Harbourvest Global Priva... Share Discussion Threads

[ivor hunch] 29/10/2021 14:36

It seems to me that the desire for a dividend or not depends on how you hold this share. I personally hold it outside my ISA so am happy not to take a dividend, especially as the tax rates on dividends has just risen.

[lozzer69] 29/10/2021 13:41

Peter Walls who runs the Unicorn Mastertrust, a portfolio of investment trusts has just said he intends to hold HVPE for at least the next 10 years.On the dividend question I think on balance I would like a divi but as suggested I can always sell 3pc or so every year if I need the income.

[the real stan] 29/10/2021 10:10

This dividend issue is also much debated at Berkshire Hathaway. For most investors the capital gain is more tax efficient. Some investors like to live off the income and maintain capital and could reasonably sell say 3% of their shares every year as "income". But there is sometimes a psychological block to that seeming to diminish your investment - it takes a confident long term outlook to manage your thinking. Legally income is treated very differently too which might affect trusts, divorce settlements and Child Maintenance awards (I know I've been there).

[skyship] 29/10/2021 09:13

An interesting debate on the dividend aspect.

I've posted my colours to the mast on many occasions; I believe they (also PIN) should be paying a dividend calculated as a %age of NAV.

I'm also a sensible and successful investor; but DP politely denigrates anyone with that view as it contradicts his entirely justified personal opinion!

"So a 1-2% dividend probably increases your potential investor base meaningfully, despite being fundamentally irrelevant to all sensible investors"

Happily other have explained above why a dividend may be required in some instances; and how it might also act as a DCM.

[killing_time] 29/10/2021 08:56

Thanks for the update donald pond.

[donald pond] 29/10/2021 08:44

Simple answer is that there's little demand for a dividend from most investors so that's not on the agenda. He did reiterate the returns the underlying funds are getting on exits are fantastic (huge write ups on carrying value) and the combination of diversification and performance is exceptional. Which we know

[donald pond] 28/10/2021 16:06

Just realised I'm having dinner with a director of HVPE tonight who I know from another place. Will see what his thoughts are on dividends

[donald pond] 28/10/2021 09:00

Aye, different things suit different investors but I think a 1-2% dividend here would reduce discount Stifel have put on a 2925 target this morning

[qvg] 28/10/2021 08:50

donald pond, different investors have different situations. For two of my portfolios I think the same way as you. But my third portfolio has much better tax treatment of dividends than capital gains, and is my retrirement income portfolio; and I oversee a portfolio for a charity which relies on regular income. So for those two it is sensible to hold a share like Apax which combines good expected capital gain and income

[rambutan2] 27/10/2021 21:07

Re my post 217:



Re the power of that compounding, the share redemption was at a nav of $13 just 8yrs ago. Latest nav is $44.

[makinbuks] 27/10/2021 16:16

I guess the perfect scenario is to get to a premium position and then pursue tap issues as a way of adding to the compounding process

[rambutan2] 27/10/2021 15:40

The board did return a bit of cash once, a few year's ago. They bought back a (small) fixed % of shares off of all shareholders at around nav. No opt out.

In most cases I'm happy to take a div, if offered. But in the case of HVPE I strongly believe that the fantastic compound returns will be reduced by more than it's worth. The amazing way the cash flows are fine tuned near the max for flowing in and out of opportunities/funds would be compromised. It is this fine juggling, leading to better compounding than its fellow trusts ie PIN, SLPE, ICGT, BPET which is one of HVPE's secret sauces, along with the big allocation to the very best VC royalty. Aimho

[rambutan2] 27/10/2021 15:20

Note that:

HarbourVest Global Private Equity Limited ("HVPE" or the "Company") will announce its semi-annual results for the six months ended 31 July 2021 on 28 October 2021.

The Semi-Annual Report and Unaudited Condensed Interim Consolidated Financial Statements, along with the accompanying press release, will be available on HVPE's website at the same time.

