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Bluefield Solar Income

Closed-end funds and OEICs
mickeypops
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Bluefield Solar Income

#122916

Postby mickeypops » March 7th, 2018, 2:20 pm

Does anyone else hold this trust? I have it as part of my IT income portfolio, and have held for three years.

I came across an old article about it from five years ago:

"the NAV should fall over time. This is because the assets are assumed to have a 25 year life, no residual value at the end and cash flows are not being reinvested in the business. Investors must bear in mind that the capital value of their investment is eroding over time."

Now, I have to admit that my research at the time I bought it hadn't uncovered this. Basically, it sounds like the capital value will slowly dwindle away to nothing over the years, which is not exactly what I had in mind!

Having said that, the share price has gone up about 10% since I purchased.....

Any opinions anyone?

Thanks

MP

gbjbaanb
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Re: Bluefield Solar Income

#122923

Postby gbjbaanb » March 7th, 2018, 2:53 pm

If you know the return does not include anything left at the end of 25 years, calculate how much dividend payments you'll have received and see if its still good value. There's no reason to say an investment that is worth nothing in 25 years isn't a bad investment if the income derived from it over that time is exceptional.

If its target dividend is 7.42p, then you're basically assuming 4% return is to cover the loss of capital, the remainder (3.42%?) is your actual income (or something like that). I assume though that the company will be buying new fields and/or replacing solar farms so the company won't be worthless, but they'll take hits to the share price as the expenditure is required.

If you don't think its going to return enough -sell up and buy something else that is better. Don't get emotionally attached to any stock.

OLTB
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Re: Bluefield Solar Income

#122928

Postby OLTB » March 7th, 2018, 3:03 pm

Hi MP - I also hold BSI as I replicate John Baron’s ‘Summer’ portfolio in my IT holdings. As this is his growth portfolio, I will hold it until he otherwise suggests selling.

Cheers, OLTB.

mickeypops
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Re: Bluefield Solar Income

#123098

Postby mickeypops » March 8th, 2018, 9:58 am

Thanks gbjbaanb and OLTB.

THere must be more to it than the article I read. It is rather old (2013) - it's from Citywire:

http://citywire.co.uk/wealth-manager/ne ... ns/a711386

It can't just be a slow but inexorable decline in capital that is planned, otherwise I can't see wny John Baron would include it in his summer portfolio, which has a growth focus.

My reitrement income portfolio is "John Baron-esque" - it's a blend of income producing ITs with elements of his Autumn and Winter selections plus a couple that he doesn't feature, but nothing too esoteric. I'd been devleoping this portfolio for about three years before I came across JB's work - he's definitely helped me fine tune my asset allocation and, indeed, provided considerable reassurance that my strategy is viable.

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Re: Bluefield Solar Income

#123858

Postby gbjbaanb » March 10th, 2018, 10:59 pm

I assume that the solar farms already incorporate the cost of replacing the panels with new ones as needed, though it wouldn't surprise me if in 20 years they say "whoops, cough up lads, we forgot to mention we now need to buy a new field of panels". Rights issue, new money, new panels, SP drops, and then things continue as before for another 25 years.

As for Barron, fund managers have been known to get things wrong. Even Buffet bought Tesco.

Maybe, as a shareholder, you could write to them and ask their planning on this matter. We'd be interested to hear the response!

UncleEbenezer
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Re: Bluefield Solar Income

#123874

Postby UncleEbenezer » March 11th, 2018, 7:23 am

We've had this discussion on the VCTs board. They're very much a special case: some VCTs started to invest in renewable energy, whereupon government changed the rules to prevent that. So the renewables VCTs live on as income generators but cannot invest any new money in this kind of asset.

The 25-year issue is about land ownership: a wind or solar farm typically secures a 25-year lease from a landowner. As an investor, one hopes the leases will be renewed, but it's generally very opaque what is in fact happening. And technically it's the investee company, not the fund that holds it, whose business is to deal with the lease.

There's a great gulf in how the VCTs report, between a majority that report NAVs on the basis of leases continuing indefinitely (presumably with associated costs), and some that write down NAVs each year on the basis of a limited-life asset. At least, that's my reading of it.

Of course an IT is different in that it can continue to make new investments.

Perhaps a good place to look would be local renewables community investment vehicles whose investment is in a single site. I guess they might look for real transparency on the question of lease lifetime!

