Chelverton UK Dividend

[everhopeful]

The Telegraph had an article on Saturday about cheap Investment Trusts as defined by unusually wide discounts to NAV. I keep an eye on the Z scores as listed periodically on Citywire and although a higher than usual discount is not necessarily a reason to buy a trust it may point up an opportunity to buy a Trust which one likes the look of at a better than usual discount. The Telegraph article mentions Chelverton UK Dividend Trust and I have been having a look at it. It invests in small and medium sized companies and only buys companies with a yield above 4%. It has suffered in the decline of small company prices in the last year but seems to be conservatively run and the average discount is about 6%. The current discount is 13% and it yields 4.7%. A slight complication is that it also has Zero Dividend Prefs which are due to be repaid in 2025.
I was contemplating topping up my UK small company exposure as valuations seem low and this trust might be a way to do it.
Does anyone have a view on this trust?

[gbjbaanb]

Looking at the performance comparison between it and standard life UK smaller, SL one seems to be less volatile whilst still having a decent dicount (9% now)
Over 10 years SDV outperformed a little, but over 1,3,5 years SL has done a lot better. If I was looking for income, maybe it doesn't matter, but I'd still like capital to not drop as much as SDV has in recent times.

[Hariseldon58]

This Is a split capital trust, where the zero dividend preference shares have a priority claim in the assets of the trust.

Nothing wrong with that but you need to fully understand the structure of the trust and where that leaves the share class you are looking at.

The zero dividend shares are repaid at 133p in 2025 and receive no dividends but get first bite at the assets and the ordinary shares get what’s left.

You need to take a view about the present situation and where it goes over the next six years, in effect the ordinary shares are fairly highly geared.

[everhopeful]

Thank you for the comments. The split capital structure is perhaps a negative particularly to someone who remembers well the Aberdeen fiasco some years back although the company website does reassure somewhat (but it would wouldn't it). The recent poor capital performance was in a way why I was attracted to the trust on the hope that it was now undervalued both by virtue of the underlying assets and the widened discount. It of course is focused on delivering a high yield unlike the Standard Life trust. I remain undecided and may just top up my holding in Henderson Smaller Companies.

[flyer61]

Everhopeful,

this is a trust that has lost it's way. Have a look at the underlying holdings. A lot of 'junk' Companies hence the price discount to NAV.
To many as well, instead of 70 holdings it should be no more than 30-40. There 30-40 best ideas and shred the rest. Probably due a fresh manager......

[Noiseboy]

Nice special dividend announced today
I’ve held these for a few years, quite like the underlying
holdings personally. I’ll sit back and keep collecting the dividends

[Noiseboy]

I decided to have another look under the hood here today

I ran the Top Ten Holdings of this (From May 31st Factsheet) through Stockopedia
I quite like their ranking scores for Companies out of 100. Their top ten holdings come out as follows

Diversified Gas & Oil - 78
Mucklow (N/A - Taken over)
Randall & Quilter - 29
Marstons. - 94
Belvoir Letting - 96
Shoe Zone - 97
DFS - 79
UP Global - 90
Castings - 98
Strix - 92

[ReformedCharacter]

I find the charges off-putting at 1.96% (according to HL).

RC

[monabri]

Some goodish "Stocko scores" from Feb 2017

KIER 86 (big ??) - massive capital decrease (I bought on the basis of the Stocko score)

INDV 99 - massive capital decrease

GFRD 93 - massive capital decrease (I bought on the basis of the Stocko score)

Carillion 70 (gone) - massive capital decrease

Interserve 62 (gone as far as we are concerned) - massive capital decrease

CNCT 81 (Connect group...) - massive capital decrease (I bought on the basis of the Stocko score)

PFC 95 (good company, shame about the SFO inquiry) - massive capital decrease (I bought on the basis of the Stocko score)


I would treat the Stocko score with great caution!

[flyer61]

I'm with Monabri, have a look at some of the few hundred thousand pounds worth of shares that are held....why???