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DSM Downing Strategic Micro-cap Investment Trust Plc

0.25 (0.43%)
07 Dec 2023 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Downing Strategic Micro-cap Investment Trust Plc LSE:DSM London Ordinary Share GB00BF0SCX52 RED ORD GBP0.001
  Price Change % Change Share Price Shares Traded Last Trade
  0.25 0.43% 58.00 65,944 08:00:00
Bid Price Offer Price High Price Low Price Open Price
57.00 59.00 58.00 58.00 58.00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Trust,ex Ed,religious,charty -1.69M -3.74M -0.0734 -7.90 29.52M
Last Trade Time Trade Type Trade Size Trade Price Currency
15:29:27 O 8,469 58.60 GBX

Downing Strategic Micro-... (DSM) Latest News (1)

Downing Strategic Micro-... (DSM) Discussions and Chat

Downing Strategic Micro-... Forums and Chat

Date Time Title Posts
29/11/202318:14Downing Strategic Micro-Cap Investment Trust plc431
07/9/200109:25DORSET SHARE MEET34

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Downing Strategic Micro-... (DSM) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2023-12-07 15:29:2858.608,4694,962.83O
2023-12-07 13:44:5558.645,0832,980.67O
2023-12-07 13:07:3157.364,7262,710.83O
2023-12-07 13:03:5357.2618,84710,791.79O
2023-12-07 12:08:2157.331,200688.01O

Downing Strategic Micro-... (DSM) Top Chat Posts

Top Posts
Posted at 07/12/2023 08:20 by Downing Strategic Micro-... Daily Update
Downing Strategic Micro-cap Investment Trust Plc is listed in the Trust,ex Ed,religious,charty sector of the London Stock Exchange with ticker DSM. The last closing price for Downing Strategic Micro-... was 57.75p.
Downing Strategic Micro-... currently has 50,890,681 shares in issue. The market capitalisation of Downing Strategic Micro-... is £29,516,595.
Downing Strategic Micro-... has a price to earnings ratio (PE ratio) of -7.90.
This morning DSM shares opened at 58p
Posted at 28/11/2023 17:23 by cousinit
I did sense that this would be the direction for RGD after the announcement a week or so ago and sold about 75% of my DSM holding, given the discount wasn't huge with the NAV vulnerable to a haircut. Seems strange that the wheels finally fell off so quickly at RGD given just a few weeks ago they were hailing a turnaround. Definitely a case of gradually then suddenly...

Does seem to be a very tough trading environment. Balance sheet strength key in the near term.
Posted at 26/11/2023 20:49 by riverman77
Depends if you're after a fund or individual stocks. For funds Rockwood and Oddysean investment trusts both look good, and DSM itself not a bad choice. Personally prefer individual stocks and an awful lot to choose from right now - some of my favourites include STB, HAT, RFX, VTU, LIT, AUGM and CARD. More recently picked up a few KITW and KGH. All look solid businesses and exceptionally cheap.
Posted at 10/11/2023 11:06 by riverman77
Regarding investments that are already involved in corporate actions - yes OTM and FA have recently received bids at a premium but the share prices have already adjusted - eg OTM up 77% in last month. This would therefore already be reflected in the NAV of DSM, so not sure there would be much further upside on top of this.
I don't disagree there is good upside potential here, but just not convinced there aren't better opportunities out there right now given you might have a long wait and the extremely cheap valuations in UK small caps (so a lot opportunity cost tying your money up here).
Posted at 10/11/2023 10:33 by 888icb
A number of the larger investments are already involved in corporate actions that will realise investments at values higher than they sit in DSM’s current NAV. The managers are saying at least a 50% uplift on 59p per share and that excludes the current 18% discount to NAV which will obviously be removed by selling the assets and returning the cash to shareholders.
Posted at 10/11/2023 10:08 by 888icb
DSM are not forced sellers and will conduct an orderly sale of assets to maximise shareholder value. There is currently no date set to conclude this process:
“ . It has concluded that it would advantage all shareholders equally and fairly to commence a managed wind down of the company's investment portfolio in an orderly manner. That will require shareholder approval which, along with further details, will be the subject of a circular shortly. It is expected that an initial return of capital equal to at least 20% of net assets can be delivered in early 2024 (subject to the two agreed bids noted above completing successfully) with further returns over a period of complete wind down. The board is consulting with its investment manager on the timescale for such a wind down, given current markets and the need to generate best value for shareholders who can see from the investment manager’s report that disposals by acquisition have been at values well above carrying value. The managers have been most helpful and set out more detail on this proposal in their report.”
And this is what the Manager’s say:
“ Inevitably, due to the nature of some of the investments, natural liquidity will be limited and hence there could be some time before a full and complete return of capital is made. Further details of this will be outlined in the coming weeks, however the manager has identified key catalysts within portfolio companies that point to an estimated intrinsic value of the portfolio, which if the divestments are carefully managed, would indicate an upside of at least 50% to current market cap. It is therefore the priority of the board and manager to realise this value and return capital to investors in the most efficient and effective way possible.

