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Scottish Mortgage to Polar Capital Tech Trust

Closed-end funds and OEICs
JoyofBrex8889
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Scottish Mortgage to Polar Capital Tech Trust

#228721

Postby JoyofBrex8889 » June 11th, 2019, 3:41 pm

Noting that Scottish Mortgage was at an above average premium to NAV today I sold. Also sold was Manchester and London which has seen its discount to NAV eliminated during my holding period.

Meanwhile, I spotted Polar Capital Tech trust is at a slightly increased discount to NAV. Very similar holdings to the two trusts sold....so I bought.

Effectively I am selling roughly similar underlying holdings at a slight premium and repurchasing under a different manager at a slight discount. Also simplifying my accounting going from holding two ITs to one, plus crystallising a decent capital gain, at the cost of 3 sets of dealing fees and spreads. The maths stacked up favourably as these were big holdings so I went for it.

Just thought that might be helpful to someone.

StOmer

Re: Scottish Mortgage to Polar Capital Tech Trust

#228842

Postby StOmer » June 12th, 2019, 8:41 am

I read a review of Herald recently, the trust was well liked but Allianz and Polar thought better options for the tech space. I am wary of the current levels of discounts & premiums, I recently sold RIT Capital Partners when it kept bouncing up to a 10% premium.
Last edited by StOmer on June 12th, 2019, 8:55 am, edited 1 time in total.

Dod101
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Re: Scottish Mortgage to Polar Capital Tech Trust

#228844

Postby Dod101 » June 12th, 2019, 8:48 am

I must say that I would never buy or sell on the basis of premiums or discounts. It is like trying to time the market, usually incurring costs and changing managers needlessly. I never even bother to look at them except out of general interest or maybe buying but would never change horses midstream.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228850

Postby JoyofBrex8889 » June 12th, 2019, 9:09 am

I am constantly checking IT discounts and premiums. In fact one of my investment rules is never to buy ITs at a premium. Why pay more than the NAV when one can pick up the assets cheaper elsewhere?

Having a 20% discount close on MNL gave me a stonking 20% extra profit. Sold out at par for a 42% capital profit in a little over 2 years. If I could rinse and repeat that a few times I would be very happy.

The key I think is to look for the turn in the trusts fortunes. With MNL it changed strategy and suddenly became a cheaper SMT lookalike.

We are very lucky to have on TLF the poster Skyship who occasionally draws attention to some great opportunities where trusts are making those changes that might give rise to a narrowed discount. Stuff like Tetragon at 48% discount where a re-rating or liquidation might unlock a lot of value.

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228855

Postby richfool » June 12th, 2019, 9:21 am

Can one always clearly see what the exact discount or premium is on trusts? I find that Citywire will have a different figure to HL and they are often yeterday's figures. If or when I am making a trade my broker's trading page doesn't mention the discount, only the trading price, so it could have changed since I last checked it wherever.

That said I do keep an eye on the discounts/premiums and am mindful of what it is or was recently.

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228856

Postby Dod101 » June 12th, 2019, 9:24 am

I do not buy at a premium either if I can help it. I seldom buy or sell anyway as I am a long term investor, and for instance see no reason to sell Scottish Mortgage at least for so long as James Anderson is managing it.

I just do not see them as trading chips but good luck to you.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228859

Postby SalvorHardin » June 12th, 2019, 9:41 am

richfool wrote:Can one always clearly see what the exact discount or premium is on trusts? I find that Citywire will have a different figure to HL and they are often yeterday's figures. If or when I am making a trade my broker's trading page doesn't mention the discount, only the trading price, so it could have changed since I last checked it wherever.

That said I do keep an eye on the discounts/premiums and am mindful of what it is or was recently.

The best place is to go to the source, rather than rely on a third party's figures. Most investment trusts publish daily NAV updates on the London Stock Exchange's website (some, like Caledonia Investments and RIT Capital Partners, only publish monthly NAVs). It's almost impossible to have an exact figure for the discount because prices are always moving (even over the weekends in the case of foreign currency rates). To paraphrase Keynes the key thing is to be roughly right rather than precisely wrong.