[donald pond] 27/10/2021 15:14

I think a lot of wealth managers are given an instruction from clients to get some capital growth but also pay out say 3% or £20,000 a year, and while total return should be all that matters, if a company is paying out some dividend it is seen as contributing to that goal. So some big pools of cash might hesitate from buying funds that pay no dividend on the basis that it makes their life harder: either pushing them into very high yielding stocks to compensate or requiring them to sell stock to generate monies to pay out which can be complex for tax. So a 1-2% dividend probably increases your potential investor base meaningfully, despite being fundamentally irrelevant to all sensible investors

[makinbuks] 27/10/2021 15:07

Sorry, yes my comment was somewhat confusing. In the sentence referencing OCI I meant that they identified a whole range of measures which had an impact on the discount and set out a strategy to deal with each one. I would like to see similar evidence of consideration on the part of the HV board.

On the dividend point I fully agree, hence my "though illogical" comment. I was thinking mainly of APAX who pay a meaningful dividend as a % of NAV and have a lower discount. Why this is effective seems to be more perception than sound logic

[apple53] 27/10/2021 13:52

Hi Makinbuks. I agree with your view that there is scope for more proactive discount management.
I have mixed feelings about dividends - I'm not sure if OCI's 1% yield is enough to make a difference - maybe it falls between two stools - not enough to attract income funds and yield investors, but using up valuable cash that could shrink discount and enhance NAV via buybacks.
However, given the impossibility of a control experiment to see where OCI would be without the div, you could counter that a) there are investors who need at least a de minimis dividend, eg to satisfy fund holding requirements, b) the discount would indeed be wider without it, c) OCI is ALSO buying back stock anyway.

The interesting development is the credit facility is now paid down and any fear of using loans to buy back shares should now diminish. As I mentioned in my comments a couple of weeks back, this may not be enough to trigger buybacks, as I’m not sure if the team or board are sufficiently convinced that buybacks help long-term, but it does make it harder to do nothing, and they are less of a millstone then creating a dividend expectation.

Re. end September, the dollar NAV movement was a balance of revaluing 30% of the portfolio from end March to end June (+2-3pp?) and a fall in the value of the (now) 15% real-time portfolio due to large market falls in September (-0.5-1pp?). The sharp fall in gbp gave the sterling NAV a fillip. The currency impact should reverse in October, as should the market impact on the real-time portfolio, so we could end up with a small fall in the sterling NAV. Any September revaluations may not help that much, given the global MSCI was flat over the quarter, but one hopes that quality investments continue to drive steady outperformance.

[makinbuks] 27/10/2021 11:19

23% discount even if we get to £25. I'd like to see them take a leaf out of OCI's book and focus on measures to close that discount. I believe paying a dividend as a % of NAV, though illogical would do the trick. Thats my hope but not an expectation

[andyadvfn1] 26/10/2021 16:07

Interims due on Thursday, any views or just hopes ..

[its the oxman] 21/10/2021 11:25

Gonna pop 25 any day.

[its the oxman] 19/10/2021 08:34

Should at least grind out 25-2600p now. Could go higher still if discount can narrow.

[killing_time] 19/10/2021 07:46

NAV up 2% month on month.

[donald pond] 13/10/2021 09:24

Good write up in Times today I believe

[apple53] 12/10/2021 13:31

Talking about Wendel, is there any share chat anyone knows of? I would love to know what IHS is valued at in their books to get an idea of the NAV uplift. Wendel is already at a c. 40% discount and is buying back shares.

[apple53] 12/10/2021 13:28

One question is about how crowded the PE space is, and then how disciplined they are about valuation. They have a full pipeline of commitments, though the cash position has improved. It is notable that PIN has been buying its own shares. I need to check the history (or the share chat) to see if this is novel for them. I guess HVB would like a stronger cash position before doing so, and they may not be convinced of the benefits, but personally I think this would be great, and value creating while the discount is so large. But I'm not holding my breath.

[apple53] 12/10/2021 13:23

I have loaded up on a bunch of discounted trusts as the market has looked increasingly toppy. Lots of HVPE PIN, NAS, decent amount of Oakley, Caledonia, Wendel (though the latter two have poorer LT track records). I think all but Wendel tend to ride out volatility, and if there is a sustained fall in the markets, you normally get a few days before these fall in sympathy, in which case you can sell half and buy the liquid securities which fell hard, then buy back in if/when markets recover and these lag behind (especially due to smoothing in both directions in their NAVs).