Abrdn Diversified Income... Share Discussion Threads

[8w] 22/2/2024 21:43

Thanks for responses.

[tiltonboy] 22/2/2024 16:04

No guidance yet

[hugepants] 22/2/2024 16:04

They say that going forwards dividends will be smaller and less regular whereas returns of capital will get bigger and less regular. Same end result though. This from the recent circular;

Dividends

The Board intends that it will continue to pay a sufficient level of dividend to ensure that the Company will not retain more than 15 per cent. of its income in an accounting period so as to maintain the Company's investment trust status during the Managed Wind-Down process. In addition, and in accordance with the Company's proposed dividend policy that is set out in the Accounts and will be put to Shareholders at the AGM, any dividend going forward will also reflect the Company's plan to return cash to Shareholders in a tax efficient manner. Therefore if Shareholders vote to approve the Investment Policy Resolution and put the Company into Managed Wind-Down, the Directors will still declare certain dividends based on the Company's net income but the quantum and timing of any dividends going forward will be at the sole discretion of the Board.

In the absence of unforeseen circumstances, it is the current intention of the Board that the Company will pay an interim dividend around the end of March 2024, the Initial Return of Capital (subject to all the required Shareholder and Court approvals being received as noted above) around the end of June 2024 and a further interim dividend around the middle of October 2024. Thereafter, it is likely that dividends will be paid in smaller, less regular amounts principally for the purpose of maintaining the Company's investment trust status and capital will be returned progressively to Shareholders in larger, less regular amounts by the most efficient mechanism available. The Board will therefore be taking into account the UK tax consequences for Shareholders in determining the most efficient means of returning realised cash during the Managed Wind-Down process.

[8w] 22/2/2024 15:53

Has there been guidance on future dividend payments as and when the equity rump has been sold?

Minded to reinvest cash into ADIG but would like cashflow whilst waiting for eventual fund closure.

[essentialinvestor] 22/2/2024 10:52

Still reckon we need a sharp % down move to clear out weaker hands, preferably followed by an intra-day reversal.

May transpire differently.

[riverman77] 22/2/2024 10:39

Yes implied discount looks too wide. And the key difference is ADIG is winding up so eventually that discount will disappear - not the case with the other PE funds, which are on permanent discounts.

[skinnypope] 22/2/2024 10:13

I'd even say the 45% computed discount on the private assets is out of line with other quoted pure play private funds e.g.

APAX - 33%
CTPE - 33%
ICGT - 40%
GABI - 25%

[chucko1] 21/2/2024 12:33

I agree - a fair amount is likely less volatile. They would really have to mess up for many of those assets to lose even 15%, let alone the imputed 45% discount represented by the forward price (assuming close to NAV for the first group of assets).

[riverman77] 21/2/2024 12:29

Most of their private markets exposure seems to be infrastructure and property, rather than private equity. I'd imagine these should deliver fairly steady, dependable returns. There are a few more esoteric assets which are harder to value, including a Burford fund, but from what I can see they don't seem to be holding much in the way of junk that would need to be written off.

[chucko1] 21/2/2024 10:23

R77, and if you set your sights lower than a "mere" doubling, you really have a decent margin of safety even taking into consideration the lack of strength in the management team.

Given the assets in the second and third groups, I am a little more conservative than you, but I certainly cannot fault the general message.

Possibly worth pointing out that APEO trades at a tighter discount then many, so it is not as though the market has any particular suspicions about their PE valuations. No sign of a cliff at some stage, which is what could scupper the above brief analysis.

[riverman77] 21/2/2024 10:11

Definitely looking interesting here - would need patience but seems a fairly safe bet to roughly double money over next 3-5 years. This is on the basis of reinvesting the third of the portfolio that gets realised close to par in the next few months - if I can reinvest those proceeds at a 45% discount, while the remaining assets continue to generate a modest 5-10% return as they are gradually realised, then this seems feasible.

[essentialinvestor] 21/2/2024 09:00

Down the slope of hope, eh


She looks to be targeting the November low all right - 'should' make a higher low, but just a guess obvs

[essentialinvestor] 20/2/2024 21:18

72.4 in the 12 month low and an intra-day low point, from memory.

