Investment trust insider on discount disconnects – James Carthew: The SONG and dance about alternative NAVs
One argument used by investors who justify the wide discounts on investment companies in ‘alternative’, non-equity assets is that the underlying net asset values (NAV) of their portfolios are overstated.
Sometimes this is easy to counter, but in other cases, boards seem wedded to valuations that do not seem to be achievable. A clutch of recent announcements illustrates this quite well.
On the positive side, HICL Infrastructure (HICL) last week sold a £204m portfolio of hospitals, schools and a stake in the Hornsea offshore transmission project to John Laing at a small premium to NAV. It is using the proceeds – equivalent to about 6% of its portfolio – to cut the outstanding balance on its borrowing facility.
This seems like good evidence of the accuracy of its NAV and begs the question: why does HICL trade on a 26% discount?
Bluefield Solar’s (BSIF) annual results confirmed that its investment adviser has not seen any deterioration in the values of utility scale solar assets in the UK, which it reckons are stable within a band of about £1.20m/MW-£1.45m/MW.
At 30 June, the operational assets in BSIF’s portfolio were valued at an average of about £1.35m/MW, down from £1.38m/MW in June 2022. At just over 117p, the shares closed last week at a 16% discount to the 139.7p NAV per share.
US Solar (USF) just slashed its NAV by… read more here