James Carthew: I’ve bought DGI9 but I’m voting against Hipgnosis
It feels sometimes as though an all-pervading gloom has descended on the investment companies’ sector as share price discounts continue to widen. It does not seem to matter how often you point out the illogicality of share prices (as I did in last week’s article), the situation continues to deteriorate.
I took the plunge and bought some Digital 9 Infrastructure (DGI9) shares afterwards. I know that in the short term the price may yet weaken further but I think that, if I am patient, I will be rewarded when it sells its Verne Global stake.
We had another case in the past week of a fund on a big discount demonstrating the validity of its net asset value (NAV). Octopus Renewables Infrastructure (ORIT) announced on Friday the sale of its two Polish wind farms at a price which could be as much as 19% higher than the valuation placed on them on 30 June. ORIT trades on a 26% discount and offers a yield of just above 7%. In the short term, the proceeds of about £90m will be used to reduce the trust’s debt.
Deals like this ought to shift the dial on discounts but this is not happening. HICL Infrastructure’s (HICL) discount widened further last week despite its £200m asset sale at a premium to asset value. There is an incredible £927m gap now between its NAV and its market valuation. As I have said before, valuation opportunities like that could easily attract buyers for the whole company. Yet the threat of bids, even evidence of them, does not shift the dial.
On Hipgnosis Songs Fund (SONG), I have decided to vote against both the proposed transaction (at the EGM) and the continuation of the fund (at the AGM)…. read more here