Would be very surprised if that's taken out - barring something left field.

[contact2fsnetcouk] 20/2/2024 15:20

Voluntary Liquidation.

Was going to sell, at a loss, and rebuy in my ISA for the generous dividend seen as the tax free div allowance is reducing to £500 next tax year and use the losses against potential gains.

Awaiting finite detail but Think I might hold on now

[neilyb675] 19/2/2024 14:45

77.00 - 78.00 (GBX) at 11:22:30
on Market (LSE)

[essentialinvestor] 19/2/2024 11:47

* thanks for the clarification, appreciated.

Db possiblity touching last November's low?.

[skinnypope] 17/2/2024 12:11

Ah right, there’s the difference.

The “including income” measure that I use is, I believe, much more accurate. It will capture the likes of imminent dividends.

The “excluding income” will ignore those dividends, but will reflect the ex-dividend price of the stocks.

[Once the dividends are paid they will hit the cash line and both NAVs will come back more in line]

[essentialinvestor] 16/2/2024 18:36

29/12/23 RNS - abrdn Diversified Income and Growth plc Undiluted Excluding Income 111.33p Ordinary

From today, on the same basis, 107.62p.

[skinnypope] 16/2/2024 17:15

@EI – I can’t see the NAV has dropped 4% since year end?

31Dec NAV = 111.01
16Feb NAV = 109.15

Change = (1.7) %

I downloaded the new portfolio disclosure report, which wasn’t overly informative. Bond NAVs slightly improved, private assets small lower, and also equities lower.

Equities driven partly through net sales – they sold AERS and bought [less] JLEN, but also partly through market moves -there is a niggly 824k of GRID in the book, which took quite a hit to the end of Jan.

Re the NAV discount widening post any distribution, I think this is mathematically probable, but also not really relevant.

The remaining private assets will be the ones mostly contributing to the NAV discount, so indeed after the sale of the liquid assets (presumably valued only at a slight discount to NAV), then the remaining total NAV discount is spread over less assets = NAV discount % mechanically widens.

But it doesn’t matter as it’s already in the price. Putting some rough numbers out here:

Total portfolio value = £333m
Total market cap = £238m

To reconcile those numbers, I have to put the listed equities/bonds/credit assets to 5% discount, and the private assets to a whopping 45% discount [cash / forward contracts / debt at FV all largely offset]

In other words, post the liquid asset sales the NAV discount can go to 45%, but that’s where they are already valued, so it all nets off.

The real value in ADIG is that the discount on the Trance 1 private assets is too wide, given that they will just roll off at par. In fact, putting these assets to zero discount, means the Tranche 2 assets are kinda valued at zero!

[chucko1] 16/2/2024 17:14

I bought a few when the wind down decision was made. Given the perpetual fall (it seems) in NAV and there is no attribution to the factors causing it, I see the safest route as one of averaging in.

That said, it is clear that a factor of note would be the medium term risk free rate which has risen somewhat the past weeks in line with an NAV fall of about 3%. We know that they have some holding of fixed income instruments and more recently, the gilt fund. However, this by no means explains more than a mere portion of the fall.

As I had previously noted, I could see no comments in their publications on any hedging strategy being employed, so what is happening to the currency exposure is guesswork. Or general interest rate risk.

But yes, a possible 30-45% discount covers up many sins in a wind down.

[hugepants] 16/2/2024 16:26

tilton, I thought I read somewhere in the circular that the number of shares in issue will stay the same? Perhaps I misread.
I know what you mean but IMO the discount has to narrow from here as we approach capital repayment date.

[tiltonboy] 16/2/2024 16:21

Deleted post after re-reading. Apologies HP

[hugepants] 16/2/2024 16:13

less than 2% surely?

[essentialinvestor] 16/2/2024 16:09

Just looking at the 31/12/23 NAV,
it's fallen not far off 4% in just 6/7 weeks.

[essentialinvestor] 16/2/2024 16:06

* provided NAV does not decline further..