Schroder British Opportu... Share Discussion Threads

[jonwig] 04/8/2022 08:15

Spec - the FTSE All-Share is down 2.5% from its end-March level. The discount here compensates adequately, I'd think. (A better index to use?)

The wider PE sector is trading at high discounts to compensate for this liquidity deficit. It's probably deserved if there's leverage, but SBO has net cash.

Anyway, it's not my style to get enthusiastic about anything right now.

[spectoacc] 04/8/2022 08:05

"The Company's private assets are currently held at their 31 March 2022 valuations"

Notwithstanding a couple of up-rounds, there must be serious downside risk to the NAV, which would take a couple of quarters to feed through.

Never thought I'd say it but - SBO makes SUPP look cheap (20p share price vs 36p "N"AV, a large chunk of it in the listed ONT).

Seen no evidence that Tim/Ben/Roger have any stock-picking ability whatsoever.

[hindsight] 04/8/2022 07:56

Followed for a while but never brought any. The size means costs are high

[essentialinvestor] 04/8/2022 07:37

Margins in the home care sector have depressed significantly over the last decade
and now labour recruitment is a huge headwind. I notice Cera are paying a joining
bonus of £500 after completion of 3 months work.


My Dad founded London Care PLc in 1993, selling out to PE in 2010 for £18 million, so
this is one sector I know quite well.

[jonwig] 04/8/2022 07:30

Today's additional invetsment (Cera Care) estimates an updated NAV will be +2.8p. That would be a discount of 28%, which is high even for a PE investor, and SBO isn't a pure PE investor.

The annual report suggests they may up their buybacks. You can now buy under mid-price (quote 74-76).

[jonwig] 09/6/2022 08:10

It's normal for hedge funds to limit withdrawal options. Sometimes a new investor has to wait as much as a year to withdraw, and then they only get a monthly or quarterly or even more option.

[cc2014] 09/6/2022 07:47

Interesting article on hedge funds and P/E on Bloomberg.

Search "Hedge fund D1 borrowed billions for a hot bet that now faces reckoning"

Bloomberg is behind a paywall but you can 5 articles for free a month IIRC.


Anyways jist of the article is that some parties have overleveraged their buying on P/E, there's some turmoil in valuation in this area and some funds may have to gate withdrawals as the assets aren't liquid enough to meet redemption requests.

[cc2014] 08/6/2022 13:23

I'm with SpectoAcc. The managers are not good and mostly interested in their fee.

50% of fund is P/E so the fund is taking on a valution in line with other P/E peers which is a decent discount to NAV.

Given the poor performance of everything since Christmas except commodities the value of the P/E investments will surely need to be written down at the next review or I guess more likely Schroders will try and hold them up arguing there has been no funding round to show an alternaive price.

I'm not sure how many shares Schroders are still holding since it used to be around 28% which they had to shove in to get the fund to £75m to give it some scale. At least they are losing their own money.

I see no value at 85p here.

[spectoacc] 08/6/2022 13:07

The managers are amateurs IMO, as they're ably proving over at SUPP.

Not possible to know the value of the unlisted/PE-style holdings, valued too infrequently and often takes a negative funding round to show up actual value. But fair to say the days of the unicorn are over, & would expect some downgrades at next qtly valuation.

Listed holdings a strange bunch - In Top 10 (according to out-of-date HL) is TRN, NEX, Ibstock, Genuit, Ascential, Breedon. Not sure what ties those together, other than "midcap and a dart".

1.47% ongoing charge. Mkt Cap £63m.

Everything has a price, but don't know at what point I'd buy SBO - where's the exit, other than to Greater Fools? If not for the unlisted punting, could at least consider them a discounted tracker (albeit one on a high fee).

[kev0856153] 08/6/2022 12:53

Is this investment opportunity as bad as it looks, or is it even worse?

[jonwig] 04/3/2022 16:10

Over 13%!

But I'm not tempted. Over 50 years ago a chap advised me that sometimes it's just best not to seek new ideas.

[cc2014] 04/3/2022 15:10

Theres's the 10% discount to NAV for us.

Too many private companies to get any true handle on a realistic NAV

[spectoacc] 27/1/2022 12:08

Agreed @CC2014. Posted in part due to buying one of the aforementioned PE ITs on the dip. Made me realise (also seeing OCI's results yesterday) the difference btwn a genuine PE trust, and SBO. OK, SBO doesn't pretend to be exactly the same, but I'd far rather eg OCI's:


"Total NAV return per share of 35%

Total shareholder return of 48% "


than anything SBO can do.

[cc2014] 27/1/2022 09:45

Interesting that you post this morning SpectoAcc as my eye appeared on this yesterday after a long time. I agree the share price has held up far better than expected. Same with SBSI which came to market at a similar time if I remember. That one is moving down as well now. Not that I'm really interested in either until they get to a decent discount to NAV but it's good to keep a sense of where the market is.

