James Carthew: Nearing time to top up on overly discounted RIT Capital
RCP’s discount remains on a steep discount, but its steady NAV recovery could soon drive demand.
Remarkably, given its size – both by market cap and the weighting within my own portfolio – it is some time since I took a close look at RIT Capital (RCP). I have been invested in the trust since 2017, topped up my stake amid the Covid panic in March 2020, then added to it again in December 2022 when the discount opened up on the back of an Investec sell note on the company.
I am making money on all three purchases, but not much on the first and last of those. The main problem is the discount, which is currently around 27%.
Buying it on about a 5% premium in March 2017 was, in hindsight, misguided, but in my defence, it had been trading close to asset value or at a premium for most of the past 14 years at that point. Markets were feeling a bit frothy at the time so I was casting around for trusts that had a good track record of offering downside protection in volatile markets – RCP fitted that bill.
The premium rating persisted for the next couple of years, but the Covid panic put an end to that. Even though the hit to its net asset value (NAV) was relatively modest and the share price bounced, investors seemed to… read more here