Schroder British Opportu... Share Discussion Threads

[jonwig] 07/12/2020 12:09

Yes, I saw it a while ago and my first thought was that the charges should be just 0%!

[cc2014] 07/12/2020 12:01

Schroders. Another fund. Only a week to apply.



Targets CPI + 2%.

Predicted charges 1.59%.

I'll pass - the ratio of charges to returns is inappropriate imho.

[spectoacc] 06/12/2020 08:51

The latest SUPP release shows how little the Schroders boys actually do there, & how little there is they can do. Averaged down a few Kymab, paid off £2m of debt, paid their fees & running costs, and "talked" to investee co's - all that over a qtr.

A morning a week? For £2m, £3m a year, plus all costs.

They'll be busier getting SBO invested, but not sure much to do once it is. Needs some big early success if it's not going to slowly languish.

If they can catch some of these big risers before the rot sets in, with 48% of the shares locked up in the EYCC pension fund/Schroders, not impossible they'll get to a premium and be able to issue enough shares to get above the key £100m market cap. Not impossible.

[chucko1] 06/12/2020 00:04

You should have been on the initial marketing pitch - a fiasco if ever there was one. Well, it actually lasted less than 2 minutes before falling off a cliff. When it got rearranged, they had sound problems.

It does put the same managers' stewardship of SUPP into perspective.

[boozey] 05/12/2020 23:45

If Schroders only raised £75 Million instead of £250 Million it says a lot about their track record. And they haven't helped themselves. Working in the markets as I do to say this IPO launch has been a PR disaster would be an understatement. Never have market conditions been more favourable for a launch yet they have managed to make it one of the poorest performers in the market. It was not beyond the wit of man to have made an impressive start yet they managed the opposite. Ridiculous.

[spectoacc] 05/12/2020 16:33

Guessing the 83% drop was when over-geared - glad to see all the REITs avoid over-gearing this time around (ignoring those going down even pre-Covid - INTU in particular).

Seems Schroders had committed to invest in SBO pre-IPO - but only 10%! Maybe when it raised so little, 10% of £250m became 28% of £75m :) :)

[cc2014] 04/12/2020 14:53

OK, I best read the prospectus again. It seems I've got confused and it is equity rather than debt.

Good job I posted. If it's private equity rather than debt I have just lowered my entry price to something beginning with a 7 rather than an 8 !

[spectoacc] 04/12/2020 14:26

They're more listed equities - and I think 60% of NAV limit on non-listed, but @chucko1 will know better.

So if they'd eg bought some Rolls Royce earlier in the week, they could easily by up 0.5% :)

[jonwig] 04/12/2020 14:25

Just shove £70m into a global etf while they sharpen their pencils.
No rush. No rush at all.

[cc2014] 04/12/2020 14:15

but how does the NAV jump by 0.5p in a day?

If they are investing in illiquid private debt this would be valued at cost and they can't just increase the value on day 2.

If they are investing in quoted debt, they pay the offer but work out the NAV at cost so all investment lose money to start with.

I accept they could have theoretically invested half the portfolio yesterday and by doing so push the bid up but I find that unlikely too.


My sense is that we are dealing with Schroders here and they will be desperate to keep the NAV up, even if it involves what I would personally find unacceptable behaviour. (like their valuation of Industrial Heat in SUPP!)

[spectoacc] 04/12/2020 13:39

Guessing divis & NAV explains SREI - but that doesn't sound very total return-y.

@Jonwig - maybe - and I guess some similarity with the likes of Majedie, LTI & others, where the manager also owns a large stake. But did they declare in advance this is what they were doing?

@CC2014 - had in mind a 20% discount for taking a look at SBO, before being told of the 5% discount control plan. So not only is it sub-scale, not only did Schroders have to put in 28% (& EYCC pension fund another £15m, so 48% of it between them), but those %'s are going to increase as cash is spent on trying to support the share price.

Which makes you wonder how much of it they'll feel able to invest - and how much has to sit in cash (15%, initially, you'd expect). I still think they'll drop the discount control.

All eyes on what they punt on - I'd missed the NAV jumping half a penny, so presumably they've bought something from their "pipeline" already.

[cc2014] 04/12/2020 13:24

It appears nothing much to do here but put it on our watchlist and come back at some later point in the future when the share price is lower.

I don't get Schroders ambition here. The prospectus spoke of a £800m fund which would require significant issue of shares above NAV but with nearly every other trust running at 5-30% discounts that's just not going to happen.


I guess it doesn't really matter to Schroders. They make me laugh . This from SREI as an example from their interim results released in Nov this year. This is their very first statement:

"Sustained relative outperformance of real estate portfolio with a total return of -0.3% over the period versus the MSCI Benchmark Index of -1.3%. The portfolio has outperformed over six months, one year, three years, five years and since IPO in July 2004"

Whilst I cannot be bothered to check their claim that SREI has outperformed since IPO in 2004, I can easily see from the chart that it's lost 62% in capital value since the IPO.

[chucko1] 04/12/2020 12:52

Makes you wonder the degree of hubris involved in this IPO process? This, too, ought to have been pulled.

