Downing Strategic Micro-... Share Discussion Threads

[weatherman] 26/3/2024 09:16

I recall the ARIX 'takeover', where the biggest shareholder used the cash to organise itself a cash pay out, and all other shareholders had to settle for shares in RTW. As it turned out the RTW shares were worth more than the cash in the end.

[makinbuks] 26/3/2024 09:01

You are right. 13.4% voted against at the first meeting on 28th Feb which presumably was Milkwood and nobody supported them so likely to happen again. And I agree, having realised the cash its better with shareholders than in Downings hands. Its the continuing realisations I'm not so keen on

[red ninja] 26/3/2024 04:00

Milkwood had 16.7 percent on 22nd March so a long way from wining votes unless other big holders vote with them.

I think milkwood is right but it is bit late and what happens to cash do they re-invest it?

[makinbuks] 25/3/2024 16:16

hxxps://www.morningstar.co.uk/uk/news/AN_1711131194113714000/in-brief-milkwood-takes-stake-in-downing-strategic-micro-cap-.aspx

Milkwood intend to vote against all resolutions on 3rd April. That could be interesting

[makinbuks] 25/3/2024 16:08

I think we all believe that, question is will I get back the 78p I paid for them

[red ninja] 23/3/2024 11:24

As per the 20/3/24 Circular, 1st payout of 26p around 4th April :-

"The Board, therefore, anticipates that it will be able to undertake an issue and redemption of B shares on or around 4 April 2024 so as to return capital of approximately 26.0 pence per ordinary share to existing shareholders. This is significantly improved on the previous anticipated return of approximately £10 million in aggregate (representing approximately 21.5 pence per ordinary share), as set out in the Circular."

As they say :-

"The remainder of the portfolio comprises investments in companies where there is a clear path to greater value than that currently reflected in the Company's NAV. Some of DSM's investee companies are currently in strategic review or bid situations that are likely to realise value over coming months."

hopefully they will be able to deliver more than the current share price, Milkwood must believe that.

[weatherman] 22/3/2024 21:11

Someone is accumulating stock - Milkwood has doubled its holding.

[red ninja] 15/2/2024 17:20

DSM January 24 factsheet :-



"January 2024 Commentary
In January, the Company’s NAV decreased by 1.7% versus the share price which declined by 2.1%. A formal notice has been sent to shareholders to vote on the return of capital strategy for the company and we would urge all shareholders to vote. At the time of writing, cash is over 30% of NAV and we remain confident, subject to completion of the offer for FireAngel, of returning 50% of NAV before the end of June."

[888icb] 09/2/2024 12:21

My apologies for the above post as I had not seen the RNS of 2nd February which is not shown in the adfvn list of RNS above.

[888icb] 09/2/2024 11:12

Up 3.3% today getting back to levels last seen in November. Having started February at 58p it has just moved above 62p. We are overdue an update on the first distribution at NAV which was expected in Mid January. I wonder if they are pursuing another option perhaps with another fund making them unable to comment. Interesting.

[red ninja] 02/2/2024 20:39

Read the text and you will see they are promising for MID CASE the first repayments at NAV ie a 13.5% premium to current share price.

Now the MID CASE is usually the most likely, but that scenario implicitly allows a HIGH and a LOW CASE.

It is possible some share prices will rise and they will get more than the current price, but some are not so desirable and will quite possibly be sold at a discount.

The incentive plan rewards early sales, but they get more for the highest price obviously so how it well end up we'll have to wait and see.

[weatherman] 02/2/2024 16:47

I also wonder whether it is the right time to break it up, impatience at the bottom of the investment cycle in small cos. Experienced investors know how to patiently trade out of the lows, and wait for the highs to sell.

[makinbuks] 02/2/2024 16:29

Incentive fees? Are you kidding me? In six years of management they've destroyed 40% of value. Most recently they completely misjudged what was going on ad Good Food Co despite having a board representative. Their performance has been atrocious, they should be apologising and compensating shareholders not agreeing to more fees

[weatherman] 02/2/2024 16:21

How much of the discount to NAV will be eaten up by incentive exit fees?

