Acencia Share Discussion Threads

[skyship] 08/12/2013 16:55

Langbarb – further to your above:

# Firstly – see this from the Cerberus website:

Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Founded in 1992, Cerberus has been dedicated to distressed investing since its inception. The Firm has over US $20 billion under management invested in four primary strategies:
· Distressed securities and assets (mortgage-based securities, corporate debt, non-performing loans, structured loans)
· Control and non-control private equity
· Commercial mid-market lending
· Real estate-related investments

# Secondly, this is what ACD has to say about those liquidating assets:

"The balance of the portfolio (10.9% vs 12.9% at 31 December 2012 and more than 20% two to three years ago) is in liquidating assets. These are investments in funds where ACD has submitted a redemption request but where the manager is unable to raise enough liquidity from the underlying fund holdings to honour the request in full, in a timely manner. As the pool of liquidating assets continues to shrink, the manager anticipates that by year-end 2013, substantially all of these investments will have gone. We do not believe these less liquid assets pose any material threat to shareholders being able to realise substantially all of the NAV in cash upon liquidation of all or part of the fund. By way of illustration, should there be, for example, 5% of the portfolio invested in liquidating assets at the end of 2014, and should it require a 25% discount to shift this in the secondary market, then the overall impact on realisable NAV would be relatively small (5% x 25% or 1.25%). Hence, we do not see the liquidating assets as an obstacle to the gradual unwinding of the remaining c 11% discount to NAV over the next two years."

Personally I have no concerns whatsoever that Cerberus will redeem/liquidate on time

# Below is what ACD say about the ACD liquidation

"Since the 2011 EGM, ACD has been managed in the anticipation that the fund will be wound up at the end of 2014. It is expected that it will be possible to liquidate and distribute substantially all of the assets during the first quarter of 2015.

Given the ongoing opportunities identified by ACD and its underlying managers, and the fact that many of those managers are closed to new investment in their funds, we continue to think it is possible that some shareholders may request that some form of continuation share class be made available when it comes to the 2014 continuation vote, perhaps continuing the investment horizon to 2016. This would allow those current investors who wish to liquidate the opportunity to do so, while giving investors the option to maintain the current underlying manager exposure."

I am sure Saltus would love ACD to continue; and I strongly suspect they will be successful in convincing many institutional holders to do so. That would not prevent we PIs receiving our payout should we elect to do so. Personally I will elect for the payout when it comes as I am wedded to stocks trading at a discount to current NAV.

# Finally - for easy reference I have added the link to that Edison research to the Header above

[langbarb] 08/12/2013 08:22

Sky, do you have any concern about the liquidating share class not being ... liquidated by Q115?

It amounts to 9.9% of the NAV according to the 16 Aug half yearly report, and has been declining rather slowly. If this were not to be distributed promptly and ended up sitting as rump for some time it would negate the discount to NAV.

I notice that most of the liquidating share class is Cerberus funds. They have recently acquired EUR 1bn loan book from Lloyds. Anyone has an idea of Cerberus ability to pay off ACD by Q115?

The Edison note you kindly posted the link to in the value thread mentions they could take a discounted price on these holdings.

Note: ACD is my largest holding

[skyship] 04/12/2013 16:46

Tapping on that £1 ceiling again...

[badtime] 04/12/2013 16:25

Bid up to 99p.. trying to tempt sellers?

[skyship] 03/12/2013 10:39

The management company continues to hoover up loose stock - 80k bought @ 98.75p

[badtime] 30/11/2013 16:20

I think the league table shows which is the right one :)

[tiltonboy] 30/11/2013 12:10

No, badtime supports the wrong club!!!

[skyship] 30/11/2013 11:04

Depends upon your allocation too I suppose - but always tempting when Tilts is bullish - no better recommendation IMO!

(Even though I gather from yr posts he does support the wrong football club)

[badtime] 30/11/2013 09:31

I thought as much..i'm toying of adding to ACD ...but thinking twice because of the same reason

[skyship] 30/11/2013 08:16

BT - totally agree with you, which is why my allocation is 14% ACD v. 8% APT.

However one has to diversify, so APT falls into the next best thing category. I am quite likely to take that 8% up to 10%; but am reluctant to take the ACD holding any higher. That said I had ACD up at 18.5% back in September, but halved my holding when North of 99pXD - knocking on the £1 limiter!.

[badtime] 29/11/2013 19:01

sky...if you take the least return you forecast here of 11% and compare it to the 12.56% you reckon at APT...don't you think its a pretty measly difference considering the 'perceived' safety of ACD?

[tiltonboy] 29/11/2013 16:20

I worry that the 52p is achievable. Will continue to monitor.

[skyship] 29/11/2013 15:58

Excellent - good to know that.

Now go and join me back into APT!!! Pity to have given some
of the profit back today; but glad it was better than it could
have been as managed to sell half at the open; then bought back
in again lower down. Still waiting for a reply to my email to
the company - would like more detail on their revaluations.

