Hipgnosis Songs Fund Limited

0.20 (0.24%)
Share Name Share Symbol Market Type Share ISIN Share Description
Hipgnosis Songs Fund Limited LSE:SONG London Ordinary Share GG00BFYT9H72 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  0.20 0.24% 82.20 7,001,086 16:35:02
Bid Price Offer Price High Price Low Price Open Price
82.10 82.30 83.00 82.00 83.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Finance Services 200.38 -19.44 -1.60 - 993.97
Last Trade Time Trade Type Trade Size Trade Price Currency
17:51:33 O 751 82.302 GBX

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Date Time Title Posts
03/6/202317:48Hipgnosis Songs Fund Limited778

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Hipgnosis Songs (SONG) Most Recent Trades

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2023-06-08 16:51:3382.30751618.09O
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Hipgnosis Songs (SONG) Top Chat Posts

Top Posts
Posted at 20/4/2023 10:34 by mpage

The continuation vote this autumn makes SONG an interesting special situation and does seem to limit the downside - while endgame must surely be a takeover.

As I understand it, the apparent share price discount to NAV depends greatly on the discount rate used to value the catalogue - a grey area. Roundhill appointed a second valuer to try and assuage investors' concerns. A small upward shift in SONG's internal discount rate would create a large reduction in the share price discount without perhaps moving the share price much. So maybe it's not as optically cheap as it appears. There is room for an upside surprise on cash coming through.

Posted at 31/3/2023 15:44 by rambutan2
So, as I said, share price is the factor for both, with divs added for the performance fee:

Performance Fee (pg158-59 of AR)
In respect of each accounting period, the Investment Adviser (or, where the Investment Adviser so directs, any member of the Investment Adviser’s team) is entitled to receive a performance fee (the ‘Performance Fee’) equal to 10% of the Excess Total Return relating to that accounting period provided that the Performance Fee shall be capped such that the sum of the advisory fee (payable in respect of the Average Market Capitalisation of Ordinary Shares only) and the Performance Fee paid in respect of that accounting period is no more than 5% of the lower of: (i) Net Asset Value; or (ii) Closing Market Capitalisation at the end of that accounting period.

The Excess Total Return for an accounting period is calculated by reference to: (i) the difference between the Performance Share Price at the end of that Accounting Period and the higher of: (a) the Performance Hurdle (being issue price compounded by 10% per annum from initial Admission subject to appropriate adjustments in certain situations); and (b) high watermark (being the Performance Share Price at the end of the last Accounting Period where a Performance Fee was payable); multiplied by (ii) the weighted average of the number of Ordinary Shares in issue (excluding any shares held in treasury) at the end of each day during that accounting period.

For the purposes of calculating the Performance Fee:
“Performance Share Price” means, in relation to each accounting period, the average of the middle market quotations of the Ordinary Shares for the 1 month period ending on the last business day of that accounting period (which shall be adjusted as appropriate: (i) to include any dividend declared but not paid where the Ordinary Shares are quoted ex such dividend at any time during that month; (ii) to exclude any dividend paid in respect
of the shares during that month; and (iii) for the PSP Adjustments). During the period, the average of the middle market quotations was 120.80p;
“Performance Share Price Adjustments” means adjustments to the Performance Share Price to (i) include the gross amount of any dividends and/or distributions paid in respect of an Ordinary Share since initial Admission; and
(ii) make such adjustments to take account of C Shares as were agreed between the Company and the Investment Adviser, acting reasonably and in good faith, at the time of issuance of such C Shares.
The amount of Performance Fee payable to the Investment Adviser shall be paid in the form of a combination of:
a) cash equal to all taxes or charges payable with respect to the Performance Fee by the Investment Adviser or member(s) of the Investment Adviser’s Team; and
b) Ordinary Shares (“Performance Shares”) which are either issued by the Company where the Ordinary Shares are on average trading at par or at a premium to the last reported Operative NAV per Ordinary Share at the relevant time or purchased from the secondary market where the Ordinary Shares are on average trading at a discount to the last reported Operative NAV per Ordinary Share at the relevant time and transferred to,
the Investment Adviser or member(s) of the Investment Adviser’s Team. The Performance Shares are subject to 18-month lock-up arrangements.

Posted at 11/12/2022 04:07 by rambutan2
The management fees are based off of the share price, not as is usually the case off of the nav. So the fees have shrunk as the share price has fallen. Which seems very fair to me.

On top of that, the performance fee is also based off of the share price and not the nav, and compounds at 10% pa. So is currently way over the horizon.

And the fact that Blackstone are majority owners of the management company should be of interest to SONG investors. It certainly plays a part in my investment thesis.


Posted at 09/12/2022 10:56 by anhar
Well I don't think they'd have the funds to buy new songs - can't raise more equity at deep discount, and quite highly levered so probably can't borrwo more

Yup that's the situation. So they are concentrating on exploiting their existing cats which is no bad thing imo.

