In relation to the last 5 years 2024 was bang in the middle performance wise, after a below par year in 23 and a very below par year in 22, but lagging the very strong 20 and 21 years. Need more of the same for the discount to narrow materially and sustainably further. Implicit in that will be a much lower discount attached to the PE investments (see my post 654). |
hxxps://www.theaic.co.uk/companydata/rit-capital-partners/announcements/677489 |
The rotation out of mega-tech into value stocks over last few weeks should be good for RCP. |
Had a look at some of the unquoteds. Potential for a number of them to IPO in the US I think. There's a chance of a double whammy of increasing NAV and closing discount of that were to happen. Glad they sold one of the crypto platforms - they looked a bit overweight on their exposure to those involved in that industry. |
28% discount on current NAV and share price at £19.40. £ will be weighing slightly this month as appreciated vs most currencies. Tipped by Peel Hunt (alongside similar fund, CLDN) for what it's worth. Good to see positive PE realisation. |
Solid update. Sale of a private asset at sizeable uplift to carrying value should hopefully dispel some of the concerns about the private positions (the implied discount the market is putting on these is over 50%). |
A small decrease in NAV in December, down -0.8% to 2614p. At today's just under £20 share price that leaves trust at a 24% discount. I would have expected January's NAV to be higher, stronger equity markets, US$ etc., so discount probably understated. |
At the margin maybe, although those costs are at the fund level not the RCP level, and SMT may be perceived to have a far better record in the private investment space than RCP. 100% in direct investments also means that their holdings are more transparent and unleveraged (not sure I'm right about this?). |
@mwj1959
UK investors have become, rightly or wrongly, increasingly sceptical about valuations used in NAVs, particularly in an environment where cheap money is no longer available.
Interesting opportunities then, if they are wrong! If.
RCP's direct PE investments are actually less than 10% of total AUM with the remaining c.25% in diversified PE funds. So what should be a lower risk profile compared to a stock such as SMT, where all its PE investments (26% AUM) are direct. Yet SMT trades at just a 10% discount.
Presumably the extra costs associated with a 'fund of funds' approach accounts then for some of that extra discount in the case of RICA. |
KKR are not just about PE as they invest across all private markets, so also RE, Credit and Infrastructure. There has been big growth in these sectors, particularly the latter two.
I agree that there is a confidence issue in the UK towards PE and only when that changes will discounts narrow sustainably. Ultimately this means more realisations / turnover to validate valuations. UK investors have become, rightly or wrongly, increasingly sceptical about valuations used in NAVs, particularly in an environment where cheap money is no longer available.
RCP's direct PE investments are actually less than 10% of total AUM with the remaining c.25% in diversified PE funds. So what should be a lower risk profile compared to a stock such as SMT, where all its PE investments (26% AUM) are direct. Yet SMT trades at just a 10% discount. |
Stateside investors have a much better handle on what PE does and the returns it offers. UK investors, despite all the evidence, still seem to believe that it's some sort of highly risky ponzi scheme.
The best performing part of the RCP port has always been its PE positions. |
I think that's what I am trying to say. How come KKR can attract money for PE investment and it is seen as good but if RCP or any IT has PE it's seen as risky and people are averse to it? |
KKR has seen massive growth in AUM (a combination of fund raising and performance) which has driven management fee/earnings growth and ultimately the share price |
Cool stuff. KKR May not be a PE fund but their profits are based on PE investments. If PE was unprofitable or out of favour then I would have thought the KKR share price would be depressed but it's not it's near a top. |
 It's an issue across the board (the exception is 3i which is at a 62% premium according to the AIC site), but has magnified in recent years on the back of significantly higher interest rates, higher leverage ratios and valuation uncertainty etc. KKR is a management company not a PE fund, so there are different drivers for their stock price and they're paid on NAV not a discounted rate.
Given that RCP has only around a third of its AUM in Private Assets the discount is probably too high. 45% in Quoted Equities should be trading at most a small discount (5%) and the 24% in Uncorrelated Strategies (Bonds, Absolute Returns and Credit) at a 5-10% discount. If that was the case the PE part of the fund is trading at a c.70% discount. This is back of an envelope calculation based on end Nov NAV and current share price (1975p). If you halved that discount that would add 313p to the SP, all other things being equal, which would be 16% higher than current levels. If that was the case the discount to NAV would be c.13%. This is broadly my target for the stock. And, of course, this is not factoring in any NAV growth. |
Why the worry about private equity? KKR stock price doesn't appear to be suffering. But PE in a IT? That appears to be suffering in a number of IT's |
Is it on the up? ;-) |
Many easier targets for Saba and its not just about the family holding here. Much harder to wind-up than the other 7 trusts given the scale of the PE exposure. |
You would think with Saba proposing to wind up 7 investment trusts that the likes of RIT will come under pressure from the activists…or does the Rothschilds 20% holding keep them at bay?
Regardless the discount is still too big imo. |
Another solid update - NAV now up 10% YTD, 45% over 5y.No reason for this to be trading on 27% discount. |
bench2 - Breakout from the wedge. |
Private Equity is coming back into fashion. |
I wouldn’t be surprised if some activist funds such as Elliott are getting involved. |
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