Close Enhanced Share Discussion Threads

[davebowler] 20/6/2008 14:04

As part of its investment portfolio, the Company holds a debt security issued by Glitnir
Banki HF ("Glitnir") with a nominal value of
£6,740,000 and a market value, as at the reporting date, of £19,417,777. This represents
18.91 per cent of the value of the Company's net
assets as at the reporting date.

On 21 April 2008, Standard & Poor's Ratings Services lowered its long-term counterparty
credit rating on Glitnir one notch from A- to
BBB+, with a negative outlook. Moody's rating has remained unchanged since 28 February 2008,
at A2, with a stable outlook. As a result of
the downgrade, the Board considered both the sale and the retention of the Glitnir debt
security, acting in the best interests of the
Company and Shareholders.
The Board reviewed Glitnir's financial results for the first quarter of 2008, including
its liquidity and capital adequacy position, as
well as recent research updates from the ratings agencies. Whilst Glitnir's profitability has
been, and is likely to remain, volatile due to
difficult conditions in capital markets and investment banking and the Icelandic economy, the
ratings agencies noted Glitnir's strong and
sound levels of liquidity, and its ability to meet commitments falling due over the
short-to-medium term, even under comprehensive stress
test conditions. They also considered that, should systemic support ever be required from the
Icelandic authorities, it would likely be
forthcoming. The ratings agencies are not, therefore, suggesting that Glitnir will likely
default on its liabilities. In fact, to the
contrary, a BBB+ rating is defined by Standard & Poor's as investment grade, with an
"adequate" capacity to meet its financial commitments.
The Board also considered how the Final Capital Entitlement of the Shares might be
affected by any sale of the Glitnir debt security and
noted that there could be a significant cost involved, resulting in an irreversible reduction
in the terms stated in the Company's
investment objective and expected by Shareholders.
On the basis of the prevailing facts, the Board therefore concluded that it would not be
in the best interests of the Company and
Shareholders to sell the Glitnir debt security, but will continue to monitor the situation.

[davebowler] 20/6/2008 14:01

Based on the values of the commodities as at 18 June 2008 and assuming these values were
to remain unchanged through to the end of the
life of the Company, the final capital entitlement per Share on the Redemption Date would be
334 pence. This is not a forecast nor is it a
reflection of the net asset value per Share and takes no account of any unforeseen
circumstances and is provided for informational purposes
only and should not be relied upon for investment decisions.

[davebowler] 02/6/2008 11:57

Based on the values of the commodities as at 28 May 2008 and assuming these values were to
remain unchanged through to the end of the
life of the Company, the final capital entitlement per Share on the Redemption Date would be
329 pence. This is not a forecast nor is it a
reflection of the net asset value per Share and takes no account of any unforeseen
circumstances and is provided for informational purposes
only and should not be relied upon for investment decisions.

[davebowler] 22/5/2008 12:56

New all time high due to the oil price, chiefly

[davebowler] 15/5/2008 10:50

Yes, it should cut a bit of volatility out after Feb 09

[tiltonboy] 15/5/2008 10:46

One thing I hadn't realised with this fund is that the terminal value will be the average value of the commodity portfolio during the last year of it's life.

[skyship] 20/4/2008 10:06

Can the oil spike be maintained? The price may be more than sustainable in the long-term, but regardless of Iran's rhetoric, it could be overbought at $117. Anyway, rather spooked by the counter-party concerns, so took the profits @ 237p.

"NAV" closed the week @ 321p, giving a GRY of 16.83% @ 241p.

[rogerbridge] 17/4/2008 17:26

Keeps on rising.

[rambutan2] 16/4/2008 22:41

i took my profits recently as concerned at iceland angle. Will sit on the sidelines for time being.

[skyship] 16/4/2008 14:12

Commodities strong across the board. Our "NAV" up again @ 323p, so the GRY has followed up to 18.45% at the improved share price of 231-236p

[davebowler] 14/4/2008 14:11

Thanks erstwhile2.

[davebowler] 12/4/2008 12:45

Alternatively ,erstwhile2, why not apply a premium ( not a discount) to the terminal value on the grounds that we are immune from the effects of the depreciating Dollar-which in turn
increases the future commodity prices over the next two years if it carries on dropping at this rate.

[alanji] 11/4/2008 17:47

Absolutely nothing wrong with looking at the 'current' GRY. Perhaps, as Erstwhile suggests, the forward price should be used rather than the current price. But what happens if the forward price is more than the current price?
good poiint Davebowler - one had to assess the likelyhood of the underlying assets not delivering on a zero.

[davebowler] 11/4/2008 16:30

It is similar to a Zero, which after all only has a fixed return if the underlying portfolio of shares do not fall below their 'cover ' level.

[skyship] 10/4/2008 08:14

TILTS - Yes, agreed - ALAN & I were using exactly that word when discussing it on the phone last night! Still, an old dog is always willing to learn new tricks.

[tiltonboy] 10/4/2008 08:05

SKYSHIP,

Whilst I understand where erstwhile is coming from, I believe he is being disingenuous to you, and to the methodology.

tiltonboy

[skyship] 10/4/2008 07:37

Incidentally - for those of us set in our ways but understanding of the relevance - the "NAV" this morning is @ 316p, providing an UNADJUSTED GRY OF 19.35% @ the slightly higher 227p

In deference to the good sense being posted by Erstwhile, I shall in future refer to this last definition as the "UGRY"!!

[skyship] 10/4/2008 07:24

Erstwhile - the "daft GRY" analogy is precisely that - an analogy based upon the GRY from the SPLIT Zeros that a number of us on this thread benefited from over 2002/7.

I'm glad you now agree that we should NOT value only at the prices pertaining to the final wind-up date!

So, in that context, thanks for your introduction to what is now known as an "Asian Forward" - I had certainly never heard of that terminology (It didn't exist when I was learning the game in the City!), but it does seem to be what applies here. It appears to amount to the same as my "Incremental Redemption" definition.

I believe I'm right in saying that the futures market does not usually operate in backwardation. The backwardations currently exist due to the large speculative element in the short-term bull position; but the Market is evolving and the "spot" purchases may well prove to be long-term investment decisions which will not unravel, ie, we are seeing a change in asset allocation - vis the ETFs. As the Market recognises this fact the backwardations will dissipate and the GRY analogy will seem more relevant.

[mangal] 09/4/2008 18:00

Very useful link, erstwhile2.
So, oil futures chain can be obtained via ...q/fc?s=CLK08.NYM. It would obviously be nice to get the future chains for other commodities too. Are these listed somewhere on yahoo?

[alanji] 09/4/2008 17:57

edit - found out my assumption was wrong

[skyship] 09/4/2008 17:33

Erstwhile - as ever, thanks for your input. Partially valid, but you're missing the fact I stated a few days ago, namely that it is an incremental redemption starting in about one year's time.