Gresham House Energy Sto... Share Discussion Threads

[adamb1978] 17/10/2023 11:56

One necessary condition for all these hard asset trusts to move meaningfully higher, as well as small-caps, is interest rates tapering off. Enough people will look at >5% risk free from savings accounts and think that is 'good enough' for them and park their capital there.

Rates are slowly coming down, and the withdrawal of the 6.1% NS&I thing recently is a sign of that. On the other side of the borrowing/lending equation, mortgage rates are coming down too - a 5 yr rate which i've been looking at as a benchmark to monitor for consistency is down 40bps in the last couple months. It's a start, but needs to move further.

I know some people will argue to the contrary but a lot of the forces which have caused low inflation and low interest rates historically are still present - more people in retirement, piles of savings in teh far east, technology being deflationary...and you can add to that the fact that people will naturally be more cautious and run with higher savings rates after the recent experience.

As a result of these factors, we'll be back in low growth / inflation / interest rate world at some point before too long - my guess is late 2024 or into 2025. But we need to move further along the path to that point to get these going again.

[cc2014] 17/10/2023 11:02

Price reverting to reality.

Too much battery storage in UK equals low opportunity and they are all competing with other and driving prices down further. Prices on the floor but market worried they go even lower yet.

Too much gearing and yet no recognition of this yet from the Board or fund manager.

[cruelladeville] 17/10/2023 10:34

Cripes. What's happening?

[cruelladeville] 16/10/2023 20:09

WTF. Down nearly another 5% today? Oh dear.

[marktime1231] 12/10/2023 13:34

Fighting talk from GSF, a statement in support of its own sp, a favourable response up 3-4p but still a 40% discount which is where GRID has slumped to. Cherrypicking some operational highlights such as a good event in the Texas ERCOT market.

No attempt to reset NAV in light of what it admits were previously over-optimistic revenue forecasts in the GB market.

Claiming the crown of the best covered dividend in the sector but not actually saying what the cover was. Not hard to beat GRIDs 60-70% cover.

Saying it is well capitalised blah blah. Talked the manager in to buying some shares in a show of support.

Actually spearing GRID with the remark that its portfolio diversification in Germany, Ireland and the USA is helping to offset the poor GB performance.

Otherwise scant on detail, I would wait for some hard numbers and the inevitable NAV reset before getting enthusisatic about either GRID or GSF again.

[marktime1231] 10/10/2023 22:18

The reasons why the share price has halved in a year are pretty well exposed and have been discussed here at length. Some due to problems with management strategy and execution, some macro and sectoral rather than specific to GRID or GSF, some down to the way things go. Hardly grounds for legal action. By all means write to them with your complaints and difficult questions if it makes you feel better, or present your concerns in person at the next meeting. It won't get your money back if you bought high and have lost a packet.

I addressed the board when things started to look more difficult, they weren't interested then and despite some tactical revisions they retain an unshakeable belief in their expertise and the wisdom of their broad strategy. So I divested. The share price is looking daft but I'm still not ready to reinvest.

[nickrl] 10/10/2023 22:01

@nickelmer the problem here is these were nothing special assets but NG ESO pushing the use of batteries for frequency response, to reduce the impact of lack of inherent system inertia from big turbines, by high fixed rates initially got the market into its first hype then Ukraine impact sent leccy prices miles higher than they would have ever been. The money men thought they had won the lottery and got carried away and imv disregarded the risks there supposed to clever at managing 1. Leccy prices would return to norms and that 2. a stash of developers have built out batteries so what did they think was going to happen to the frequency response mkt.

Good luck with your quest

[nickelmer] 10/10/2023 20:21

TO GRESHAM HOUSE INVESTORS.

I am a shareholder in Gore Streety Energy Fund, I would urge you to ask the same questions of your company


"I have emailed the company (GORE) for a response, my question to them being.

If BESS as an industry is so vital to the Net Zero project, why are they performing so badly, either the management is utterly incompetent, or they have hoodwinked investors to put money into something that has no value or chance of success.

Other BESS plc's are also failing, if they cannot answer these questions then I would suggest investors consider taking legal action against directors and management of GORE and other such companies.

I would urge you to place increasing pressure on management to provide answers to these questions, and those you most likely also have

[cruelladeville] 06/10/2023 12:34

Good to see a director share purchase. Only ~£10,000 but showing some confidence.

