Brunner AGM

[barchid]

Hi, don't know if any other fool's attended the Brunner AGM today but it was an interesting and well attended meeting.
Lucy Macdonald, the fund manager, gave a very confident address and it must be said the performance has been good during her tenure.
To me, a concentrated portfolio of 64 global stocks, with a strong U.S. bias, yielding 2.4% with a 10%discount looks a very attractive proposition.
Talking to a director later I was told that the Aviva overhang of 18% is still there.
Could this be the reason this counter trades on such a discount ?

[StOmer]

Quite possibly. When Aviva sold Witan the IT dropped around 7%.

[LittleDorrit]

I had previously missed the fact that both of the expensive long term debentures have now been paid off.
We now have the rather unusual situation that the declared N.A.V. with debt valued at fair value is greater than with the debt valued at par.

[Dod101]

Talking to a director later I was told that the Aviva overhang of 18% is still there.
Could this be the reason this counter trades on such a discount ?

That seems surprising because Aviva has been quite aggressive in getting out of a lot of their IT holdings, eg London and Lawrence was liquidated on account of a big holding by Aviva and there have been several other placings. This of course arose when Aviva bought Friends Life which held a lot of significant IT holdings.

If I had been in your position, I would have asked the director if they had not considered buying out Aviva to remove the holding and take advantage of the discount.

Dod

[Dod101]

Should have said London and St Lawrence of course. Brunner looks interesting. The only problem I would have is the modest yield of around 2.3%.

I like the pro active way they have replaced the high cost Debentures. There are still a few around in the marketplace.

Dod

[barchid]

Dod
What the director actually said was that they are in a long conversation with Aviva, who some years ago highlighted this holding as a potential sale.
However it is of course down to Aviva to initiate the salebut at present seem relatively happy holders.
Re the yield, which is approaching 2.4% currently, the Investment Manager stated that it is intended to increase it at above the rate of inflation. They did not state which rate they were taking though !
Last years increase was 10% y-o-y, due to the lack of debentures on their balance sheet.
There is also over a year & half dividend payments in reserve which is increasing at over 1p a share a year, which looks good to me.
They are now down to 64 holdings having exited their position in Walgreen Boots (a top 20 holding) 2 or 3 weeks before the 12.5% plunge in price.
Interestingly for a fund of their size (modest) they have very low ongoing costs and Lucy Macdonald said that any holding should be able to be exited in a day, which is more than can be said for other funds/trusts !

[Dod101]

Thanks for that barchid. I thought when I saw that Wallgreen Boots was one of their larger holdings that they would have been caught out. Good sale!

It sounds an interesting trust I must say. For years though it did not do much as I recall but the current (small) board seem to be quite pro active and if Aviva are happy to continue to hold their substantial stake then that should be a good sign because they have exited many of their IT holdings.

Maybe something to be said for female management (Chairman and fund manager) and a small trust.

Dod