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Chrysalis - still value here ?

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
BusyBumbleBee
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Chrysalis - still value here ?

#28091

Postby BusyBumbleBee » February 1st, 2017, 11:15 am

Bought a few more of these this morning - just over 15,000 to round up a holding - they go ex div tomorrow. This transaction moved the price by 2 pence so there can't be many around.

Over the years they haven't done too well (but I only bought them second hand) but they seem to have reached a stable state and are yielding just about 8% on bid price. I always value my holdings on what I am giving up if I sell them. The yield looks sustainable given that they are virtually fully invested under the old rules and certainly don't need to rush into buying poor quality assets.

These days an 8% tax free yield ain't too bad methinks and on an 18% discount

Does anyone else have a view on these?

127tolmers
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Re: Chrysalis - still value here ?

#28178

Postby 127tolmers » February 1st, 2017, 4:13 pm

http://boards.fool.co.uk/chrysalis-srrp ... e#12737702

There was a lot of discussion in another place over the years.

I have been a long term holder. They used to have a discount policy of 20% from memory but then let it drift. The directors are avid buyers of the shares at a good discount and often very promptly after their results.

They seem quite a focussed fund and have an interesting management structure. The 5 year EBB period comes to an end in April 2018 and will release a lot of shares on the market. Perhaps this means discounts will increase again.

wilwak
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Re: Chrysalis - still value here ?

#29170

Postby wilwak » February 5th, 2017, 8:34 pm

I have quite a holding of these that I also bought second hand at a good discount.

You're right that they return a good steady dividend.

Two of the directors have just bought more which bodes well.

I was looking at picking up a few more just before the ex-div date but somebody bought a load and pushed up the share price! Ha Ha! Now I know who! ;-)

A good steady hold I'd say at a good discount.

BusyBumbleBee
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Re: Chrysalis - still value here ?

#29315

Postby BusyBumbleBee » February 6th, 2017, 11:35 am

Sorry, Wilwak, but glad I got there first :D ! Incidentally my wife also missed out!

I am watching this one like a hawk cos almost every other VCT 'house' worries me. NVT for example trades at NAV and they have been giving veiled warnings recently. BSV was a one shot wonder - almost all their dividends coming from one investment (Go outdoors). Two Albion VCTs have cut their dividends so where to now for the sector - especially as there is a massive fund raising going on with the whole market looking very toppy. I am now holding a lot of cash and waiting for opportunities to emerge.

The VCT sector - along with many others - seems well overbought but we may have to wait a couple of years or more to get in again.

Still value in the Ventus twins though - even more if we could persuade the directors to cut the excessive fees to Temporis.

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Re: Chrysalis - still value here ?

#64773

Postby BusyBumbleBee » July 4th, 2017, 7:11 pm

Interim Results - quite good ones - published at 18.04 tonight.

http://www.investegate.co.uk/chrysalis- ... lc%20Alert

Another special dividend of 3 pence making 4.75 for the interim. Nav up a bit

They have a mature and maturing portfolio which has the potential to do more of the same They don't really need to make new investments at all really but have done two

One of these is non-qualifying - and I rather like it

Non-qualifying portfolio
The Company continues to hold a portfolio of fixed income bonds, which was valued at £2.2 million at the period end. The unrealised capital gain on the portfolio over the period was £24,000, along with income of £73,000.

The Company made one new non-qualifying investment of £750,000 in Impact Healthcare REIT plc, a newly launched investment trust which holds a portfolio of care homes. Impact Healthcare should deliver a steady yield with reasonably limited risk and good liquidity on funds that the Company might otherwise hold as cash generating very little yield. This investment showed an unrealised gain of £30,000 for the period.

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Re: Chrysalis - still value here ?