[red ninja] 02/2/2024 15:57

Indicative returns for Shareholders and estimated timescales
In the absence of unforeseen circumstances and subject to the market conditions, the Board, in consultation with the Investment Manager, is currently estimating that the Managed Wind-Down could be completed within 2 years. Further, the Board believes, in consultation with the Investment Manager, that within the first six months of 2024 up to, or exceeding, 50 per cent. of the Company’s NAV could be returned to Shareholders in cash (assuming current bids for certain of the Company’s investments complete by then) with more value remaining in the NAV of the residual portfolio to be realised through the process of complete wind-down.

Specifically, the Board and Investment Manager estimate that, on a mid-case scenario, the Company will return:

on or around the end of the first quarter in 2024, 25 per cent. of Shareholders’ capital at NAV which, given the Company’s discount as at 31 January 2024 of 11.9 per cent., would be a 13.5 per cent. premium to the Current Share Price;
a further 25 per cent. of Shareholders’ capital at above NAV by 30 June 2024, which on current discounts and NAV would represent a greater than 13.5 per cent. premium to the Current Share Price; and
beyond 30 June 2024, a mid case scenario for the current market suggests a return above the current NAV and hence a significantly better than 13.5 per cent. premium to the Current Share Price. In order to keep up a timely rate of returns, the Board has constructed an incentive scheme for the Investment Manager (further details of which are set out below) to ensure that Shareholders receive their returns in a timely manner consistent with recovering value and rewarding appreciation above the current NAV.

[eeza] 22/1/2024 20:42

Steadily reducing JNEO from 8.04% at 31 Dec 23 to 3.79% on 19 Jan 24, and receiving a good price.

[red ninja] 20/1/2024 14:14

Judith McKenzie on Vox Markets covers fund holdings :-

Ramsdens
Journeo
Volex
Inspecs

[red ninja] 14/1/2024 14:36

Downing Strategic Micro Cap I.T December Factsheet comment :-



Hargreaves Services (-9%) announced that the wholly-owned Services and Land businesses
were trading well. The German JV will contribute significantly less profit, but as expected, will generate more distributable cash which will be returned to Hargreaves shareholders.
As a result, the business has increased the ordinary dividend to 36p per share equating to over a 10% yield on our cost. We think that there remains further scope for additional special distributions.

[misterd1] 02/1/2024 15:22

Arguably these are small prudent sales with plenty of skin left in the game

[red ninja] 02/1/2024 13:25

Yes, no one wants to see a share sold at a cheap price, but I guess we could be waiting some time to achieve fair value.

[makinbuks] 02/1/2024 10:17

Yes clearly the cash comes at 100% and the rump swapped for Rockwood shares. I don't like them selling down these stakes for cash at current valuations. Before they threw the towel in they thought these stakes had considerable upside to fair value, they made the point many, many times in presentations so why change the view now, just as the market turns up? Where there is an acquisition, fair enough, but otherwise get a deal done that allows shareholders to have the upside. That's what we're all here for after all

[red ninja] 02/1/2024 10:03

They are already selling down stakes :-

Journeo goes from 6.62% -> 5.89%



FLOWTECH FLUIDPOWER PLC goes from 10.09% -> 9.46%



Personally I would be interested in taking a transfer to Rockwell Strategic, but sounds like we'll get 50% in cash by June as they have stated. If they want to allow individual shareholders to transfer then they need to offer that option soon.

[makinbuks] 02/1/2024 09:22

Indeed maybe not even Rockwood acting alone, could be with others in the Harwood stable. I'm worried that Downing would see that as losing face to a competitor so we need our independent directors to stand strong here

[makinbuks] 02/1/2024 09:20

Exactly and at a discount to NAV but narrowing it for existing holders here. I'd take Rockwood shares happily as I already hold

[makinbuks] 30/12/2023 15:03

That's what I'm hoping