As I said, no cream fees until they turn this pile driver around |
Regarding fee creaming, there's a management fee and a performance fee. The AIC website describes them as follows: "The management fee payable quarterly in arrears calculated at the rate of one-fourth of 1% of Adjusted NAV minus Uncommitted Cash, where uncommitted Cash means cash that has not been allocated for repayment of a liability on the balance sheet of any member of the Group. Adjusted NAV means Net Asset Value, minus cash on the Company balance sheet. The performance fee payable to the Adviser by the company will be 10% above a hurdle of 7% of NAV, capped at 50% of the advisory fee in the respect of that period." |
No fee creaming until they deliver some results |
Is this of any use? |
To some extent the management fees are justified as we are in a period of high investment activity. In time this will change to a more or less fully invested steady state situation where they will be creaming off fees for little effort, that would be the time where linking the fees to market cap is more appropriate. |
Ah hadn’t realised EBITDA was 70% rev. I’d assumed 55% odd. But that’s the issue for us shareholders which is the fees are too high as the NAV is too high. They should revert to a Greencoat model of charging on mkt cap. But they won’t! |
@Andycranleigh. GSF are estimating operational EBITDA of 69% of £72M = £49.7M for FY 25/26. GSF give the NAV at September 2024 = £507.6M. 6 x EBITDA + say £50M of tax credits gets to £348M. (Management fees are based on a percentage of NAV so it's in GSF's interest to overestimate the NAV.) |
Home is an example of BS NAVs. Ditto D9 although exacerbated by daft asset sales plus huge advisor fees. I think some NAVs are probably too high. I think GSF’s probably are as if it can do, say, £40m of EBITDA, put that on say six times gets you to £250m odd. Plus tax credit. So maybe £300m of EV. Not £500m!! Might get you to roughly 60p? Don’t think these assets deserve 7-8x but could be wrong. Often am. |
You're forgetting that rates are coming down (but fair point on possible Gilt yields), as well as hopefully a little divi growth, unlike with Gilts.
I see it as a plethora of ZIRP-era chancer ITs coming unstuck, from the SONGs to the DGI9's to the HOME's, and plenty more. Bandwagon ITs set up in the era of cheap money.
Even the much better infrastructure ITs had business models based on being able to continually issue new shares, grow their asset base, and extend their lifespan as a result.
But but but. How much is in the price down here? I'm long many in size, and as long as divis don't get cut, am being paid to wait. GSF may have cut to 7p, but I'm pretty confident of getting it, post-energisation. |
Thats pretty much the conclusion Ive arrived at (though not sure where Home Reit fits in). Whatever happens my original enthusiasm was misplaced and Im never going to get much of my outlay back. Its largely been a fools errand - me being one of the many fools. |
That’s true, sector been descending for couple years but that covers rising Int rates, D9, Home REIT (and others), and optimism giving way to despondency vis a vis returns. If gilts yield, say 4.5, with no risk then what the right yield premium? I’d argue for quality like SEQI, UKW and GRP it’d be 7.5-8%. For Foresight etc maybe 9%+ then for Next/GSF/SEIT etc 10% to 13% smells right. If GSF can harvest the ITCs, finish its various builds then maybe 12% is possible which is c 60p? If they flog the unbuilt stuff then 65-70p? |
Ah I’ve discovered filter. Resident f’wit censored. Idiot. |
let's gather up outside GSF with torches, crosses and anti ESG and LGBT flags
we need to all chant purge and purify |
I think GSF is somewhat unpredictable and is low ish quality albeit bigrock is helpful. Then the sector ranges from UKW and GRP which are high quality, conservative and v well run to stuff like SEIT (should be opco) and GSF - reflected in yields. But overall sector dogged by opaqueness of NAVs not helped by D9 and Home REIT catastrophes and general global anti ESG/green mood. |
Those are fair comments Andy but they have been relevant ones now for quite a long time. Not sure how much we can blame Trump - GSF share price has been headed towards earth for most of Biden's tenure. Not a lot has changed, Big Rock Energised, Trump's unpredictability - suspending the IRA but all the analysts reckon he wont touch the ITCs (apart from George) |
Sorry dog in study crests fat finger moment
fixed'ish pricing and rpi adjustments to a more dynamic situation where buying in energy and subsequently releasing it is much less oredictable/secure
That's a downside but also an upside if your trading into an increasing demand for electricity?
Do management see this as a factor? |
Thanks AndyC
That's a very helpful insight.
I wonder if part of the concern might be a movement away from standard infrastructure revenue based on a fixed'ish |
If you've not filtered @george stobart yet, you really should - almost everyone else has. |
So what ? ITCs are still applicable. |
Plenty of others out there. SEIT, GRP, Foresight Solar, Nextenergy etc etc. GSF not entirely alone! |
Nevertheless , you are buying assets at 46p in the £ whilst capital investment in BESS are continuing. How much of a safety margin do investors need? |
Trump cancelled the IRA subsidies.
It's over |
I’m a holder and chatted with them last week. Issues are:
Mkt is suspicious of NAVs in sector generally - rightly so
Wind and solar NAVs easier to derive than batteries or say SEITs stuff. Limited or no mkt.
Suspicion around longevity and quality of cashflows. See above NAV comments.
Man fees too high - see Greencoats cut to mkt cap.
Sellers due to general sector worries, Trump, end Ukraine war so lower gas prices - in UK?
So lots headwinds. Is it all in price? Think for the highest quality names - UKW, GRP yes. Others need to prove eg GSF needs the tax credit then buy backs.
Overall tho mood poor. |
Herd mentality at play. |
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