early January and invested the
proceeds in ADIG, then you might perhaps be pretty content!.


exel, most welcome.

[exel] 24/2/2022 09:47:47

Thanks EI,

[rcturner2] 24/2/2022 08:56:30

EI, I beg to differ. I am sure you have seen the large falls across many stocks and ITs in recent weeks. You will also have noticed that the share price here has barely moved.

[essentialinvestor] 23/2/2022 18:40:04

Well whatever they are doing, they are not doing particularly well imv.

[tiltonboy] 23/2/2022 18:35:40

There is a big difference between Private Equity, and Private Markets where ADIG are invested

[essentialinvestor] 23/2/2022 18:23:55

Go to the HL site, click the dividend tab on the ADIG page, there is an option
that gives a full dividend breakdown over multiple years.


Question I would ask here is ...where is the uplift for their private equity investments?. Nearly every PE firm had a fantastic 2021.