They are buying back shares, funded by normal cash flow. I'm an income investor and generally I dislike buybacks because they rob shareholders of cash that could otherwise be paid out as additional divis, but for investment trusts like SONG where the share price stands at a deep discount to NAV, BBs can be beneficial because share purchases below NAV have the effect of reducing the disount.

One interesting feature of the accounts is the fees of $6.8m paid to Mercuriadis's management company as investment adviser for the six months, though admittedly it is well down on the $8.2m paid in the comparative last year. It's contractual but still seems an awful lot in light of the lousy share price performance but of course the share price is beyond his control.

Posted at 08/12/2022 09:41 by hugepants

Operative NAV (whatever that is) of 164p
Annual target dividend maintained of 5.25p per share

"Despite all of this positive news, I share the disappointment of shareholders that the true value of our iconic songs is not being reflected in today's share price. Hipgnosis is an asset based company with a catalogue unrivalled for its extraordinary success and cultural importance. The current share price implies that our Company is valued using a 12% discount rate, presenting an incredible investment opportunity considering this is a deep discount compared to multiples currently being paid in the market.

"All that's left is to wish you all a Merry Christmas, just as Mariah Carey's All I Want for Christmas Is You has gone to Number 1, again, on the Billboard Global chart and is also Number 1 on the UK Official Midweek Chart and Michael Bublé's Christmas album is heading for the Top 5 all over the world."

Posted at 30/11/2022 22:30 by rambutan2

(09/08/2021) Combined with its acquisition from Lindsey Buckingham, Hipgnosis now owns the song copyrights and writers share for 7 of 11 songs on 'Fleetwood Mac', 8 of 11 songs on 'Rumours', 15 of 20 songs on 'Tusk', 9 of 12 songs on 'Mirage', 9 of 12 songs on 'Tango In The Night', 11 of 16 songs on 'Greatest Hits', and 12 of 17 songs on 'The Dance'.

Merck Mercuriadis, Founder of The Family (Music) Limited and Hipgnosis Songs Fund Limited, said:

"Christine McVie is one of the greatest songwriters of all time having guided Fleetwood Mac to almost 150 million albums sold and making them one of the best-selling bands of all time globally. In the last 46 years the band have had three distinct writers and vocalists but Christine's importance is amply demonstrated by the fact that eight of the 16 songs on the band's Greatest Hits albums are from Christine. It's wonderful for us to welcome Christine to the Hipgnosis Family and particularly wonderful to reunite her once again at Hipgnosis with Lindsey Buckingham. Between Christine and Lindsey we now have 48 of 68 songs on the band's most successful albums."

Christine McVie said:

"I am so excited to belong to the Hipgnosis family, and thrilled that you all regard my songs worthy of merit. I'd like to thank you all for your faith in me, and I'll do all I can to continue this new relationship and help in any way I can! Thank you so much!"

Posted at 04/11/2022 08:35 by anhar
NAV for SONG and all the many other investment trusts holding unlisted assets might be meaningless to you or some others here, but, like it or not the market values the share price by reference to NAV, even though NAV has to be an estimate. The market consists essentially of pros, private investors are irrelevant for larger caps like this, and pros look principally at NAV for IT valuations. The discount is the single most important metric.

Personally as I've said, I bought into SONG as a yield play and diversification in my wide income port where fluctuating share prices don't concern me much, not for this or any of my many holdings.

But if I had bought in the hope of capital gains, then I would have to pay attention to NAV, whether or not it's estimated and whether or not I approve of it, because that's what the market does. So if one is playing the market, then obviously it matters what the market thinks. Ignoring NAV, for someone seeking profit from the share price, makes no sense to me.

We've had this discussion many times so it's become rather repetitive but every so often someone new comes along and raises the same old arguments. Essentially I see it as the market view vs. some private investors' view so if you want to play the market and win, you need to play by the market's rules.

Posted at 01/9/2022 13:34 by davebowler

Hipgnosis Songs Fund / Round Hill Music Royalty Fund

Joint proposal from publishers and streaming companies for next 5-year period of US royalties

SONG: Mkt Cap £1,369m | Share price 113.0p | Prem/(disc) -29.2% | Div yield 4.6%

RHM: Mkt Cap £348m | Share price $0.99 | Prem/(disc) -16.3% | Div yield 4.6%


The National Music Publishers Association (NMPA), the Nashville Songwriters Association International (NSAI) and the trade organisation for digital music services have put forward a joint proposal to the Copyright Royalty Board (CRB) in the US to set the on-demand streaming mechanical royalty rate at 15.35% for the period from 2023-2027. The new headline rate of 15.35% will be phased in over a five-year period.

In the US, rates for royalty payments for streaming are set by the CRB on a rolling five-year period. The joint proposal marks a step change in the approach taken by the digital service providers in relation to US streaming royalty rates. In January 2018, the CRB ruled to increase songwriter rates for interactive streaming by almost 44% in the period from 2018 to 2022. This was to be achieved by increasing the revenue share being paid by streaming services from 10.5% to 15.1%. In March 2019, the ruling was appealed by Spotify, Google/YouTube, Pandora, and Amazon Music. A lengthy legal battle ensued and the CRB only reaffirmed the 15.1% headline royalty rate last month. Hipgnosis and Round Hill are due to receive unpaid income for the period to 2022 as many of the streaming providers had been paying the reduced 10.5% rate while the legal case was ongoing.