Further details on the proposed divestment plan, expected running costs, board composition, return of capital and revised management arrangements will be detailed by the end of the calendar year.”
Posted at 10/11/2023 09:00 by 888icb
The final part of the very detailed article and Buy recommendation:
“ Although Ramsdens continues to outperform analysts’ earnings expectations, prompting another round of upgrades post results last summer, the shares are only priced on a forward PE ratio of nine and offer an attractive prospective dividend yield of 4.9 per cent. A price-to-book value of 1.3 times is modest for a cash-rich company generating a post-tax return on equity of 17 per cent and one that is performing well during a cost-of-living crisis. Liberum’s target of 290p is more than a third higher than Ramsden’s current share price.

It’s worth noting, too, that DSM’s largest holding is a liquid £2.9mn (8.5 per cent of NAV) stake in cable manufacturer Volex (VLX:285p), a £511mn market capitalisation company. In other words, the investment trust’s cash. Proceeds from the two agreed takeovers and investments in the above five holdings account for 54 per cent of DSM’s NAV.

Scope for narrowing of share price discount to NAV
The point is that there should be scope for a narrowing of DSM’s share price discount to NAV as cash distributions are made. There is also the real possibility that other portfolio companies will succumb to takeovers or corporate events at share price premiums during DSM’s wind-down process given that their listed market valuations are well below the intrinsic value of the holdings.

Indeed, investment manager Judith MacKenzie has identified key catalysts within investee companies that point to an estimated intrinsic value of the portfolio, which if divestments are carefully managed, indicates an upside of at least 50 per cent to DSM’s current market capitalisation of £28mn (59p). True, a complete wind-down could take time given the nature of some of DSM’s investments and liquidity. However, this could work in shareholders' favour as small-caps have historically outperformed strongly after downturns.

The bottom line is that there is potential for capital returns to shareholders well above DSM’s current NAV of £34mn (71.5p), a factor not reflected in the 18 per cent share price discount to NAV. Buy.
Posted at 10/11/2023 08:57 by 888icb
More from the IC article where Simon Thompson has separately issued buy recommendations on a number of companies in DSM’s portfolio:
“ In recent weeks, portfolio companies OnTheMarket (OTM:110p), an online residential property portal, and FireAngel Safety Technology (FA.:6.73p), a home safety product supplier, have attracted recommended cash offers at bid premiums of 261 per cent and 56 per cent to their previous day’s closing prices. DSM will receive £2.7mn cash proceeds from each holding which, when combined with its cash holdings of £1.9mn, represents 21 per cent of DSM’s net asset value (NAV).

In addition, another investee company, Aim-traded fintech payments group Equals (EQLS:119.5p), has entered talks with potential bidders that could lead to a takeover of the fast-growing challenger brand in banking and international payments. DSM’s holding in Equals is worth £2.1mn, or 78 per cent higher than cost. It could have a 45 per cent further upside if analysts’ 175p fair valuations are hit (‘Equals offers opportunity for 50 per cent upside’, 8 November 2023).
Lowly rated portfolio offers material capital upside
DSM holds positions in three other companies I am particularly keen on: Hargreaves Services (HSP:418p), an industrial group and land developer; Journeo (JNEO:205p), a transport systems provider; and Middlesbrough-based financial services group Ramsdens (RFX: 212p). Combined the holdings are worth £6mn, or 17.6 per cent of NAV. I have target prices materially higher than the current share price for all these holdings, highlighting the value opportunity on offer.