#105309

Postby BusyBumbleBee » December 20th, 2017, 10:32 am

Chrysalis has just released its final results - solid with a return of 8.9% for the year. Dividend kept at 3.25 payable on 2nd March (ex div is 1st Feb)

What is interesting though are these statements from the chairman:
Recent years have seen the progressive tightening of the regulations that venture capital trusts such as your Company have to comply with. This has restricted the range of investment opportunities open to the Company and has also caused increasing competition for eligible investments offering potentially good returns. As reported in the Investment Manager's report this has made the pricing of such transactions significantly less attractive. Additionally over the past year the Government has carried out the Patient Capital Review ("the Review") the outcome of which was announced in the Budget in November.

The consequence of these developments is that your Board is of the view that it is likely that the universe of attractive and available investments that will qualify as eligible for VCTs will continue to diminish. To this extent the outcome of the Review is not positive for the Company. However, given that the Company is now relatively fully invested, the impact will not, it is thought by the Board, be immediately or significantly negative in the near term.

The Board is also aware that April 2018 will mark the end of the minimum five year holding period required to enable investors in the Share Realisation and Reinvestment Programme to secure the tax benefits that they may have claimed.

To take account of all these factors the Board plans to conduct a review of the options that may be available to the Company and will provide a further update to Shareholders in due course.
I certainly agree with the first two paragraphs and noted the last two with interest. Question is will there be a lot of sellers when April arrives - or will the board come up with a good plan to extract maximum value?

Price moved up a tad on these results and is 57 pence bid and 60 pence offer with NAV at 80 pence.

scotia
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Re: Chrysalis - still value here ?

#105346

Postby scotia » December 20th, 2017, 12:24 pm

That's both Artemis and Chrysalis thinking that current price levels on possible VCT investments are a bit frothy.
Artemis has decided to soldier on, albeit offloading gains into substantial dividends. It should be interesting to see what Chrysalis does when (and if) such gains materialise.

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Re: Chrysalis - still value here ?

#108448

Postby Shavtedagin » January 7th, 2018, 9:27 am

Thanks all for the heads up on Chrysalis. Not owned this one before as didnt really like it, but on a discount play and a possible tender offer in the making, I couldn't resist (déjà vu with Foresight 3 & 4 pre-merger, albeit under a slightly different cloud!!)
Managed to buy some before Christmas, though at a slight premium to the quoted spread.
However, tried to buy more after Christmas as the spread was a very reasonable 60/61, but was quoted a ridiculously high figure and declined their generosity. Spread now 60/63.

Still some value here for the LTH or gamblers amongst us (though be aware anything over NMS of 1500 shares will likely demand a hefty premium).

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Re: Chrysalis - still value here ?

#108765

Postby BusyBumbleBee » January 8th, 2018, 1:37 pm

Shavtedagin wrote:Thanks all for the heads up on Chrysalis. Not owned this one before as didnt really like it, but on a discount play and a possible tender offer in the making, I couldn't resist (déjà vu with Foresight 3 & 4 pre-merger, albeit under a slightly different cloud!!)
Managed to buy some before Christmas, though at a slight premium to the quoted spread.
However, tried to buy more after Christmas as the spread was a very reasonable 60/61, but was quoted a ridiculously high figure and declined their generosity. Spread now 60/63.

Still some value here for the LTH or gamblers amongst us (though be aware anything over NMS of 1500 shares will likely demand a hefty premium).
I bought some more - 18,938 to be precise) this morning within the spread. I have found that if you try to buy (or sell) a round number of lesser known VCT shares - say 18,000 or 18,500 or 19,000 the order will often not go through 'electronically' and then you have to place a 'limit order' which may or may not be filled. However, I have never had a buy for an odd number fail and only rarely a sell fail to complete electronically first time and most often within the spread.

Anyone else noticed this phenomenon and anyone got a reason why it should be so?

scotia
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Re: Chrysalis - still value here ?