Liberum view

This is a positive development for both funds as it should remove uncertainty over streaming royalty rates (assuming the proposal is accepted by the CRB). The proposal includes a number of other amendments to provide more equitable revenue for songwriters including minimum payments. Streaming is a material split of revenue for both funds (43% of revenues for Hipgnosis for the six months to December 2021 and 20% of Round Hill's revenues in FY 2021). The updated royalty rates from the CRB will apply to the majority of this revenue given the dominance of US revenues.

Posted at 29/7/2022 09:21 by anhar
I'm repeatig myself yet again on this point of eps vs assets so I'm going to say this for the last time - probably :~)

SONG is an investment trust and these differ in aims from normal businesses. IT status has certain rules that have to be followed for tax purposes but that apart, the whole ethos of an IT differs from other businesses.

This difference is what many readers here who go on about eps don't seem to appreciate.

Typically, a normal business undertakes some process in order to derive a profit from doing so. Eg. manufacturing, retailing, mining, whatever. Thus the profit, eps, matters greatly as it demonstrates how efficiently they are carrying on that process.

In complete contrast, the primary purpose of most ITs in general is to acquire and grow assets. Institutional investors buy ITs for potential asset growth and consequently share price growth. It doesn't matter what anyone here thinks, that is why IT shares are bought by insts and they are usually all that matters in the market.

It's not entirely black and white of course, in that assets have some relevance to many trading businesses investors and eps/divis matters to many IT investors, but generally that is the situation, like it or not.

So however much some readers would like SONG to be valued on an eps basis, it isn't and almost certainly never will be, just like ITs generally. That's why NAV is the most important measure, it is the key ratio by which ITs are judged and the share price calculated.

People can value the share any way they like, eps, yield etc. I for example bought it for yield and diversification in my incom port. But that's just individual views. If you want to know how the market values it and how the share price might progress in future, it's on NAV and the discount/premium to that.

The debate is consequently between how the market values the share and how some small investors personally choose to value it. Chalk and cheese so it simply depends upon what you want to achieve from the analysis, neither is right or wrong. So for example if you are investing for long term share price growth, you have to base it on estimated long term NAV growth because that's what the market will do. Alternatively if like me you are looking at income, then divis are the key factor, regardless of the market.

Posted at 04/7/2022 08:51 by anhar
Press release from the company today:

Hipgnosis Songs Fund Limited ("Hipgnosis" or the "Company")
Impact of Copyright Royalty Board III Decision
4 July 2022

The Board of Hipgnosis Songs Fund Limited, the first UK listed investment company
offering investors a pure-play exposure to songs and associated intellectual propertyrights, and its Investment Adviser, Hipgnosis Song Management Limited, welcome the decision of the US Copyright Royalty Board (CRB) to disallow the appeal by various streaming services against the CRB III determination to increase mechanical streaming royalty rates for songwriters and publishers.

The increase, which is incremental over the period covered by CRB III ( 1 January 2018until 31 December 2022) will culminate in a 44% uplift in the "all in" (mechanical and performance) statutory minimum rates for streaming paid in the US, rising from 10.5% ofstreaming revenues prior to 2018 to 15.1% in 2022.

Commenting on the decision, Merck Mercuriadis, Founder and CEO of Hipgnosis
Songs Management, said: "Using the success of Hipgnosis to change where the songwriter sits in the economic equation has been a massive priority for us from day one. "The song is the currency of our business, without the song we simply have no music business. Yet for too long the songwriter - who delivers the most important component to the success of a record company, digital service provider, music merchandiser, live promoter etc., is the lowest paid person in the equation.

"We still have plenty of room for improvement before we have a rate that's genuinely fair and equitable but this is an important step on the road to finally, properly recognising the value that songwriters bring to the industry and the lives of the billions of people all over the world who rely on great songs to enrich their lives.

"The CRB has delivered a strong message not only to the digital service providers like Spotify but also to the recorded music companies about the importance of the songwriter in our industry.

"Congratulations to all of the incredible songwriters that have entrusted us with their incomparable songs as well as to each and every songwriter that goes to work each day to write great songs and make the world a better place. This is a victory for all of you."

For most of the period since the appeal was launched in 2020, the majority of the
increased revenue due to the owner of song copyrights has been withheld and revenues have been paid off the CRB II rate of 10.5% in most cases. Hipgnosis will now receive US streaming revenues based on the royalty rates set out in CRB III.

In addition, Hipgnosis has not accounted for any withheld revenue since 2020. This is expected to be received by Hipgnosis in the coming periods, as money flows from the Digital Service Providers (DSPs) to the publishers and then copyright owners.

We expect more details once the full ruling is released. CRB IV, which will determine songwriter payments for 2023-27, is currently underway.

Hipgnosis Songs share price data is direct from the London Stock Exchange
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