Bluefield Solar Income Share Discussion Threads

[masurenguy] 22/4/2024 23:22

Bluefield Solar Income Fund: dividends whatever the weather

Dividends are covered by high levels of regulated, index-linked revenues alongside contracted power sales. Last year, 836,232 MW hours of energy were generated, of which just over 700,000 MWh was from solar. Payments for this electricity amounted to £108m of operational cash flows, minus £18m to service debt, percolated through to £90m of distributable earnings – more than twice covering dividends. So even after paying out dividends, a £58m dividend surplus was carried forward, giving investors extra peace of mind. Funds like Bluefield Solar paid highly attractive, progressive dividends for the first 7 or 8 years after BSIF and its peers floated, with average wholesale prices between £45 to £55 per MWh. Wholesale prices spiked above £500/MWh in 2022 and last December fell back below £100 – but that’s still almost double what the average has been in the previous decade. So to people worrying about how the funds will continue to pay dividends, Armstrong says: “the reality is these funds work very well and can operate very attractively on lower power prices than we currently see.”

[masurenguy] 21/4/2024 09:16

AJ Bell’s fair value assessment of Bluefield Solar misses the mark
We assess the report from 360 Fund Insight that is preventing private investors from buying Bluefield Solar Income on AJ Bell, and find it wanting.

AJ Bell’s outsourced assessment by value provider 360 Fund Insight of Bluefield Solar Income Fund (BSIF) has concluded the strategy is not appropriate for private investors because it has ‘worrisome’ borrowing levels and an ‘aggressive’ dividend policy. In the two-page document shown to Citywire, 360 demonstrates a misunderstanding of what Bluefield does by comparing its portfolio of UK solar, wind and battery storage assets with WilderHill New Energy Global Innovation index, made up of shares in global renewable energy companies, and an exchange-traded fund (ETF) that tracks it.

Holding shares in a portfolio of actual assets delivering largely inflation-linked, government-backed revenues that offer income investors a dependable yield is a different investment proposition to having shares in a portfolio of more than 100 global energy companies. It’s not comparing like for like. 360’s declaration that BSIF’s 8.80p-per-share dividend is ‘aggressive’ is at odds with its observation that the fund’s forward revenues from the inflation-linked contracts cover it twice over. Perhaps the ‘aggressive’ bit is the 9% yield, which is a result of a high payout and a low share price, but that’s what makes BSIF so attractive at the current 27% discount to net asset value (NAV) and why investors are annoyed that 360’s report has prevented them from buying the investment company on AJ Bell.

In Bluefield’s own recently published assessment of value, it says the main purpose of the £601m fund is to provide shareholders with an attractive return ‘principally in the form of regular income distributions’. By contrast, the ETF reinvests dividends it receives and only offers an ‘accumulation’ or growth share class to investors. 360 flags BSIF’s borrowing of 41.5% of gross assets as ‘worrisome’ given the dividend policy and elevated interest rates. But this is within the fund limits and is the sector average, and the board has pointed out in recent documents that at a 3.5% fixed rate, it’s pretty cheap. Emphasising the high leverage by pointing to the Invesco ETF’s zero borrowing is a straw man argument given ETFs are passive and can’t use gearing. Lastly, 360 says Bluefield’s factsheets distributed to retail investors do not provide key data, such as the total cost of investing, performance and the discount/premium evolution.

The Kent-based company, which was founded in 2017 by former members of the investment research team at funds platform Allfunds Bank, says it bore in mind that Bluefield is distributed to retail investors with ‘limited knowledge of the risks of investment trusts’, which is laudable. It makes good points that trusts are not held to the same reporting standards as open-ended peers and that several factors can impact a shareholder’s returns, including ‘leverage, liquidity, opaque costs and charges’. It also points out that BSIF’s ongoing charges total 1.94% versus 0.6% for the ETF. Bluefield portfolio manager James Armstrong told Citywire he was very surprised and disappointed to learn through investor feedback that 360’s assessment suggests BSIF does not offer fair value. "Since AJ Bell’s announcement to investors, the BSIF share price has fallen, trading away from BSIF has increased, and many frustrated investors continue to contact Ocorian, BSIF’s company secretary, expressing their confusion over the suggestion that BSIF does not offer fair value. They have also been frustrated by an inability to trade on the AJ Bell platform as a result." he said

The tone of the assessment is set when 360 makes the contentious claim in its opening statement that professional investors are better suited to closed-end funds in general. That appears to be a strange comment on behalf of AJ Bell, a retail broker with thousands of customers invested in trusts. The assessment rightly sets out to ensure retail investors aren’t hoodwinked by hidden costs, ‘misleading’ NAV returns and borrowing levels, but it misses the mark. Unfortunately, there are wider consequences with 360’s fair value assessments. AJ Bell’s DIY investors are barred from buying any shares online, not only in BSIF but also in Cordiant Digital Infrastructure (CORD) and Amedeo Air Four Plus (AA4), which have failed the assessments. Shares can still be bought over the phone though. In January, 360 won the contract to provide fair value assessments for thousands of funds on AJ Bell, including all offshore-domiciled investment companies.

