Pantheon Share Discussion Threads

[skyship] 02/11/2022 11:45

PEY today provided the proof, if proof were needed, of the inevitable link between
yield and discount.

PEY announced that their high dividend would henceforth be less secure, just 2 days after revealing a further 1% rise in NAV for September.

The Market's immediate response has been to slash the share price from 9.54 to 8.24; so
that the discount widens out from 33% to 42%

Further proof of the incontrovertible link between yield and discount.

If PIN were to reveal a new dividend policy, say at 4% of NAV. The share price would just
as rapidly rise from a discount of 49% (250p) to perhaps a discount of 35% (320p).

That would deliver a 28% uplift in the share price; and further progress likely from there in view of PIN's great long-term history.

[skyship] 31/10/2022 13:39

Acol - indeed, I don't really anticipate any positive outcome; just wished to vent my spleen. I'm sure however that at some stage they will be coerced into action on this matter.

[acol] 31/10/2022 13:30

Skyship

A well constructed letter which deserves an answer. I have followed this discussion on a number of associated threads and you have convinced me of the logic behind your stance. The direct evidence of the current huge discounts to NAV is especially compelling.

Some years ago when I held a portfolio of shares outside of an ISA I would have strongly supported PIP'S current policy in order to avoid tax. Nowadays, all my shares are in ISA'S and dividends assume much greater importance.

I suspect that if your letter is answered it will disappoint. If they cannot answer the discount anomaly it will go in the too 'difficult box' and be ignored!

[1968jon] 24/10/2022 19:14

jonwig. To be clear with my (potentially open to misinterpretation) statement…perfectly rational not to invest in PIN for a whole heap of reasons…but I’m sure you knew that….

[jonwig] 24/10/2022 17:59

SKYSHIP - the post just before mine was a practical example of taxation benefits. But -

Companies which want to grow and are well managed do not need to pay dividends to succeed: Apple, Amazon, Microsoft, Tesla, haven't been superb investments thanks to their dividend-ability. (Yes, there are duds promising growth and failing. We dump them.)

Companies which throw off cash but don't have organic growth are bought for their dividends: utilities, renewables, infrastructure, REITs, etc. I'm happy to invest in these, too.

PIN puts itself in the former category, and you take your pick: buy, hold, sell. PIN is recycling income into supporting growth of its investee companies, and the high fees are are telling us, "We can invest in this better than you can".

The issue right now is that quarterly valuations (June) are lagging behind events. The market is applying a discount in compensation.

