Hipgnosis Songs Share Discussion Threads

[cynicalsteve] 19/9/2023 09:29

I sold last week @90p then bought half back @83p. Don't know yet if that makes me very clever or very stupid! I still believe that music catalogues are a credible alternative income investment but there is a problem with newer catalogues because it's difficult to judge their long term income stream. There is also the risk that the artist will be caught doing something very illegal/immoral, the fact that they've sold their royalty rights will not stop the media from banning their music. A more general problem for SONG is that there are a lot of cheap alternative income funds around at the moment: INPP, JLEN, USFP and many more.

[purplepelmets] 19/9/2023 07:52

75p is my magic number. Will allocate 10% of my portfolio to SONG if we get there. Long term capital appreciation on our classics and divis in the meantime. I just wish we hadnt bought so much bubblegum music

[epo001] 18/9/2023 20:11

So much for uncorrelated income.

My unit cost is 110p so a disaster all round really. Clearly wasn't paying attention when it went to 95p. Is there any point in holding? I can't see me breaking even.

[mpage] 18/9/2023 16:22

I agree. It stinks. What's the title of that Isaac Hayes 70s classic song? Oh, now I remember: Shaft!

[gerry53] 18/9/2023 14:59

Fortunately I have reduced my holding and now hold only a small number.This deal doesn't pass my smell test by a long way, and winding up is probably the answer I would vote for.

[johnbower] 18/9/2023 12:07

Back to levels pre RHM news = cheap. The 17% sale discount is defensible, and the fact no other buyers have come forward tells you it's close to a fair price. Also shows there is institutional demand for these assets well in excess of current share price. Yes, valid governance concerns but more than factored in...

[williamcooper104] 17/9/2023 10:38

As an investment banker once told me "Oh yes we have Chinese walls, but the Chinese are small and we are all quite tall"

[jong] 17/9/2023 09:06

Quotes from the Citywire Article :-

"The sale represents a 26% premium to the price SONG paid for the catalogues, a 51% premium to their current valuation implied by the company’s 30-day average share price but a 17.5% discount below their audited fair value at 31 March.
This portfolio has a ‘Go-Shop’; provision allowing the company’s board to solicit alternative offers for up to 40 days from today’s announcement. Hipgnosis Songs Capital has the right to match a new offer, but will receive a $6.6m termination fee if the board cancels the sale and switches to another buyer.
This deal raised concerns for analysts as the sale is to a related group. While SONG’s board said there would be Chinese walls between the two teams, Liberum analysts said it had only provided ‘boilerplate statements’.
‘It leaves us with the question of where the really good investment team members at the investment advisor are going to sit,’ the analysts wrote in a note. ‘Are they going to be on the team that advises the company or on the team that advises Hipgnosis Song Capital?’
The note went on to question if the teams would use the same models to value the catalogues and if they do they ‘will think alike and not be independent in their assessment of the value of the catalogues’.
The deal also raised questions of pricing, with Numis saying it was ‘disappointing that the manager does not trust the most recent valuation’ and the in-house nature of the transaction would ‘make some investors uncomfortable’ and lead to ‘increased scrutiny’ on the selling price.
Stifel’s Sachin Saggar also raised the question: ‘How do investors know that Blackstone [the end buyer] has not cherry picked the portfolio’ adding that it ‘does look a little cute’ the transaction is backdated to the beginning of the year with SONG handing back $15.3m in revenue to the purchaser"

[jeffian] 15/9/2023 15:33

Given the cosy relationship, surely it would just be merged into the Blackrock fund? They both have too much invested in the valuation model to let it be tested on the open market.

[cynicalsteve] 15/9/2023 15:25

I've just remembered this quote: 'Liquidity isn't how easy it is to sell something when you want to, it's how easy it is to sell something when you have to'. Music catalogues are not liquid assets and if the continuation vote doesn't pass a lot of catalogues are going to hit the market at the same time. Winding up the company may be more of a problem than a solution.

[jong] 15/9/2023 15:23

There's a good write up on Citywire on why this deal has raised a lot of questions and concerns.

[riverman77] 15/9/2023 15:18

I think people digesting the deal and realising it's not that great - if the purpose of deal was to prove the value of their assets then selling at a 17% discount is not ideal (and of course no guarantee that the rest of the catalogue will even achieve that).

[orinocor] 15/9/2023 14:53

wtf! The price went to 99p yesterday. What gives?

[edwardt] 15/9/2023 14:36

I guess this means no to continuation!

[edwardt] 14/9/2023 18:49

I hear you - it feels like the slap down today is what others are thinking too. Pay me full nav or close to it on the lot asap. I think that is short sighted but understand the reasoning. The vote could be interesting

[grahamg8] 14/9/2023 15:59

Mr Market has given this the thumbs down. It seems the only way to push the share price up is to sell off more and more catalogues, presumably at gradually bigger discounts. With the gigantic debt pile there doesn’t seem a great deal of upside, at least not for quite some time.

I’ll need more than jam tomorrow to convince me to vote YES for a continuation. Better value elsewhere.

[edwardt] 14/9/2023 09:26

looking through the list of proposed sells i am comfortable that these are not the cream of the portfolio. the transaction is complex but does meet a lot of the demands of the city bean counters.

[riverman77] 14/9/2023 08:18

Not too sure about this. They're selling at a 17% discount to latest valuation, and certainly no guarantee the rest of their songs would even achieve this. Compare with the private equity funds which continue to sell assets at around 30% premiums, yet trade on 40% discounts - I think I'll stick with the PE funds over this.

[cynicalsteve] 14/9/2023 08:09

Could take the market some time to give it's final verdict on this. The quality of the catalogues being sold need to be accessed, then the quality of the catalogues not being sold need to be accessed. This should allow the implied total value of the assets to be calculated. This needs to be done by someone with far more time and expertise than me! Maybe that the problem with SONG, it's too difficult to work out it's real value, especially the newer catalogues those long term earning potential are almost impossible to predict.

[hohum1] 14/9/2023 07:04

Hope they are not selling all the good stuff

[tiltonboy] 14/9/2023 06:58

This won't re-rate in the short-term. Needs more than this

[edwardt] 14/9/2023 06:57

To be fair they have invited other bids too. Unlikely but it is not improbable

[edwardt] 14/9/2023 06:46

I hear you but blackstone were always the obvious buyer

[edwardt] 14/9/2023 06:39

Boom! While not a slam dunk it does make the current share price look silly which is all that matters