[marktime1231] 03/10/2023 14:58

Here we are back under 100p the IPO price from Nov 2018.

Reasons for the share price crash must include the suspicion that there should have been further NAV correction at half way and/or there is further correction to come. The paper discount pushing through 30% is pricing it in.

GRID can't keep slipping project deadlines, observing an outlook for lower revenues, moaning that the customer ESO is not on-boarding battery services how GRID would like, supplementing income with cash to pay the dividend, drawing credit in the face of rising interest rates.

NAV adjustment something presumably GRID are reluctant to do, it would erode management fees and might sour Searchlight's bid interest in Gresham House. A bit like they were reluctant to tell us about the project problems and the tumbling revenue, and don't like to use hard operational and income metrics preferring to keep it all about assets and pipeline.

So doubts whether we can trust them. I have watched Ben Guest's investor presentation, reedy voice, under pressure or bluffing. He wants us to believe that we can expect a return to the wholesale price volatility caused by the Ukraine war on gas markets, blames ESO for failing to make proper use of batteries, and suggests they are working on "exciting" ways to sell services to other customers but no detail. All a bit thin and too late. And then refers to tiering up capacity without having to issue more equity, but we know the programme is not in control so how and when is that going to save the day. At least a year.

Can't find a report on the q&a webinar, not sure who the key shareholders are who might have had tough questions. Blackrock, Schroders ... ? Given up trying to engage with Stevenson the NED private investor who tipped GRID as looking like a bargain when it hit 130p in July. No-one challenging on our behalf.

Sorry if I am harping on here, I wish I had something more positive to say. At some stage I will want to get back in here, not ready even at this price though.

[cc2014] 03/10/2023 12:03

Why would you bother? 7.35p uncovered dividend rising to covered in due course, then plan to ramp up borrowing to invest in more assets making it uncovered again.

[marktime1231] 02/10/2023 17:31

Chairman Leg It stumps up a measly 5 grand and the stock drops like a stone. Even good stocks were pummelled this afternoon but GRID is just laughable.

[waterloo01] 02/10/2023 16:52

Renewable energy stocks hit hard by higher interest rates
Sector falls 20% in two months, with some wind turbine shares weighed down by contracts struck at unfavourable prices

......However, Anaconda’s Saleur said he was no longer shorting solar companies and had bought in to some stocks in the sector. “We believe the large part of the value destruction is over,” he said.

Explains the fall. Sector based

[nickrl] 01/10/2023 10:50

So they say not needing an equity raise to complete build out but given they want to expand many exiting site to two hour duration (which is sensible but too late again) they will have to draw down more of the debt to build them although my read is they are using kit destined for new sites so maybe not too much draw but increased finance costs for sure. The whinge about the BM is relevant although how much more they will benefit from that depends on pricing and the thing here is a lot of battery capacity is coming into the mkt so pricing will be competitive like we've seen in the ancillary services but should provide a boost to income albeit means cycling the batteries a lot more frequently.

In propcos at least the valuation is externally done here this effectively done by the mgr and clearly the mkt doesn't believe it given how much share price has been smashed down in last month when IRs haven't moved either. As ive said before GRID chose not disclose any operational data on its assets unlike UKW who are very transparent. Then you have all the subsidiaries not being consolidated and yes you can look at companies house but accounts are min 9mths stale and often a lot worse so its meaningless.

Still have more faith in HEIT but not invested there either but maybe an entry point given gas prices have crept up a fair bit recently.

[marktime1231] 27/9/2023 20:39

Yes, happy to be on the outside looking in until things resolve.

Collapsing revenue stream, complaining that ESO are cutting them out, well maybe ESO doesn't need the way batteries are being offered so much, get with it GRID.

They say the dividend will not be covered until 2023 deployments are complete, latest estimate is sometime H1 2024 but don't bank on it. Not much chance of further dividend increases then.

They say happy with funding of committed programme without needing another issue, but we know the last raise fell short of what the US venture requires, so it will have to be expensive debt then. Already eating in to the available credit facility.

Restating the low risk wisdom of extending the duration of existing sites to 2hrs, solves the problem of grid connection delays at new developments. A bit late. While still pursuing early stage new developments including in new markets.

I'm sure I've missed other bad snippets, but that is depressing enough.

The devastating collapse here in the last six months, as problems with strategy and execution slowly reveal themselves, worth a bit of contrition if not heads rolling. I imagine the investor Q&A this morning had a bit of atmosphere to it. But the chairman applauds the track record of the manager, and there is a whole page in the Interim Report about how the manager is adding value and enhancing revenue.

