North Atlantic Smaller C... Share Discussion Threads

[topvest] 16/9/2021 21:19

Agreed - its a fantastic trust. Really pleased I topped up in the 40s.

[p1nkfish] 16/9/2021 20:25

Solid hold for me too SM, same reasons, and Mills knowing how to negotiate the cycle.

[spartacus mills] 16/9/2021 20:04

Interims out today. Good news regarding the sale of Pelsis with a £12m gain over the Jan 2021 valuation. Goes some way to offsetting the tremendous pumelling Renalytix has received in the last week, apparently on concerns about a longer route to FDA approval. Assuming the Pelsis uplift is already in the August 31st NAV I make the running NAV about £63 and the discount about 24% at today's close of £48.

Mills's note highlights the buildup of cash which will be at close to £150m once the Pelsis and Augean disposals complete. That's around 18% of NAV. Happy to hold here given (1) this defensive posture, (2) the stellar track record and seeming undimmed energy and (3) the continuing unjustified discount

[18bt] 02/9/2021 08:25

Was expecting interim results out yesterday according to one info provider, but it was 16.9 last year.

[apple53] 29/8/2021 23:28

Thanks so much Spartacus for your latest figure and the colour on some of the specific holdings.

[topvest] 29/8/2021 20:33

Increasing the cash % would be a smart move in my book. Best to have funds available for when things get a little rocky. I suspect that we are not too far away from that, but we will have to wait and see!

[spartacus mills] 29/8/2021 17:07

A conservative discount in the current environment would be between 15 - 18%. Gives a price target in the next few months of say £54. Happy to stay onboard in a big way. The long term performance has been good *despite* the conservative positioning ….. Perhaps in the not too distant future it will be good *because* of the conservative stance!

[spartacus mills] 29/8/2021 17:06

Mills had pretty bearish positioning in the mid 2010’s when he ran the NAS portfolio consistently with a cash / treasuries level well over 20%. Hearteningly he was not afraid to alter this stance as his bearish view was proved wrong. He ran down the cash from 28% in 2017, to 7% in 2021. In particular he managed to put cash to work post COVID in ways that have proved pretty lucrative.

My suspicion, shared with other posters. and based on previous form and the comments of Peregrine McWomble our Chairman is that the cash level in NAS is going higher in the near future. Teleos has been sold, the stake in AssetCo and Tribal were cut. Now Augean is on the auction block, and when that goes it will add another 6% of NAV to cash. I suspect a cash return (and possible further dismemberment) is also on the way from BigBlu – may be an announcement as soon as tomorrow

[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.