North Atlantic Smaller C... Share Discussion Threads

[spartacus mills] 29/8/2021 17:05

Running NAV as of today I make as circa £64.30. So still plenty of value and a 23.7% discount at the closing price on Friday of £49.10.

Mills has a lot of his wealth in North Atlantic (his shareholding = £185m). Hence one way to think about NASCIT is as a wealth management vehicle for him = somewhat more defensive than an ordinary equity IT.

[apple53] 28/8/2021 21:58

I have definitely noted his remarks about market caution, and given the portfolio is normally quite concentrated and 'special sits' it says even more if he is struggling to find opportunities. I am comforted and happy for NAV to (slightly) underperform a rising market due to cash-drag, knowing the dry powder is likely to provide the kicker after the next correction.
One unknown is how much cash at present.
Another is whether the discount will open up during a correction. From memory NAS fell a week or two after more liquid trusts and shares last march and I even sold a bit to buy more bombed out securities. But again if the discount widens cash creates buyback options.

[p1nkfish] 28/8/2021 09:32

Sorry for all the posts but my thinking is NAS has a gearing effect on major set backs for the market.

1) NAS gets hit by downturn as do others.
2) Mills allocates capital in value due to sell-off.
3) NAS price recovers to trend AND
4) NAS sees a gearing effect as its newly acquired cheap investments also recover.

Look at step response and trend rate change post March 2020.
Imho etc.

[p1nkfish] 28/8/2021 09:19

Chairman statement.

One step ahead, hinting at tightening potential. It could lead to a sell-off and value showing and NAS has a magazine full of ammunition (cash). We are in a bit of a minefield now. One misstep and........

"Equity markets have, in my opinion, already priced a recovery in corporate profits into current valuations, which do not appear for the most part to be particularly cheap. The core driver of equity markets is therefore the continuing provision of liquidity by central banks, with the only cloud coming perhaps from significant fiscal stimulus combining with an increase in money velocity to prompt some reversal of the deluge of monetary easing measures."

[p1nkfish] 28/8/2021 09:14

From last results.

"Your Managers are constantly reviewing potential investment opportunities but markets have had a major recovery and in our opinion are running ahead of fundamentals even assuming a full vaccine roll out over the course of the coming year."

Treasuries might have given a decent return as they ran them down to invest then back up again as asset sales occurred just before yields took a step lower . A bit of luck perhaps if that happened.

[loglorry1] 28/8/2021 08:56

Renalytx should recover on FDA approval (or die if not approved). SP500 grinding on up which is normally good for North Atlantic small caps. Augean will bring in more cash which can be used for buybacks or new investment but I get the feeling Mills thinks things are a bit expensive.

[apple53] 27/8/2021 23:15

Thanks for the sums loglorry1.
Missing Spartacus - but meanwhile we had end July NAV, published quite early (16th August) at 62.9. And as you say a direct holding in Augean (fingers crossed they were buying rather than selling the last few weeks) should give us 60p minimum, plus almost as much from the month-to-date increase in Oryx. ekf up nicely but renalytix hammered, polar flat, so without scanning the other holdings, and dependent on recent trades (and I think there could have been some significant repositioning given recent performance of some stocks), I will guess at 63-64 quid end August.
Still no sign of resumption of buybacks.....

[loglorry1] 25/8/2021 13:43

Looks like Harwood owned 25m shares of Augean. Price up 50p today puts £12m on NAV. Some of it is in Orynx etc. but should put 1% or so on NAV.

[18bt] 25/8/2021 07:50

Offer for Augean - 5th biggest holding.

[loglorry1] 09/8/2021 10:14

Soz I was talking upside to NAV (although I didn't write that).

CIR up quite strongly today thru 40p so hopefully having an effect.

[apple53] 09/8/2021 10:07

based on 49 quid (rough offer price) and 62.7 nav, discount is 22%. However, if you can get it for 48.5, and if you think NAV is now more like 64+ you can get to 25%. You can also put it on its head, and say there is 28-30% upside to NAV.

[loglorry1] 09/8/2021 09:48

I make the disc to NAV 28% still apple. Am I missing something?

[apple53] 09/8/2021 08:53

And no sign of buybacks still. However, the discount, though substantial (23%+) is smaller than it's been all of this year and probably since 2018.

[apple53] 09/8/2021 08:50

So I was happy to be wrong about end June (62.7).
Spartacus - what's your spreadsheet saying at present for end July or today? It looks like they've got a bit more organised and the website may be showing genuine holdings end June.
Given his remarks, Mills may have been taking some profits, or even trading (Renalytix has been very volatile). And hopefully he did buy more Circassia before it jumped (historically there was more in Oryx).
I'm guessing we are higher than 62.7 rather than lower but I haven't done detailed sums for a bit.
Cheers,
Apple

[loglorry1] 13/7/2021 09:39

Good update from Circassia (CIR) today one of Mills' holdings.

[p1nkfish] 26/6/2021 21:25

apple, that's why Mills has performed so well over the years. He gets it, results at minimum cost, others don't see it.

Glad he's running the show, long may he do so.

[apple53] 26/6/2021 20:03

So it was 62 quid end May. I was lucky!
However, down in June I reckon, despite Oryx. Maybe £61?
Buybacks approved again at AGM (ie waiver granted), but even more opposition. I really don't get it (the opposition, I mean). Why would you want to remove the one really effective tool for keeping the discount down? Especially for an illiquid stock where you don't need to spend much to do it.

[spartacus mills] 04/6/2021 10:16

My end of May NAV estimate is c.£61.50. Ergo discount currently around c.27%

[p1nkfish] 02/6/2021 23:15

All I can imagine for lack of buyback is tightness of supply and perhaps the capital will be allocated on a market fall or go out as dividend instead.

AJ Bell apologised for the mix-up.

[apple53] 02/6/2021 22:40

My note: "Although a private investor, I have worked for many years in the financial services industry, initially as an equity analyst and subsequently as a fund director.
For me, discount management is an important part of investment trust and listed fund investing. I have been a modest investor in NAS (Oryx) for some years, but significantly increased my holding (via ii and EQi) when I learnt of the buyback program. I think it is well-designed; large enough to be meaningful and not too restricted.
I believe it is equally important that the fund manager and indeed the board, to some degree, are co-invested. For me, therefore it is a positive that the ‘concert party’ accounts for such a large holding, and I strongly support the waiver of any commitment to make an offer for the entire company.

My only minor concern in some circumstances is that a very large holding might result in an excessive focus on capital preservation rather than growth, but I see no evidence of that at NAS."

[apple53] 02/6/2021 22:39

The waiver was voted against last year by a number of holders at the recommendation of their ESG teams, though thankfully they amounted to a minority. Without such a waiver, the buybacks could not continue without the Mills family selling proportionately.
The Board therefore sought opinions from shareholders to understand their views. I wrote a short email (I will paste in the next message) which the Chairman asked if he could forward to the relevant ESG teams.


Moving on, the million dollar question is why no buybacks since Feb 10th.

[strathroyal] 27/5/2021 12:07

Hope he doesn't take it private, as NAS and a number of its quoted holdings offer good value. More fun today with the potential bid for AUG (unfortunately one of those I didn't buy).