Edinburgh Investment Share Discussion Threads

[cynicalsteve] 13/8/2019 14:13

Agree about Barnett's Invesco funds, these have been shrinking since Woodford left.
The overlap is very high but EDIN is mostly large/medium caps so more selling from the funds would only be a problem if there was a panic, maybe more of an issue for PLI which has more small caps and unquoteds.

On a lighter note the current yield of EDIN is now 5.2% because of the 15% discount to NAV, the yield at NAV is 4.4%. The difference is 0.8% and last years annual fee was 0.56% so the market is saying Barnett's management is now worth less than nothing!

[essentialinvestor] 13/8/2019 12:31

Yes, Invesco on fees - and the BOD get paid.

[harewood1] 13/8/2019 11:55

Yup - CTY not affected but I think the reason is they are not invested in a lot of UK income-generating shares - because of Brexit and the falling pound they went for foreign income earners. Woodford and Barnett were the contrarians. The board will be heavily involved now and they have promised more oversight. They are loading themselves up with their own shares. I don't think they would be doing this if they thought there was some dodgy accounting issue in the offing. EDIN holds, after all, a basket of shares that are largely high liquidity and quoted on UK markets. My hunch is a sit tight - my suspicion is someone is making a lot of money out this!

[essentialinvestor] 13/8/2019 11:01

If I could buy a £6 million holiday home for cash, think the world might seem a rather wonderful place, whether he feels like that..

[contrarian joe] 13/8/2019 10:29

All MB funds have been named in the dog funds.Invesco high income,invesco income,uk strategic income,then you have pli,the problem facing all the open end funds is investors wanting out,maybe having to sell the most liquid first in this volatile market,the stocks in Edin will probably be similar to open ends,i wonder how woodfords feeling!!.

[andyj] 13/8/2019 09:46

It is hard not to think the collapse, for that it is what it is becoming, is not Mark Barnett specific. Other UK funds like CTY remain comfortably above their December lows, whereas EDIN and PLI are both plumbing multi year lower lows. I remain fearful of this becoming a run on his funds. Thoughts?

[harewood1] 13/8/2019 09:21

Specto - well, one seller in particular:-) It's triggering ATs as well. I think these are headwinds - Woodford's sales need to work through before the true position is clear. There is 25% overlap BUT the percentage of saleable Woodford assets are much higher - hence the disproportionate impact on EDIN. Barnett's portfolio is much more conservative. Conflicted on whether this is a further buy opportunity..hmm.

[spectoacc] 13/8/2019 07:24

Slightly concerning how little effect the buyback is having - a lot of keen sellers out there.

[contrarian joe] 12/8/2019 21:54

Borrowings and Gearing
The Company has in place a mixture of fixed and floating rate debt comprising of the Company’s 7¾% 2022 debenture; and a £150 million, 364 day committed credit facility. By these means, Mark has the ability to vary the gearing level of the portfolio depending on his view of the market. Borrowings at the start of the year were £143.9 million (equivalent to gross gearing with debt at market of 12.1%), aggregate borrowings during the year ranged between £100 million and £177.6 million and ended the year at £130.8 million, equivalent to gross gearing with debt at market of 11.0%, reflecting the Manager’s more cautious outlook.
Costs
The ongoing charges ratio f

[steve3sandal] 12/8/2019 21:28

CJ, hmmm, you’re probably right! I hope not, nearly 2% BB in total quite recently, that would be c£25m.

[contrarian joe] 12/8/2019 21:14

Steve,that's only around 0.3% of shares in issue,which is probably been funded by bank facilities increasing their gearing !!.

[essentialinvestor] 12/8/2019 19:52

It's also stocks like Provident Finance.

Emerging from a recession might see a rational for
a sub prime lender. However late in the cycle with
would be less sure on the
buying/holding case. Appreciate EDIN have held longer term,
it's still capital that arguably could be better deployed elsewhere.

Just fwiw, I'm watching stocks like AV. DLG, MRW for opportunities on a no deal exit -
don't hold any of those atm and there are business headwinds that apply to each.