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Re: Bluefield Solar Income

#124147

Postby Nocton » March 12th, 2018, 8:52 am

The 25-year issue is about land ownership

Not just that. As someone who has panels on their roof (a good investment if you want to invest in renewables!) I know that the efficiency of the panels slowly declines. So like any capital investment the panels will need replacing at some time.

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Re: Bluefield Solar Income

#124404

Postby UncleEbenezer » March 12th, 2018, 11:49 pm

Nocton wrote:
The 25-year issue is about land ownership

Not just that. As someone who has panels on their roof (a good investment if you want to invest in renewables!) I know that the efficiency of the panels slowly declines. So like any capital investment the panels will need replacing at some time.

Maintenance and replacement of equipment is a very simple cost to budget for. It's the land leases that raise serious uncertainty.

You're very fortunate to have the roof, and huge taxpayer subsidies for your production. Those of us not rich enough to have a roof have no choice but to invest through funds, with a much less generous regime.

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Re: Bluefield Solar Income

#124523

Postby Nocton » March 13th, 2018, 12:06 pm

You're very fortunate to have the roof, and huge taxpayer subsidies for your production. Those of us not rich enough to have a roof have no choice but to invest through funds, with a much less generous regime.

Yes. I assume that you live in a flat UncleEbeneezer as you don't have to be very rich to have a suitable roof.
I am constantly amazed that so many new houses are built without solar panels. The cost, if put in at building time, for a 3MW array would be about £6,000. (And at the time of site layout and house design the roof can be optimised for the sun.) This is trivial compared to the cost of most houses and even with the very much reduced subsidies the investment would be very worthwhile - tax free, rising with inflation and guaranteed by the government - many times more than any extra mortgage payments that might have to be paid. In cash terms, our array more than covers the cost of our electricity. We also have solar hot water - not subsidised and less lucrative, but still very worthwhile.

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Re: Bluefield Solar Income

#124555

Postby UncleEbenezer » March 13th, 2018, 2:19 pm

Nocton wrote:
You're very fortunate to have the roof, and huge taxpayer subsidies for your production. Those of us not rich enough to have a roof have no choice but to invest through funds, with a much less generous regime.

Yes. I assume that you live in a flat UncleEbeneezer as you don't have to be very rich to have a suitable roof.

Well, I do have a roof and live in a house. But it would be for my landlord to put up anything like solar panels, and he's not interested.
I am constantly amazed that so many new houses are built without solar panels. The cost, if put in at building time, for a 3MW array would be about £6,000. (And at the time of site layout and house design the roof can be optimised for the sun.)

Agreed. The last place I lived (a flat) looked down on a new development of nine flats. Couldn't see why they didn't put in solar panels: a block like that would really have benefited from a communal heating and hot water system: zero bills in summer and much reduced in winter.
This is trivial compared to the cost of most houses and even with the very much reduced subsidies the investment would be very worthwhile - tax free, rising with inflation and guaranteed by the government - many times more than any extra mortgage payments that might have to be paid.

Yes. I have a reasonable five-figure sum invested in renewable energy (not Bluefield, but some of its peers), and would have no problem forking out the cost of solar panels. But I'm certainly not so rich as to have my own roof.

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Re: Bluefield Solar Income

#124582

Postby Devjon » March 13th, 2018, 4:47 pm

I am constantly amazed that so many new houses are built without solar panels. The cost, if put in at building time, for a 3MW array would be about £6,000. (And at the time of site layout and house design the roof can be optimised for the sun.)


That is a mighty big roof if you can fit a 3MW array on it, and it might cost a tad more than six grand ;)

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Re: Bluefield Solar Income

#124603

Postby scrumpyjack » March 13th, 2018, 6:21 pm

The key point about the 25 years is that you only get the government feed in tariff for that period. After that there is no subsidy.

scotia
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Re: Bluefield Solar Income

#124606

Postby scotia » March 13th, 2018, 6:37 pm

That is a mighty big roof if you can fit a 3MW array on it, and it might cost a tad more than six grand ;)

You beat me to it! I would guess that 3kW while the sun shines would be a more accurate assessment.

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Re: Bluefield Solar Income

#124841

Postby Nocton » March 14th, 2018, 2:46 pm

Well spotted, scotia! I got a bit carried away.


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