Shires Income Share Discussion Threads

[rcturner2] 09/8/2017 09:18

Shires Income Trust PLC Undiluted Excluding Income 278.75p Ordinary
Shires Income Trust PLC Undiluted Including Income 283.42p Ordinary

[spectoacc] 09/8/2017 07:12

Out on the tighter discount. Holding had become too small, though hope to be back in in size at some point. Good luck holders.

[riverman77] 03/7/2017 19:57

Thanks for the update. I think this looks a very solid fund, and the preference shares and the asci holding (itself on a very wide discount) help it stand out from the rest of the crowd. Not too worried about the discount - if it narrows great, otherwise you're getting a very attractive but sustainable yield.

[davebowler] 03/7/2017 13:50

Winterfloods;
On 29 June Ed Beal (EB), manager of Shires Income, provided an update on the fund, which is summarised
below. Ed Beal is a member of Aberdeen AssetManagement's 16-strong Pan-European equity team.
Performance
 Over the last five years the fund has delivered a NAV total return of 90%, significantly outperforming its
benchmark, the FTSE All Share, which has delivered a total return of 65%. As can be seen in the table
below, it has also outperformed over the last one and three years.
 In its latest financial year to 31 March the fund paid a total dividend of 12.75p per share, representing a
yield of 5.1% on the current share price. This dividend was fully covered by revenue of 13.08p.
Portfolio & Manager's Outlook
 The investment strategy is to invest primarily in equity securities alongside some higher yielding
preference shares and a small option writing programme. The aim is to provide an above average yield
from a diversified portfolio, with an emphasis on total return and the management of risk.
 A portfolio of UK equities comprised 74% of the fund at 31 March, with 26% allocated to preference
shares to enhance income. The team also write short dated call and put options, which are typically
between 5% and 10% out of the money, as another way to enhance income. In the latest financial
year options generated 5.5% of income, while 60% came from dividends and 34.5% came from
preference share, fixed and bank interest. Within the equity portfolio, income is also diversified across
sectors, with the largest contribution coming from Oil & Gas at only 14% of dividend income (estimated for
FY 2018).
 The preference shares are viewed as being more defensive than pure equities although the manager does
not expect to see notable income or capital growth from this area of the portfolio. EB views gearing,
currently equivalent to 20% of net assets, as being solely invested in the preference share portfolio,
meaning that the fund is effectively ungeared into equities.
 Up to 10% of the fund is now permitted to be invested in Europe, with the allocation currently standing
at around 2.5% and holdings including Novo Nordisk. The manager notes that performance benefitted in
the wake of the 'Brexit' vote due to the significant overseas earnings element.
 EB believes that smaller companies are offering better growth opportunities at present. Small cap
exposure is predominantly gained via the holding in Aberdeen Smaller Companies Income*, which the
manager highlights provides diversification among smaller companies. New purchases over the last three
years have had a mid and small cap bias, which EB notes have lower yields but greater potential for income
growth. The smallest new addition is Manx Telecom (£200m market cap), the leading provider of
telecommunications and broadband services on the Isle of Man.
 While the team's outlook for the UK economy and stock market is not particularly optimistic, with
political uncertainty, high valuations and a likely slowdown in dividend growth cited as key concerns, they
highlight that the focus is on good quality companies that are able to perform well even in difficult market
conditions. In addition, they are more positive from an income perspective where key advantages include:
Sterling weakness; positive underlying earnings growth; and a reduction in the risk of dividend cuts
amongst the biggest UK payers.
 There is a significant emphasis on corporate governance and engagement with boards, with numerous
meetings and AGMs attended each year. For example, the team met with Pearson's Remuneration
Committee Chair in Q1 2017 to discuss a number of issues, including the restructuring programme and
data issues.
Murray Income
 Charles Luke, the manager of Murray Income Trust, also provided an update. This fund has delivered a
NAV total return of 63%, broadly in line with the benchmark. There is a 56% overlap between its portfolio
and Shires Income's equity portfolio and six companies are in both of the funds' top ten holdings.
 Key differentiating factors between the two funds are Shires Income's higher level of gearing (20% versus
2%) and preference share portfolio and Murray Income's higher international allocation (approximately
15% versus 2.5%).
Winterflood View
Shires Income has a good long-term performance record, with income from its relatively mainstream
equity portfolio boosted by gearing, the preference share portfolio and option writing. The current
dividend yield of 5.1% is notably higher than the UK Equity Income peer group weighted average of 3.4%
and is supported by adjusted revenue reserves (14.9p) representing 1.2 years of the most recent full-year
dividend. We view the preference share portfolio as a key differentiator from its peers and believe that the
diversification of sources of income should help to allow the fund to maintain its attractive yield. However,
its small size (£75m market cap) means that it is likely to be off the radar of many investors, which may
partially explain its current discount level of 11%.

[davebowler] 16/5/2017 11:37

15 May NAV Shires Income Trust PLC Undiluted Including Income 282.40p

[davebowler] 02/5/2017 11:13

27 Apr NAV Shires Income Trust PLC Undiluted Including Income 274.84p

[spectoacc] 24/4/2017 14:55

Still cheap IMO, happy holder here. ASCI (7% of SHRS) also popped back to new highs.

[rcturner2] 24/4/2017 14:48

Shires you little beauty.

[essentialinvestor] 12/4/2017 15:44

Hoping to add back some SHRS lower down,
easier in theory than practice though.

[davebowler] 11/4/2017 11:52

7 Apr NAV Shires Income Trust PLC Undiluted Including Income 271.30p

[essentialinvestor] 06/4/2017 09:27

XD, bought back a few sold higher up at under 238.5.

[essentialinvestor] 05/4/2017 09:40

Sold a few more this AM over 2.43, keeping the rest.

[croney mingler] 01/4/2017 19:42

nice chart

[essentialinvestor] 01/4/2017 19:23

Hi Tim, reliant on some dividend income so need to stay mainly invested.

[tim 3] 01/4/2017 17:21

Similar to me EI.

Problem is money earning nothing when out of the market and the risk that there is more upside to really rub it in.

Doing research everything I like the chart looks horribly overbought so find it difficult/risky to buy.

Like you I do expect a drop in the summer though.

[essentialinvestor] 01/4/2017 13:30

TBH no. Positioning, or at least trying to, for some downside in markets
going in to the Summer. 34% cash atm, that is the max level I will go to.

[11_percent] 01/4/2017 12:51

EI,

Why are you selling, do you have a better place for the money.

[essentialinvestor] 01/4/2017 11:41

Sold a chunk at 2.45 yesterday, looked like a decent price for now imv.

[essentialinvestor] 30/3/2017 14:52

Sold a few at just over 2.48.

[essentialinvestor] 30/3/2017 14:02

Here we go, overdue.

[essentialinvestor] 29/3/2017 08:48

Should have added a few more perhaps, due a move.

[essentialinvestor] 27/3/2017 13:23

Added a few under 2.38, XD only a few weeks away now.

[essentialinvestor] 16/3/2017 10:54

Agree, also some astute positioning by the Manger.

Hoping for an increase the the Q4 dividend, another divi next month, lovely!!!.

[spectoacc] 16/3/2017 10:00

A rising tide.