[steve3sandal] 12/8/2019 18:39

500,000 buyback today at 540p again. That’s serious and another >£2.5m not available to the manager to invest. Importantly it generates a 15% shareholder return immediately. Sea change on buy backs which is good.

[spectoacc] 12/8/2019 18:07

I'm with @EI - all for value, just not convinced Barnett's tobacco & oils actually represents it.

[steve3sandal] 12/8/2019 17:48

Last year the Board of value style Schroder UK Income IT changed manager to growth style now Baillie Gifford UK Income BGUK. We will never know how Phillip Matthews would have done had he been given another 12 months but interestingly BGUK is showing c6% down fir 12 months v flat FTSE All Share. We need to be careful what we wish for of course but I’d imagine long term holders here are losing the will to live. PM did subsequently move to Wise Multi Asset/Cap Income which hasn’t had a great 12 months IIRC. I feel value is likely to do better than growth when the cycle turns but poor picks like value traps will remain dogs. I see elsewhere a few of Mark Barnett’s Invesco funds are officially dogs, so it’s not just us. I’m for a change of manager not a change of style here.

[essentialinvestor] 12/8/2019 16:38

It's arguable whether the fund holds many great value stocks.
Cheap for a good reason companies may be more apt.

Yes if we go in to recession sectors like tobacco would hopefully
provide some relative outperformance. It's likely Mike gets the best part of
another year in any case.

One of the themes he's stressed is undue pessimism towards UK focussed companies,
we will find out by Christmas whether that's validated, or not.

It's the same theme Woodford stressed btw.

[harewood1] 12/8/2019 15:54

EXACTLY my thought Topvest - value has been out of favour for a number of years now which is why a lot of analysists are predicting a big boost for this sector when Brexit eventually gets sorted. I think this is why the EDIN management is backing Barnett. I agree this is the big worry - selling out of value at the bottom and buying into growth at the top.

[topvest] 12/8/2019 13:47

The concern that I have to be honest is that they switch manager at just the wrong point (i.e. when value turns against growth). The last thing you want to do at this point is throw the towel in on the value mandate, just as growth goes pear shaped!

[essentialinvestor] 12/8/2019 13:40

There would be fierce competition for the mandate, yes.
An activist investor targeting EDIN to agitate for change is a different proposition though.
They make money on NAV gap closing (to a degree) and there does not look
to be that much leeway atm - particularly with volatile equity markets
and (generally) wide discounts across multiple funds - mentioned IVI last week.

[harewood1] 12/8/2019 13:38

Interesting SpectoAcc and you may well be right. Law debenture isn't paying over 5% dividend though - it is much lower and the discount is below 15%. I'm conflicted on EDIN - I've topped up slightly but not an enormous amount. Barnett is right about the basket of shares he holds being largely undervalued as a result of macroeconomic issues and forced selling by Woodford's equity fund. The unknown unknown is how long these issues will take to play out. My safety play is to slightly top up and sit tight. You can't argue with 5% of covered dividend.

[harewood1] 12/8/2019 13:38

Interesting SpectoAcc and you may well be right. Law debenture isn't paying over 5% dividend though - it is much lower and the discount is below 15%. I'm conflicted on EDIN - I've topped up slightly but not an enormous amount. Barnett is right about the basket of shares he holds being largely undervalued as a result of macroeconomic issues and forced selling by Woodford's equity fund. The unknown unknown is how long these issues will take to play out. My safety play is to slightly top up and sit tight. You can't argue with 5% of covered dividend.

[essentialinvestor] 12/8/2019 13:07

Discount to NAV might need to be wider for that.
Also the size of the fund - you are looking at a significant financial commitment
for any activist involvement.

[contrarian joe] 11/8/2019 19:44

Wouldn't give it that long EI,can see activist coming on board to shake up this cosy set up!!,"they have let their shareholders down really badly",buying the fund 5yrs ago would of resulted in a unbelievable 5% annual underperformance against it's benchmark & in that period Invesco have taken £75m in fees.

[topvest] 11/8/2019 18:14

Agreed. Invesco have just not performed and don’t really show much sign of doing so. There are much better managers out there for such a highly prized investment trust. Bring it on.