The GRY there from 40.63p to a 52p target by 31 Dec'15 would
be 12.56%.

[tiltonboy] 29/11/2013 15:49

SKYSHIP,

Just bought another 28k myself at the same price.

[skyship] 29/11/2013 15:48

Topped-up today @ 98.35p.

GRYs at differing payouts at 31.03.2015:
(each inc. annual divi of 3.68p)
(NB: Current NAV = 108.04p)

108p: 11.02%
110p: 12.51%
112p: 13.99p
114p: 15.46%

[skyship] 26/11/2013 15:24

Thanks Tilts...

[tiltonboy] 26/11/2013 14:39

Performance will be driven by the expertise of the fund managers they invest in. The various funds have different mandates, and it may be best to do a little homework on the top 10 holdings.

hxxp://www.acencia.co.uk/performance/top-holdings/

I'm still picking stock up, and believe there is an attractive return to be had until wind-up.

[skyship] 26/11/2013 14:27

No - it is a certainty - just needs one shareholder to vote for the winding up. I will be doing so!

NB: In all my current calcs I use 31 Mar'15 as the payout date.

RECI - no, not a liquidation stock - just interesting to read comments and reports from a company in the same line of business. I no longer hold there.

[speedsgh] 26/11/2013 14:07

SKYSHIP/SBP - Thanks for the reply. AFAICS (only looked briefly) RECI is not working towards winding itself up + returning the value to shareholders which is what interests me here. I have also looked at LSR but, due to the apparently shorter timescales, I am currently erring towards ACD as a means of insulating against possible volatility/corrections in the market over the next 12-18 months.

Am I right in thinking that it is not a certainty that ACD will be wound up at end of 2014 (even if it is still highly probable)? What effect might it have if ACD were to continue?

[skyship] 26/11/2013 12:31

Thanks for that SBP.

speedsgh - if you are still quite rightly doing your due dilgence - then also take a look at RECI. They operate in the same field; so many of the comments and reports would also apply here.

A rise in interest rates might impact on a limited part of their portfolio; but most stocks held will be on fixed maturity dates - so they climb toward par regardless.

I see the chance of a fall in the NAV as negligible; and it is interesting to note that a payout at the current 108p would still provide a GRY of 11.27%pa (7.52% from capital gain + 3.76% from the divi).

But it would be interesting to elicit a comment from Tiltonboy...

RU there Tilts?

[stupidboypike] 26/11/2013 12:13

speedsgh, I asked Sky a similar question a couple of months ago. His reply was in this post:-


It worked for me!

Best regards SBP

[speedsgh] 26/11/2013 11:54

SKYSHIP - Thanks for your research. I am looking at a possible investment in ACD + trying to identify any major risks in the investment case. The most obvious risk would seem to be that the NAV falls from its current position thereby eroding the potential upside.

The Chairman statement from the Interims in August was pretty bullish (AcenciA remains extremely well placed to benefit from any slow-down in quantitative easing, where those companies with leveraged capital structures are only able to sustain themselves in an environment of ultra-liquidity and low rates.)

However I have to admit that this is a sector that I do not fully understand. What circumstances would cause a fall in the NAV + what is the perceived likelihood of a fall in NAV actually occurring?

Any help greatly appreciated. TIA.

[smuttley] 25/11/2013 23:16

Thank you Sky.

[badtime] 25/11/2013 22:55

added sky?

[skyship] 25/11/2013 17:40

I was looking rather closely at ACD last week, so wrote this at the weekend:

ACD was a great performer in Q1'13; however its rapid rise caused the share price to get rather ahead of events. It is interesting to note that the returns dropped off as the share price levelled out through much of the following 8months of March-November:

Based on the 97.5p share price for the w/e/f 22nd November, the returns including the two dividends totalling 3.68p were as follows:

# 12months from 83p (Nov'12) 21.9%
# 11months from 86p (Dec'12) 17.7%
# 10months from 90.75p (Jan'13) 11.5%
# 9months from 93p (Feb'13) 8.8%
# 8months from 96p (Mar'13) 5.4%

As the price stalled through the Summer & Autumn, so the Gross Redemption Yield has risen to again really quite interesting levels. At 98p the GRY to 112p by 31 Mar'15 would be 14.2%. Such a target figure is likely to prove overly conservative. 115p would deliver 16.4%.

NB – the NAV is also showing good performance – 108.04p as at 31st Oct'13

Last week's purchase @ 97.5p by the Management company suggests that others too have been running the numbers!

Taking a look at the chart we can see that the 200day MA, which had been left well behind in Q1'13, has recovered to a level where it is now supporting the current share price (See Post No. on ADVFN's ACD thread):

To my mind the double digit days are well nigh over – so these are once again a very good BUY.