Marwyn Value Investors Share Discussion Threads

[tiltonboy] 15/10/2015 19:04

Its no different to other returns of capital.

If they continue to return capital at NAV then the figures eventually work out

[skyship] 15/10/2015 18:56

Tilts - of course it is a return of capital - no-one disputes that. But is it a profitable return of capital? Are you any better off? For that - do the numbers:

You had 1000 shares, now you have 909. Note - the fractions round down - not UP!

The PREMIUM you earned was 91 x 47.626p = £43.34 - all as per my previous..

The other £200.66 is just a return of capital at the effective strike price of 220.5p

That is a return of 4.334p, ie 1.96% - that's all.

NB: It may be a 12% return of capital - but so what. If its done at market you are no better off other than that small premium.

MF/Tilts/Jaws - anyone else - do the numbers. Correct me if you think I'm wrong.

I'm not by the way...

[mad foetus] 15/10/2015 16:39

A lot of huge deals going through today. Good that the share price has barely moved

[jaws6] 15/10/2015 16:20

hmmmm that is good price

[tiltonboy] 15/10/2015 16:14

I have sold a few at 219.52!

[mad foetus] 15/10/2015 15:58

So that was a 12% chunk of the company transferred. Presumably the buyer has a clear understanding of where the company is going to deploy its cash and the seller is happy to bank a profit. Unless it is tilts selling out of course.

[mad foetus] 15/10/2015 15:39

What on earth was that trade?

[tiltonboy] 15/10/2015 14:05

SKYSHIP,

Sorry, I disagree with you. It's a return of capital.

For each 1000 shares, I have had a repayment of 92 x 268p = £246.56.

You could argue that at the underlying price of 220p, you have had a 12% return of capital.

[mad foetus] 15/10/2015 13:51

FWIW, because it is a Jersey company it has total flexibility on how it distributes excess assets back to shareholders: there isn't the sort of distinction between share capital, share premium and retained profits that you might have in a UK company. The distinction instead is simply between assets and liabilities and you can return the excess in any way to shareholders. But lets see what the guru says!

[skyship] 15/10/2015 13:03

MF - I think you may have that wrong. Let's see what Tiltonboy rules...

[mad foetus] 15/10/2015 12:50

I think the key point is that the company has distributed £Xm in cash - it could have done this by a 24p divi but instead did it by a redemption of 9% of its share cap. The same amount of money was paid out, just as capital rather than income.

[jaws6] 15/10/2015 12:46

skyship
Good point, will check this one.
Tilton what you think of this post 776, if any view. Thanks.

[mad foetus] 15/10/2015 12:28

Sky,
I think you are half right!

The alternative would have been a dividend of 24.6p. But this would have had the effect of causing the share price to drop by an equivalent amount and may also have had adverse tax consequences for holders.

So with the share price at 220p(ish), one would have expected the ex-d price to have dropped to 195pish. But your overall holding would be worth the same. So it's really just a tax wheeze to give holders a capital rather than an income distribution. Which suits me.

[mad foetus] 15/10/2015 10:43

I may attend the AGM, if I do I'd be happy to ask any questions people may have, though hopefully before then new investments will be made and things will become clearer.

[davebowler] 30/9/2015 13:30

Looks like a well timed exit from ETO.

[tiltonboy] 22/9/2015 12:54

mf,

For the time being!

That cash will soon get invested, so I wouldn't use it as a support.

I will be reducing my overweight position when opportunities arise.

[mad foetus] 22/9/2015 12:50

What a numpty! Though the basic point remains valid (that MVI is currently holding 175p in cash and 100p in investments, so the investments are effectively valued at a 50% discount).

[tiltonboy] 22/9/2015 12:45

mf,

Your maths are all wrong - AGAIN!

You will end up with less shares at the same price.

[mad foetus] 22/9/2015 12:12

last NAV was 275.1p. We will get back 24.6p in cash.
Assuming no change in the SP, it will be 198p at that point and the NAV 250p, near as dammit. so a little over a 20% discount. For a fund with MVI's record that is cheap.
However, of the 250p NAV, £93.4m will be in cash, the equivalent of approx. 150p per share.
So, for the 198p of share price you get 150p of cash and 100p of assets which are valued at a 50% discount.
Looks like a no brainer to me, and if there is a market shakeout before the next investment is made all the better for long term holders.
Unless my maths is all wrong - AGAIN!

[mad foetus] 16/9/2015 15:29

"to support the launch of new management teams and acquisition companies"

I suppose "without being specific" is one way of describing it!
I'm happy to hold this for a long time - the management have earned a degree of investor trust with their past performance.

[tiltonboy] 16/9/2015 15:25

mf,

Read the announcement! It tells you what they intend to do, admittedly without being specific.

[mad foetus] 16/9/2015 15:21

thanks guys, I wasn't in last time but that is worth knowing. One of the interesting things is that they are only planning to distribute about £15m of the £105m they are sitting on. It would be good to know what other plans they have.

[jonwig] 16/9/2015 15:16

That's what they did last time.

[papy02] 16/9/2015 14:55

Could be a tender but my guess based on that wording would be mandatory redemption of (about 9%) of every holder's shares, at (about) NAV.