AJ Bell said: "The assessments consider a range of factors, including cost and performance, in line with regulatory guidance. As with all our processes, [they] will be reviewed periodically and we’ll continue to listen to feedback from customers, regulators and other stakeholders."

[stemis] 18/4/2024 10:26

The one thing I will say about BSIF is that, unlike some, at least they disclose some financial information about the performance of their subsidiaries to compensate for the ridiculous ability (allowable under accounting standards) to not consolidate them and instead put them on the balance sheet at valuations made up by the board...

However I'm not exactly sure what they are disclosing. In the interims they disclose underlying earnings of the portfolio as £43.9m. It's unclear what they mean by 'earnings'? Is it ebitda or does it include depreciation (it certainly doesn't seem to include tax). After this they deduct debt repayments to give 'earnings' available for distribution. All a total muddle.

Anyone actually looked at this or all you all fixated on a meaningless NAV?

[williamcooper104] 17/4/2024 15:42

Still increases the chances of BSIF being taken private

[williamcooper104] 17/4/2024 15:41

Also misses the point that you can't compare the ETFs 60bps (which is expensive for an ETF) and BSIFs 194bps costs The ETF invests in trusts and companies that all have their own costs (whether they are externally or internally managed)Thus the 60bps is ontop of a lawyer of costs at the individual company/trust level Also you can't say the ETF is unleveraged as its investments will mostly be leveraged

[williamcooper104] 12/4/2024 13:04

Shell are thinking about leaving London There used to be a stock enhance in Leeds and one in Manchester Just as one day we will say - there used to be a stock exchange in London (I don't think the LSE will completely disappear but it's going to be become an irrelevance with New York and Amsterdam stealing it)

[panshanger1] 12/4/2024 12:50

5 year low here

[18bt] 12/4/2024 09:35

In my view the role of the FCA and the FRC continually adding new "governance" rules is a major reason for the decline in the UK market size and liquidity. I used to be a director of a couple of listed companies, one in the FTSE250 and I wouldn't touch it now.

[18bt] 12/4/2024 08:21

Another example of the FCA destroying the UK market? They will say that the platforms need to interpret the rules - but change the effing rule or at least issue clarity, especially for non-UK domiciled funds.

[18bt] 12/4/2024 08:19

AJ Bell blunders deepen row over ‘fair value’ restrictions on trusts
Outcry over retail brokers restricting investors from buying out-of-favour investment companies intensifies after AJ Bell implements FCA consumer duty regulations.
Jamie Colvin
By Jamie Colvin

AJ Bell has added to the outcry over retail brokers restricting investors from buying out-of-favour investment companies on the grounds that they are poor value.

The share-dealing platform has confirmed to Citywire that Chrysalis Investments (CHRY) and Bluefield Solar Income (BSIF) were among listed funds where online trading had been stopped after they failed fair value assessments conducted on behalf of the broker.

However, a spokesperson said investors could phone through a transaction and still pay the online charge of £5 rather than the normal phone fee of £25.

On online forums customers of AJ Bell complained they had also been prevented from buying Digital 9 Infrastructure (DGI9), Cordiant Digital Infrastructure (CORD) and Amedeo Air Four Plus (AA4) for failing the fair value assessment carried out by external consultant 360 Fund Insight.

Investors are furious they are being prevented from buying closed-end funds trading on wide discounts that they regard as good value with their low share prices offsetting any potential concerns over performance and costs.

Tom Poynton of wealth manager Baron & Grant said: ‘They’re acting as DIY investment supermarkets and supermarkets don’t tell you what you can and can’t buy otherwise everybody would only every buy own-branded and the cheapest goods. When those investors are told they can’t, they become disgruntled and there’s a chance that they’ll vote for their feet.’

There is also concern that the fair value notices are encouraging investors to sell these companies, putting further pressure on their share prices.

AJ Bell apologised after contacting investors who did not hold the restricted funds or informing others that the investment companies had completed the fair value assessments when they had been done by 360.

The confusion was heightened as all of the above investment companies are based in the Channel Islands and are not required to provide the assessments.

‘Notifications were issued following fair value assessments and unfortunately in some cases administrative errors resulted in customers receiving incorrect messages,’ AJ Bell told Citywire.

Under the Financial Conduct Authority’s consumer duty regulation, share-dealing platforms say they are required to alert customers at risk of poor returns and help them make informed decisions.