For instance, Hargreaves is being valued on a 33 per cent discount to NAV of £201mn (618p) even though the group’s renewable energy assets (three wind farms, six access agreements and two solar farm leases) have been valued between £27.2mn and £28.9mn (83p to 89p). These assets are in the books for only £6.6mn (20p). The shares are rated on a forward price/earnings (PE) ratio of 6.7 and offer a five per cent dividend yield, too. Sum-of-the-parts valuations are 84 per cent higher than the current share price.

Following two recent earnings upgrades, house broker Cavendish expects Journeo’s full-year pre-tax profit to almost quadruple to £3.7mn to produce earnings per share (EPS) of 19.7p, rising to £4.2mn and 22.7p, respectively, in 2024. On this basis, the cash-rich company’s shares are rated on a 2024 price/earnings (PE) ratio of 9.1, an unwarranted 32 per cent discount to peers. My 300p target price represents a premium of almost 50 per cent to Journeo’s current share price (‘Journeo is en route to quadrupling its profit’, 18 September 2023).
Posted at 10/11/2023 08:48 by 888icb
Buy recommendation from Simon Thompson of IC. This is the beginning of it:
“ Downing Strategic Micro-Cap Investment Trust (DSM: 59p) is planning an orderly wind-up of the company and to return capital to shareholders. The first distribution will be made early in 2024 and will be at least 20 per cent of DSM’s current net asset value of £34mn (71.5p).

DSM retains a portfolio of 17 well-run, niche businesses that continue to generally perform well even in a more challenging economic environment. The manager has been outperforming a falling stock market, too, reporting an 8.3 per cent decline in NAV since its last financial year-end (28 February 2023), or half the 17.1 per cent decline in the FTSE Aim All-Share Total Return (TR) index over the same period. Moreover, although the holding is 12.9 per cent below the entry-level in my 2021 Bargain Share Portfolio, the FTSE Aim All-Share TR index has shed 39 per cent of its value in the same 32-month holding period, highlighting DSM’s outperformance.
However, there is no avoiding the negative sentiment towards UK small and micro-cap companies that has led to some of the deepest investment trust’s discounts to NAV in the past 20 years, nor the fact that there is little interest in small specialist investment trusts like DSM. This explains the investment manager’s and the board’s decision to pursue an orderly wind-up of the company.

Initial distribution fully funded
Importantly, the board has the cash on hand to make the initial cash distribution. That’s because more than 20 per cent of the portfolio by value is under offer or in a strategic review process.
Posted at 09/11/2023 16:25 by cousinit
Interesting post Sphere. We may do.

I do think DSM have to some extent been architects of their own downfall though. The return of cash has been talked up in previous reports. This invites tourists/'bob each way' investors and to some degree DSM then becomes a hostage to fortune when the much vaunted delivery lags. Clearly the markets can remain irrational for long periods so making statements which are almost in defiance of this aren't particularly advisable.

See also ARIX. Loads of cash on balance sheet. Strategic review initiated. Fails to return said cash. Share price wilts in face of tourists feeling, somewhat understandably, aggrieved.
Posted at 27/10/2023 14:16 by red ninja
The current DSM discount to NAV is 19.31% and the bid should raise NAV by 4.9p per share.

From todays NAV statement :-

Premium/(Discount) to NAV (including current period revenue) (19.31%)

* Current period revenue covers the period 01/03/2023
to 26/10/2023 and includes undistributed revenue in
respect of that period.

Fireangel Safety Technology Group plc

At 7:00am this morning (27 October 2023) it was announced that Intelligent Safety Electronics Pte. Limited has reached agreement on the terms of a cash offer for portfolio company Fireangel Safety Technology Group plc at 7.40p per share.

The closing bid price of Fireangel Safety Technology Group plc shares as at 26 October 2023 was 2.0p per share. Valuing the Company's Fireangel Safety Technology Group plc holding at 7.40p per share, plus warrants, would increase the Company's NAV as at close on 26 October 2023 by c.4.9p per share. The bid price of Fireangel Safety Technology Group plc at 11:00am on 27 October 2023 was 6.25p.
Downing Strategic Micro-... share price data is direct from the London Stock Exchange

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