Oh, and the management fee/admin was £4.85M for all that dreadful investor value destruction. A 37% increase!!!

Worse still to come.

[speedsgh] 27/9/2023 17:38

Happy to be watching GRID from the sidelines...

Half-year results to 30 June 2023 -

[marktime1231] 25/9/2023 17:20

Wow, closed down at 108p. Is this now so cheap it is worth getting back in?

A 25% discount to NAV (but which may be falling) and 6.7% yield on offer. Well some good renewable energy ITs are trading at a 15% discount so is 25% off a bad one about right? Similarly beleaguered rival GSF on a 29% discount is yielding 9%, so if GRID is possibly worth betting on again then GSF certainly is.

But I'm not warming to either, watching from the sidelines for good news, or the end to bad news, and for signs that they are behaving more like lower risk income managers and less like fee-driven higher risk asset developers.

[cc2014] 09/9/2023 10:55

Hi Adam,

Our opinions of the economic situation are pretty close. I'm in agreement that there may or may not be one more rate rise in September and if does happen it's very likely to be the last one. I'm also in agreement that base rates will start to fall at some time. This is a bit hard to predict as I see it as difficult for the BOE to reduce rates whilst inflation is above 2-3% but I'd say sometime next year.

Let's call it June for the sake of discussion. There are two things though. I see the era of low term rates is now gone. That's a failed economic experiment. So, maybe they will drop to 4% and that fits with say 10 year gilts when are sitting at around 4.5%

If rates fall to 4% is that going to make any significant impact on the asset value based upon some DCF cash flow model. Well yes a little. But not that much. It helps. But in the other direction we have lower inflation in the DCF models but more importantly for me is QT.

By June next year that's another $900bn of QT done roughly in the US and IIRC correctly perhaps another £60b in the UK. That's a constant drag on asset prices.


Sure, I see the possiblitiy of some relief rally based on interest rates falling but I don't think it will be that great and could be from a lower low than where we are now.

Just my thoughts. As you say it takes two to make a market and that's the beauty of it.

[adamb1978] 08/9/2023 18:56

CC2014

I take the opposite view. I think inflation will continue to come down sharply from here and be around 4% by year end. That will mean that we're probably at peak interest rates - max there would be 1 more rate rise in Sept and therefore that market expectations of peak rates at 5.7% needs to come down further. Falling rates will therefore support the price of this sort of thing, as well as small caps, commodities etc. I plan to be 100% invested before long.

Guess our different opinions is what makes a market!!!

Adam

[nickrl] 08/9/2023 17:28

Not sure how much you can take from BESS analytics website especially trading income as thats not readily declared for weeks even for BM assets but stats for last 30 days are

HEIT 4 sites 129MW/258MWh average 6.93 £/MW/hr 61 £k/MW/yr

GRID 9 sites 355MW/398MWh average 4.39 £/MW/hr 38 £k/MW/yr

shows you the extent of not have 2hr batteries.

HEIT have one site in delay due to grid connection but two more sites coming on line a little earlier all helps boost cashflow although neither are anywhere near covering divi currently.

[topvest] 08/9/2023 13:47

No problem. Yes, I would agree HEIT are a better buy at the moment. To be honest, I think both will get cheaper though and energy storage is having a big hangover from the glories of 2021 and 2022. I should have waited longer. They are both probably better placed medium-term than short-term so there is no rush.

I am still 34% cash in my portfolio and I am not buying anything now until my chart alerts get hit (i.e. 50dma>200mda) - have 178 alerts set! Its always tempting to bottom fish, but where is the bottom? I am not convinced we will hit bottom until the US cracks. I would be very surprised if the US gets through Q4 without a stock market crash. The US is still 50%+ overvalued and when this corrects we will surely feel it!

[cc2014] 08/9/2023 13:30

My apologies Topvest. I've checked the RNS and the battery life is not being extended.
I'm not sure why I thought that, I probably read it somewhere but not on GRID.

I have been dithering about buying this morning but in the end I've decided to leave it. I'm kind of with you that 120p is a not unreasonable price but it does carry some risk and isn't super cheap which is what I would prefer.

I concur that HEIT seems better or at least they seem good at the construction side of it. And so they should be as that's what Harmony (the company not the IT) do.