Price, performance, leverage and liquidity are all factors in whether investment companies are regarded as fair value.

AJ Bell says it monitors funds through the assessments and if they have not completed one, outsources the requirement to 360.

Its move follows similar restrictions by other investment platforms.

Hargreaves Lansdown has also restricted investors from buying Digital 9 Infrastructure, Cordiant Digital and Amedeo Air Four Plus until they pass a questionnaire showing they have the understanding of ‘complex investments’.

While Cordiant and Amedeo are listed on the London Stock Exchange’s specialist fund segment, Digital 9 is not but is still viewed as ‘complex’;.

‘These questionnaires aim to protect clients from poor outcomes, and so provide information on the product type, including some of the associated risks, before testing whether the client has an appropriate level of knowledge and experience,’ Hargreaves told Citywire.

AJ Bell also requires investors to complete an online ‘appropriateness assessment’.

‘It’s sheer stupidity that I can buy a hopeless share at big risk of going bust like Superdry, but can’t buy a pooled investment like DG19 without this farcical test. Pointing out that I was a very experienced investor in investment trusts fell on deaf ears,’ said one bulletin board member who failed Hargreaves’ questionnaire.

As previously reported, Fidelity’s platform bars purchases in AVI Global (AGT), MIGO Opportunities (MIGO), RIT Capital Partners (RCP) and Abrdn Private Equity Opportunities (APEO) although existing investors are allowed to top up their positions.

Interactive Investor also requires investors to certify they understand the risk of more complicated investment companies, including Digital 9, before allowing investment.

Poynton added: ‘I do sympathise with the platforms. They are trying to interpret what their role is in this. Some investment trusts are designating themselves as complex and the platforms can take it upon themselves to do so, then insist on investors taking a test. But what’s an appropriate test? What expertise is needed?’

[ltinvestor] 28/3/2024 08:56

Heard from a very good source that AJ Bell are in trouble over the email which was a definite error…

[janeann] 25/3/2024 21:38

My email from ajbell still not retracted.......and i messaged them today and still waiting to have a reply

[fordtin] 25/3/2024 20:53

Received a reply from Bluefield this evening. They acknowledged AJ Bell sent some emails in error and they will be retracted.

[mikealig] 25/3/2024 19:04

My apology from AJ Bell said it should have applied to another of my holdings AA4 Amedeo Air Four Plus. Not sure what they're playing at but it appears they've done some damage here. Good to see directors showing some support.

[gateside] 25/3/2024 18:46

Worth topping up at sub 100p

[gateside] 25/3/2024 18:46

My wife holds BSIF in her Sipp with AJ Bell, and she got the emails that others got. I hold BSIF in my Interactive Investor ISA and there was nothing from them. Suggests that AJ Bell have made a real mess of their communication

[melody9999] 25/3/2024 17:29

I've had the letter saying this:

First, an apology. We sent you an email this weekend telling you that an investment you hold had failed a fair value assessment. Unfortunately, due to a system error, the email named an incorrect investment.

We’re very sorry for this mistake, and for the confusion it caused. The investment you hold that failed a fair value assessment is: CORDIANT DIGITAL INFRASTRUCTURE LTD.

This fair value assessment was carried out by the manager of the investment itself, and may mean the investment doesn’t offer you good enough value over the long term.

I think AJBell are talking garbage with respect to both companies anmd will be contacting them to seek an explanation. If someone gets there before me, pls share.

[gateside] 25/3/2024 15:45

Well it's hurt the share price today. Back to under 100p

[mikealig] 25/3/2024 15:01

Now had an email from AJ Bell stating that the previous email was sent in error. What a shambles!

[fordtin] 25/3/2024 10:23

As for AJBell's "Recently, this investment failed a fair value assessment, carried out by the manager of the investment itself."

Perhaps you should ask AJBell for a copy of this alledged assessment.

If the manager of BSIF really has made such a value assessment of BSIF and determined BSIF to have failed that assessment, why wasn't it issued via RNS?

[fordtin] 25/3/2024 10:14

I agree with tournesol.
I had a look at the bot site and it doesn't seem to include any consideration for events such as share issues to fund acquisitions, development projects etc.

That type of simplistic calculation is a total waste of time for companies like BSIF imo.

[tournesol] 25/3/2024 10:07

It's an automated robotic system which creates output without the involvement of human beings (other than developing the robot).

There are lots of these things around and they are bit like the proverbial million monkeys using typewriters.

When they identify stocks that fit into the normal distribution they don't make any comment. When they identify outliers they do. Most of the time what they say is wrong. There are usually reasons for anomalies and these systems are unable to consider those reasons.

I never pay any attention to them.