#108812

Postby scotia » January 8th, 2018, 4:25 pm

BusyBumbleBee - I have been trying to sell 5807 Maven 5 shares for the past few weeks. I have been unable to get a market order, and have been forced to place limit orders at the bottom of the spread - but so far no takers (Charles Stanley Direct).
So I wish it were as easy as simply placing an odd number of shares!
I'm not desperate to offload the shares - its simply my current policy of recycling old VCTs to obtain fresh tax relief on new purchases. I'll keep trying, but I suspect I'm going to need to place the limit below the spread.

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Re: Chrysalis - still value here ?

#108869

Postby SpinDoctor » January 8th, 2018, 9:14 pm

scotia, MIG5 does periodic share backs at around the bid price. Your broker needs to talk to the MM. You shouldn't have a problem shifting that number of shares.
I accept the rationale for recycling, but note that two of the biggest MIG 5 holdings - Ideagen and Water Intelligence - have been doing very well on AIM recently. Unlike Plant Impact, but that was a much smaller holding. You might want to hold selling until the next NAV statement.

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Re: Chrysalis - still value here ?

#108892

Postby scotia » January 8th, 2018, 11:00 pm

spindoctor - thanks for the feedback. Yes I had noticed the MIG5 buybacks - in May, August and November. In view of such purchases I was surprised that my modest amount didn't sell at the bottom of a sizeable spread. However - it was just a tidy-up exercise, of no great importance. I note that the market size is quoted on LSE as 1000, which seems remarkably small.

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Re: Chrysalis - still value here ?

#121426

Postby BusyBumbleBee » March 1st, 2018, 5:30 pm

Well all resolutions were passed at the AGM by a comfortable margin and we are fast approaching the end of the tax year when a number of shares might come on to the market. Just over a month to go in fact.

The chairman said in his last report
The Board is also aware that April 2018 will mark the end of the minimum five year holding period required to enable investors in the Share Realisation and Reinvestment Programme to secure the tax benefits that they may have claimed.

To take account of all these factors the Board plans to conduct a review of the options that may be available to the Company and will provide a further update to Shareholders in due course.
So one could reasonably expect an announcement real soon now. Anyone prepared to say what they would like in that announcement?

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Re: Chrysalis - still value here ?

#121466

Postby Kidman » March 1st, 2018, 8:12 pm

BusyBumbleBee wrote:Well all resolutions were passed at the AGM by a comfortable margin ...

Yes and no! Resolutions 1 and 5 had about 13% against, why did someone not like the accounts or their auditor? Resolution 9 had about 22% against and as a special resolution that was nearly lost as it needed a 75% pass.

Anyone prepared to say what they would like in that announcement?

I am pleased that the directors are being honest about the potentially uphill battle for many VCTs as they search out new investments that not only pass all the new rules but also are good value.
I suspect they only have two real options, run-off or being taken over, hopefully with an exit option for those that want it.

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Re: Chrysalis - still value here ?

#121560

Postby 127tolmers » March 2nd, 2018, 10:53 am

You might like to cross check the number of votes against the accounts in resolution 1 with the number of shares declared by the former chairman.

I think the former chairman was also strongly against actually doing buybacks. Foresight 4 have set a precedent after the end of their EBB period by doing a tender offer at a 7.5% discount not only to help shareholders but to reset discount expectations.

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Re: Chrysalis - still value here ?

#141436

Postby Shavtedagin » May 26th, 2018, 10:06 am

BusyBumbleBee wrote:
To take account of all these factors the Board plans to conduct a review of the options that may be available to the Company and will provide a further update to Shareholders in due course.
So one could reasonably expect an announcement real soon now. Anyone prepared to say what they would like in that announcement?[/quote]


All quiet on this one too.
I would like to see a wind up or tender offer at 5% discount. Surely news overdue on this, but may now have to wait till the next results.

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Re: Chrysalis - still value here ?