There's another point, which isn't much mentioned: when investing in unquoteds, it's hard to find out how much leverage is hidden in the investee companies. Some of these might be in the junk bond class, without our being told. (PIN's accounts won't say.)

~~~~~~~~~~~~~~~~~~

1968jon - yes, that's my view.

Incidentally, I'm not currently holding PIN.

[1968jon] 24/10/2022 16:40

I have no idea of the preference split among individual shareholders as a general rule on a div/no-div policy for any stock but I am reasonably confident that on an institutional level the no-div policy is favoured. It pretty much comes down to what your tax treatment is. I hear the point in PINs case about management fees on a higher NAV number but I am utterly ambivalent. If I want a 1-2% cash inflow I can sell stock. Providing this thing goes up 10+% p.a I'm happy. I think it would be a poor decision for most individuals not to invest in this stock because of a lack of dividend. Different folks, different strokes and all that....

[skyship] 24/10/2022 16:14

jonwig - Terry Smith speaking as a fund manager earning fees from the gross value.

If shareholders never receive a return, tell me what is the point in holding. Logically the discount can widen out to any figure you care to name - 60%, 70%, 80%. All you get as a shareholder is the warm glow that the shares are worth a whole lot more - but no way to capitalise upon it! The only winners are the managers claiming to be doing their best in your name.

It won't stop ne trading the anomalies; but personally I do so holding my nose as I think PIN's managers are a load of talented but corrupt rip-off merchants.

[skyship] 24/10/2022 07:25

Interesting to listen again to the InvestorMeet presentation.

Partner Helen Steers confirmed they are happy with valuations, as the portfolio is clearly conservatively valued when exits average a 21% premium.

[apple53] 24/10/2022 07:17

Going back to the NAV disclosure, based on markets it ought to have been modestly down in underlying terms, given a further reduction of end March valuations (when markets were much higher) and a reasonable shift from end August to September - a more modest fall in markets. So on a small scale pretty impressive we didn't see more like a 2-3% fall. A modest sceptic would say that there was enough wiggle room in the non-listed holdings to leave them where they were, but this still leaves the mark-to-markets doing pretty well.
Need to try to buy more!

[jonwig] 24/10/2022 06:59

"The ideal company doesn’t pay a dividend and if a company can make a 30% return on capital why would you want it to pay you a dividend? You by and large can’t make a 30% return on capital so you want it to retain the earnings and generate that return for you."

[Terry Smith, 2020.]

[nickwild] 23/10/2022 23:05

Some investors (eg higher rate taxpayers) value the zero dividend as all profits are capital gains and can be realised using relief (over several years if necessary). This is helpful if your ISA allowance has been used up.

[aishah] 23/10/2022 19:47

78% of investments valued at 30th June. That's also an issue as economies are slowing down and borrowing costs have gone up significantly and rising!

[topvest] 23/10/2022 19:09

I agree that a dividend at a set % of NAV would be good. It would certainly narrow the discount. Thankfully their performance has been goog. My general stance though is that I have to have a very good reason to invest in anything with a dividend of less than 1-2%. I'm sure many other potential investors are put off by the no dividend approach.

[aishah] 23/10/2022 11:06

A lack of dividend is a hindrance for a lot of investors.

[johntobin] 23/10/2022 10:24

Most of the NAV is from valuations dated 30th June, but the US market isn't that different from June.
The fact that most of the recent gains are FX is imo one reason to invest in PIN, you don't want all your eggs in one basket, especially if that basket is the UK!

[skyship] 21/10/2022 15:54

Sept. NAV up 3% to 492.5p. Mostly down to Forex, but a good result nevertheless.

Market cloth-eared as the share price drops back to 242p again - discount at 50.9%!

[apple53] 19/10/2022 16:33

as mentioned in the PE thread I was looking to buy more and have done in City index (having sold HVPE up to 23) and ii (sold IQE).

[skyship] 19/10/2022 13:07

Back in at 242p for an Aug'22 NAV discount of 49.4%.

NBPE reported a 2% fall in their Sept'22 NAV; so will be interesting to see how HVPE & PIN make out.

[rambutan2] 06/10/2022 21:00

Spend £2.5m to add £2.4m to nav...

[cwa1] 06/10/2022 17:55

...announces that on 6 October 2022, it bought back 1,000,000 Ordinary Shares
of 6.7p (the "Ordinary Shares") at a price of £2.50425 per Ordinary share.
The Ordinary shares bought back will be cancelled.

[1968jon] 04/10/2022 10:07

I am not certain how much of the fall in PIN is due to the LDI stuff, but I do note the two pension funds in their top 10 shareholders list - maybe some holdings RNSs incoming? Whatever the nature and reasons of the sellers of PIN (and other PE names I follow) over the last few months, it is surely an argument for investing in a trust rather than a fund (for an average punter). Discount widens, sure, but they don't have to sell assets to meet redemptions. Unlike the three property funds delaying redemptions this morning.

[rambutan2] 04/10/2022 03:55

Yes, good point re fully funded.

Re LDI collateral. As well as selling down equities to meet recent calls, I would expect all parties concerned to want a larger cash buffer and less leverage used. So extra selling t/c on top of the immediate emergency needs. Dear oh dear, a wholly foreseeable mess!

[cousinit] 03/10/2022 16:01

It might not just be the LDI collateral funding. If schemes are much closer to being fully funded at these higher Gilt yields then they've got limited incentive to retain the same allocation to "growth" assets, so can just sell them down at current prices and buy more Gilts. I guess some of the larger REITs and alternatives trusts could also be in for more selling pressure.