[jonwig] 04/12/2020 12:48

Spec - just possibly, Schroders couldn't vote on a motion to dismiss Schroders as manager. It's a guess, my knowledge of company law is imperfect.

[jonwig] 04/12/2020 12:42

That's the gist of it!

What an overhang this is. And when the market decides it's a dud, the firm will have to buy back its own shares
I doubt this was the game plan.

[cc2014] 04/12/2020 12:00

Do I read that RNS correctly?

In order to get to 75m shares to launch the fund Schroders bought 21m shares themselves?

[jonwig] 03/12/2020 14:18

chucko - SREI and SBO have one co-manager in common! (WFH probably.)

[spectoacc] 03/12/2020 13:58

SREI also got the advantage of starting at a big discount :)

Only mentioning as an RNS appeared, but re Post #15 - OCI just bought 6.9m shares at 257.5p, vs last NAV 356p.

Not sure the point of SBO's barely-accretive buyback plans, particularly if the market calls their bluff.

Awaiting news of first purchases.

[chucko1] 03/12/2020 13:23

And I would not even dream of buying here. The investment managers have not covered themselves in glory with their management of the SUPP IT. Those fooled by Woodford, may now feel that the comforting words from Schroders (and including their personal investment in the fund!) were misplaced - either from the latter's ignorance or overarching lust at the fees available.

Fund mangers do count, you know! I sincerely hope those who manage SREI work in a different building, or at least a separate floor. One without a sandpit.

[cc2014] 03/12/2020 13:00

so, there we go. NAV 97.8p and possible to buy below 100p

[boozey] 02/12/2020 21:08

Hi SpectoAcc, thanks for your thoughts and I agree and I will be here for the duration. Just a case of first impressions count and all that. Thought I would try one Schroders trust. They haven't always performed well compared to peers in my experience, but I thought I would give this one a go!

[spectoacc] 02/12/2020 19:43

Interesting - unconvinced a tight discount management policy is wise on a punting IT. Eg OCI - ostensibly a PE trust, but with unlisted & listed holdings like a big stake in TMO - trades at a c.27% discount, despite occasional large buybacks, and has a strong track record/management.

It isn't a "Covid era" discount either - had gapped out over 50%, and usually sits around -30%.

If SBO intend to keep within 5%, that 14.99% won't last long, will need renewing, and a sub-scale £73.5m trust will become a sub-£50m one, which isn't a great place to be.

Unless, of course, they think they'll go to a premium and be able to issue there - plenty have, not least our old friend WPCT.

IPO Group, another strong performer with a long history (some of it entwined with a certain Neil & Craig) had a last-reported NAV of c.109p, vs c.91p share price - that's the sort of discount on the successful, let alone the unproven:

"Portfolio highlights [IPO]

· Net portfolio gains of £34.9m or approximately +3% (HY19: reduction of £36.7m; FY19: reduction of £43.9m)
· Cash realisations of £113.7m (HY19: £7.1m; FY19; £79.5m), exceeding investment by £76.9m
· IP Group investment into portfolio: £36.9m (HY19: 39.0m; FY19: £64.7m)
· Total funds raised by portfolio companies in excess of £350m (HY19: £239m; FY19: £430m) including Featurespace (£30m) and Inivata ($25m), £200m of which was raised post-UK lockdown.
· Fair value of portfolio: £1,025.0m (HY19: £1,127.0m; FY19: £1,045.6m)"


Large, liquid, successful. Vs small, illiquid, unproven management, untried stock-picking. Can't see spending c.£10m (and some) to keep the shares within 5% is a good use of funds, and suspect they'll find an excuse not to do it. It's far too tight a range to be adding any value.

But in meantime, it may function as a confidence trick to prevent it falling too far. And you'd hope the early picks would be good ones - it's when they get down to mattresses-by-post, biotech frauds, and microchipped pallets that you need to start worrying.

[jonwig] 02/12/2020 18:44

This might be helpful (prospectus p44):

It is the Directors’ intention to implement an active discount management policy through the use of share buybacks to seek to maintain the price at which the Ordinary Shares trade relative to their prevailing Net Asset Value at no greater than a 5 per cent. discount, measured over the long term and subject to normal market conditions. Ordinary Shares bought back at a discount to Net Asset Value will be held in treasury and will be available for re-issue at a premium to Net Asset Value.

A special resolution has been passed granting the Directors authority to repurchase up to 14.99 per cent. of the Company’s issued Ordinary Share capital immediately following Initial Admission during the period expiring on the date 18 months after the date on which the resolution was passed, or at the conclusion of the first annual general meeting of the Company, if earlier.

So 20% discount is unlikely, but there's no protection for bad investment choices, of course.

[spectoacc] 02/12/2020 16:55

@CC2014 - councils can surely do better than give it to Schroders to reap the fees. Ontario Teachers Pension Fund the example to follow.

@Boozey - wonder if they've invested in any of their "pipeline" yet, or whether that sub-98p NAV is just the cash less a few more fees. Far too early to judge SBO, but one obvious judgement is that it ought to be sat at a discount of around 20%, like peers. Arguably more.