#141437

Postby Shavtedagin » May 26th, 2018, 10:06 am

BusyBumbleBee wrote:
To take account of all these factors the Board plans to conduct a review of the options that may be available to the Company and will provide a further update to Shareholders in due course.
So one could reasonably expect an announcement real soon now. Anyone prepared to say what they would like in that announcement?[/quote]


All quiet on this one too.
I would like to see a wind up or tender offer at 5% discount. Surely news overdue on this, but may now have to wait till the next results.

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Re: Chrysalis - still value here ?

#141536

Postby Kidman » May 26th, 2018, 5:51 pm

Shavtedagin wrote:I would like to see a wind up or tender offer at 5% discount. Surely news overdue on this, but may now have to wait till the next results.

I agree, I'm in favour of a return of capital. A wind-up could be very protracted, they may not have enough spare cash to do a tender big enough for those who want the cash, perhaps a takeover by a cash-rich VCT who could offer the choice of cash at NAV-x% or shares?

Hopefully we'll hear something soon.

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Re: Chrysalis - still value here ?

#141813

Postby BusyBumbleBee » May 28th, 2018, 9:55 am

Kidman wrote:Hopefully we'll hear something soon.

In the past they have reported as early as 3rd June - but often delayed into July. Merger with another VCT is a good idea - better still if they can manage a big special dividend to existing shareholders first. Personal preference would be one of the Albion VCTs but any with a buy back policy at 5% discount would do really.

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Re: Chrysalis - still value here ?

#146395

Postby BusyBumbleBee » June 18th, 2018, 7:46 am

Interim results published first thing this morning. Reasonable with a slight uplift in NAV and the announcement of another special dividend of 3 pence payable on 3rd August - ex div 5th July. They will also implement buy backs at a 15% discount.

The board are gloomy on prospects for the future of the VCT (perhaps all VCTs!) but have put forward this plan for the future

As announced in my statement in last year's annual report the Board has
conducted a further review of market developments and has considered
carefully the options that may be available to the Company.

The recent and prospective changes in Venture Capital Trust regulations
substantially prohibit the style of structured investment that the
Investment Manager has historically deployed so successfully. At the
same time, the universe of eligible companies has been significantly
reduced and the pool of funds seeking to invest in qualifying companies
has expanded, not least due to changes in taxation in areas such as
pension contributions and inheritance tax. In the view of the Board,
this leaves the Investment Manager significantly less well placed to
source and execute transactions that are likely to yield good returns to
Shareholders.
The Investment Manager also has limited ability to make
follow on investments in existing portfolio companies, due to a
combination of the new rule changes and the increasing concentration
within the portfolio. For these reasons, the Board expects further
investment activity to remain rather more muted
.

The Board is however confident that the existing portfolio is likely to
deliver attractive realisations over time. Mindful of regulatory
requirements, in particular current and prospective restrictions on the
amount of capital than can be held outside qualifying investments it is
proposed that further distributions of capital to Shareholders will be
made to assist in continuing to comply with the regulations
,. The Board
has therefore decided that, in addition to its established policy of
distributing regular interim and final dividends totalling 5p per share
per annum, it will pay additional special dividends as and when
realisations provide liquidity.

The Board also believes it is now appropriate to adopt a more active
approach to share buybacks and in future intends to conduct buybacks,
subject to market conditions and any liquidity or regulatory
restrictions, at a target discount of 15% to the latest published NAV.
The 15% discount level has been carefully considered by the Board and
selected to take account of the particular characteristics of the
Company's investment portfolio.


Any Shareholders wishing to buy or sell shares in the Company may wish
to consider contacting the Company's broker, Nplus1 Singer Capital
Markets, who will be able to provide details of share availability and
likely timings in respect of buybacks. There were no share buybacks in
the period under review.

The Board recognises that over time the consequences of the above
decisions will probably be to reduce the size of the Company to the
point where its cost base relative to its net assets becomes
inappropriate. The Board will address this issue in a timely manner.


I think that is actually quite a good plan - what do others think? Hopefully the buy back policy will narrow the spread.


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