I completely agree that share buybacks make most sense when shares are most undervalued (and its hard to see they can be much more undervalued than at a discount to NAV of about 75%) but at the moment it doesn't appear anything is going to be a catalyst to the share price until HGEN makes its next realisation, which unless it is a partial realisation, has to now be bigger than the recent Gen2 £3m.
If its a bigger realisation near or at a premium to NAV hopefully that will help the share price to improve before any decision can be taken on how to then use those proceeds.
So unfortunately, it appears, the choice at the moment is to wait or to sell at a very undervalued price. |
100% agree, so many specialist trusts fail because the managers don't understand capital markets and that funding for any emerging business can be feast and famine. |
Kooba if you know people in the city perhaps steer SABA in this direction. Its a sitting duck. SABA is the US company currently buying large stakes in investment trusts at large discounts. |
Yes I can see a conflict with their own remuneration if they sell assets to do a buy back. It's a no brainer and a bit worrying if they are managing our money and don't understand. Its so obvious not to invest in more hydrogen companies when they can buy at a 75% discount to what they would pay investing directly in the existing portfolio |
I did catch most of it before having to join another call.Re question on share buyback...they don't think that was a great idea and would look to reinvest any realisations in new hydrogen assets. Not sure they understand what a share buyback does..its not just to create some liquidity to investors and might help narrow a massive discount it also means they are buying hydrogen assets they they have cherry picked at a huge discount to what they think is a realistic value...and it further concentrates remaining investors interests in those assets and would instantly boost asset value.Issue is by doing a share buyback it reduces the funds under management...which they don't want.Figure i might speak to the board directly as they might better understand the position as less conflicted by lining their own pockets. |
Ridiculous fee structure if they get a % of nav. It should be linked to the share price. |
They have 3.1m of cash |
They ducked my questions last time..and i cant make this call so any feedback on discount or structure would be good. I did put a question in on share buybacks being more sensible than committing funds into investments that the market value so lowly ..but as said if they have no liquidity it is not a likely choice to be able to make. |
you wont get an answer guys. it'll be 99% waffle |
and now for their next trick of cherry picking the Q&A to avoid any further interrogation of their abject failure. |
Think they need to prove the assets are worth the values they put on them by selling ..not keen on borrowing against portfolio...we would then still be paying fees and then interest on top.Most of the portfolio is now private so they are getting £1.7m a year to manage holdings they mostly have no control over...and the overall value is falling. I'm afraid this is why there is such a discount ...what are they going to do about it is the question.I spoke to them not long ago and it was all about them being shareholders and aligned...i pointed out that not all shareholders get paid a lump of money to manage the funds and have monetised that management contract for their own gain..so no not so aligned. |
Yes sell ten % of portfolio for 10m and then buy back shares.
Or take out a loan and buy shares.
Or get SABA involved.
If we are paying one million in fees we would expect some action from managers to do something about it. |
I have asked a question on capital allocation and the benefit of buybacks over committing any funds to further investment...but first they would need to be able to sell assets at book or higher to have that choice. |
Working better for the managers than the investors.HydrogenOne Capital Growth PLC's (HGEN) management fees are based on the net asset value (NAV) of its listed and private hydrogen assets. The investment advisor receives a fee of: 1% of the NAV per year for listed hydrogen assets up to £100 million0.5% of the NAV per year for listed hydrogen assets over £100 million1.5% of the NAV per year for private hydrogen assets held directly by the companyPredominantly private holdings ..so a lump of the reduction in NAV apart from the write off is paying them fat fees.So they are taking very good money for being valued so poorly by the market...they have also managed to monetise that revenue by selling their business.Some answers needed on addressing the discount and whether this should be wound up or merged for the benefit of investors.Clearly the market has no faith in value being delivered in current structure. |
Or buy their own shares |
Opportunity for Cordiant to unwind discount from say 75% to 40% by mixing with other funds ? |
22p share price.
90p nav.
That's some discount |
Notice of Quarterly NAV, Portfolio Update and Investor Presentation
Q4 2024 NAV and Portfolio Update will be published on Wednesday, 5 February 2025. |
This is what is included on the Elcogen website: -
“Elcogen is the first scale-up company in the SmartCap Green Fund portfolio, receiving capital that complements the prior strategic investments from Baker Hughes and HD Hyundai to further support the development and construction of Elcogen’s new factory in Tallinn. The new plant will significantly increase the manufacturing capacity of solid oxide fuel cells and solid oxide electrolyser cells — technologies we see as key drivers of the green transition in industrial processes and enablers of energy security. The expansion reflects the growing need for highly efficient hydrogen technologies, such as Elcogen’s technology,” said Sille Pettai, CEO of SmartCap and Fund Manager of SmartCap Green Fund, funded by the European Union’s NextGenerationEU." |
Good research PJ |
 Agree that on the face of it, it appears positive for one of our larger holdings but it would be useful to have an idea of what stake SmartCap got. It is, however, an Estonian state investor.
"Our two investment funds are SmartCap Venture Capital Fund and SmartCap Green Fund.
SmartCap Venture Capital Fund backs VC funds and ensures a resource-rich environment for innovative and ambitious Estonian startups. SmartCap Green Fund invests as a fund-of-funds in Greentech-focused VC funds as well as directly in Greentech companies.
We’ve been operating since 2011 under an activity licence issued by the Estonian Financial Supervision Authority. We’re a subsidiary of the Estonian Business and Innovation Agency. The Republic of Estonia is the sole unitholder of both SmartCap funds."
I was surprised there is no news yet on the SmartCap website about the investment but the investment is part of the Smartcap Green Fund which states there investment criteria is : -
"The size of individual investments will remain between EUR 500,000 and EUR 5 million, and as before, SmartCap Green Fund invests in companies together with private investors. Private capital must account for at least 50% of the total funding round, with at least 30% of that capital coming from new private investors for the company."
The investment is at the top end of there investment criteria which is good and it appears they have not followed the new investor criteria and hopefully it is based on the previous investors so that any dilution in holding is nominal countered by new funds. |
If the pre new money value is in line with our valuation indeed no worries in fact reenforces the valuation currently worth 17p per share...if it is done at a significant discount (or premium) then it would be material and price sensitive. When a listed company holds private companies and some very concentrated interests they should confirm whether there is any valuation consequences in funding rounds ..most do. |
Market takes your side Kaboo.
Sentiment remains dire. |
Perhaps contact the company if you are worried.
Anyway even if at a discount the dilution would be insignificant on an asset likely worth over 150m.
I see it as good news but let's see what the market thinks. |
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