[spectoacc] 27/1/2022 09:25

This has definitely done better than I thought it would, and traded nearer to par. But perhaps mainly because the bubble has carried on far longer than expected.

If we really have seen the top now, hard to see the unlisted stuff ever getting away at anything like the valuations SBO invested at. The listeds are already heading down (eg WOSG, ASCL) with the possible exception of 10th placed OSB - banks should do well in a rising rates environment.

But why you'd pick the naivety of the Schroder Juniors over any of the genuine PE ITs, I don't know. Long experience, mainly great portfolios, big discounts to strongly rising NAVs. Pick any from the likes of NBPE, BPET, SLPE, PIN, PEY, OCI, HVPE...

[jonwig] 28/4/2021 06:23

Interesting update, "though we aren't telling you what it is";

[simmsc] 20/4/2021 20:16

I've sold my holding in SBOT as i didn't realise what i had actually bought. After reading comments on here about these things trading at discounts to it's asset values i thought I'd better invest directly into some shares. Ok, i run the risk of picking wrong stocks, but at least they will be valued at what they are worth, rather than a discount.

[spectoacc] 16/4/2021 07:45

Another investment RNS'd - Cera Care. But the fundraising appears to have been from February, £54m - wonder why an RNS now? Unlikely Cera have raised again 2 months on.

Can't tell what the market cap is - but be surprised if SBO put in more than one or two million.

Again, looks nothing particularly wrong with the investment, but another non-early stage tiny holding.

[spectoacc] 14/4/2021 06:42

Good point - yet they give a detailed explanation of another big & dubious travel punt, SSPG:

"In March 2021, we invested in SSP Group, a leading global operator of food and beverage outlets in travel locations, principally airports and railway stations. At the time we believed that a combination of new equity and refinancing of existing debt would be required to repay near term maturing facilities, reduce its leverage and provide it with extra liquidity to survive a protracted lockdown scenario. The company has since announced a rights issue and associated refinancing of debt facilities. Whilst the stock has done well since the announcements of various vaccine discoveries in November 2020, we believe there are various long term structural growth drivers underpinning the investment case."


Interesting they sold down their biggest loser, PRSM, and sold out entirely of another loser, IQE. Ditching losers a perfectly sensible strategy, but makes for churn - a long way from a Terry Smith or Nick Train "ideal holding period is forever".

Not sure I'd have led with the ADVFN award :)

£78m co, but make themselves sound like they're managing £780m. 30 positions, with more still to come.

But - they've made gains since launch, even if the discount still far too tight. No reason you'd pick SBO over eg CLDN (27% discount, £2.1bn assets, great long term record).

[jonwig] 14/4/2021 06:17

Portfolio update:



Quite a thorough description of their strategy and holdings.

But ... no mention of the reasoning behind two of their largest, Trainline and National Express.

[jonwig] 18/3/2021 07:24

Closure of share premium account:



One way of pretending to pay unearned dividends.

[oiltakeyouhomeagaincaitlin] 05/2/2021 11:38

spectoacc has taken a massive bashing on the market in the last few months. 4 of his to choices have gone phut. And ramping this isn't going very well, isit?

[chucko1] 03/2/2021 15:34

Equity futures indicate and index price different from the underlying index - take the March futures contract which expires on the 3rd Wednesday of March (19th):

It has a price of 20739

MCX has value of 20777

Difference (38 points out of 20777 = 0.183%) is the difference between the dividends received on the index minus the funding cost for 44 days. Annualised, that is around 1.5% (which makes sense because the trailing div yld is 1.86% and you would expect that to be lower this year - actually it is a little more complex than that, but you get the point).

In portfolio arbitrage terms, you are buying the future cheaper as you are not benefitting from the dividends, although you are not having to pay for the contract (but the current funding rate is near zero).

[cc2014] 03/2/2021 14:56

Ah, so if the futures contract does not charge interst, it is because it is built into the contract price.

And presumably what Shroders are doing is choosing to present the financing differently, so as to raise the NAV compared with the published price for the futures contract and spread the interest over time, thus resulting in the cum/ex difference.

[spectoacc] 03/2/2021 13:58

Hmm no clearer on Cum/Ex then. SBO's the only time I've seen it.

Bottom line for me is that SBO managers are punters. There's no "best ideas", it's spray the cash around with a mostly mid-cap & British bias (tho far from solely UK earners). Not particularly value or growth, & will only make 10% pa if the market has a good run - any one stock isn't large enough. Largest single holding (TRN) at 3.1%.

20% would still seem about the right discount IMO. Cheap at 30%?

[Edit - on the concentration point, and can't say this is necessarily a better way of doing it, ARR's 10th largest, Vesuvius, is bigger than SBO's no.1. ARR top 3 are FRAS 16%, BDEV 11%, EZJ 11%. That's a conviction portfolio.]