Polar Capital Technology Trust - most recent NAV is 1,415p as of 10th June 2019 (current price 1,326p indicates a discount of 6.3%)
https://www.londonstockexchange.com/exc ... ml?lang=en

RIT Capital Partners - most recent NAV is 1,892p as of 15th May 2019 (current price of 2,055p indicates a premium of 8.6%, albeit with an NAV that's almost a month out of date)
https://www.londonstockexchange.com/exc ... XSTMM.html

As to why RIT Capital Partners consistently trades at a premium, the company has a great history with its unquoted investments which shareholders are prepared to pay extra for. Also many won't sell at a small premium because of its track record (and the capital gains tax that doing so would force them to pay).

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228861

Postby Alaric » June 12th, 2019, 9:46 am

SalvorHardin wrote:As to why RIT Capital Partners consistently trades at a premium, the company has a great history with its unquoted investments which shareholders are prepared to pay extra for.


If there's a belief that the unquoted investments are valued conservatively, that's another plausible reason for a premium.

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228875

Postby JoyofBrex8889 » June 12th, 2019, 10:12 am

Dod101 wrote:I do not buy at a premium either if I can help it. I seldom buy or sell anyway as I am a long term investor, and for instance see no reason to sell Scottish Mortgage at least for so long as James Anderson is managing it.

I just do not see them as trading chips but good luck to you.

Dod


They are all trading chips Dod, and some chips have a face value floating some distance away from their their underlying value!

I am sure Scottish Mortgage has a bright future. But play with the FT site to compare SMT and PCT here:

https://markets.ft.com/data/investment- ... ?s=SMT:LSE

I see a pattern of similar returns, and actually PCT has outperformed SMT over the long term. Swapping SMT at a premium for PCT at a discount seems to me somewhat worthwhile if the delta is sufficiently wide. Likewise if the situation was vice versa I would perform the reverse trade, and hopefully in a few more years I may get the opportunity!

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228881

Postby Dod101 » June 12th, 2019, 10:34 am

I know what you are saying but I do not of course have to agree. As I said, I wish you well. Some we win some we lose.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#228975

Postby monabri » June 12th, 2019, 4:02 pm

+1 for nod to Skyship.

MNL - too strong a conviction (top 4 holdings ~60% of the portfolio)

SMT v PCT....very similar performance over the last 5 years (total return) even though their individual holdings do not overlap that much.

viewtopic.php?p=228759#p228759

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Re: Scottish Mortgage to Polar Capital Tech Trust

#229009

Postby 77ss » June 12th, 2019, 5:39 pm

monabri wrote:+1 for nod to Skyship.

MNL - too strong a conviction (top 4 holdings ~60% of the portfolio)

SMT v PCT....very similar performance over the last 5 years (total return) even though their individual holdings do not overlap that much.

viewtopic.php?p=228759#p228759


Yes, and both better than MNL.

Personally, I hold ATT - which over 5 years is better still. A small premium (1.4%) when I bought it, but as far I am concerned, that degree of premium (or discount) is just market noise.

Having ATT, I would not buy PCT, but am currently interested in SMT - as a more diversified IT.

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Re: Scottish Mortgage to Polar Capital Tech Trust

#229407

Postby Dod101 » June 14th, 2019, 9:10 am

I do wish posters would not write in symbols. ATT apparently means Allianz Technology.

Scottish Mortgage is not a technology trust. It happens to hold some technology shares but it is not in any sense dedicated to technology. It is much more dedicated to what James Anderson calls 'disruptors' and if that happens to include tech shares they will hold them, so I do not think that comparing it with Herald, Polar Capital and Allianz Technology is reasonable.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#229428

Postby scotia » June 14th, 2019, 10:39 am

Dod101 wrote:I do wish posters would not write in symbols.

I agree

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Re: Scottish Mortgage to Polar Capital Tech Trust

#229461

Postby richfool » June 14th, 2019, 12:13 pm

Dod101 wrote:I do wish posters would not write in symbols. ATT apparently means Allianz Technology.

Scottish Mortgage is not a technology trust. It happens to hold some technology shares but it is not in any sense dedicated to technology. It is much more dedicated to what James Anderson calls 'disruptors' and if that happens to include tech shares they will hold them, so I do not think that comparing it with Herald, Polar Capital and Allianz Technology is reasonable.

Dod


What about Monks (MNKS), as a more broadly diversified alternative to Scottish Mortgage trust? It holds technology.

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Re: Scottish Mortgage to Polar Capital Tech Trust

#229470

Postby Dod101 » June 14th, 2019, 12:32 pm

I agree Monks has been good since the change of manager at Baillie Gifford, probably a little less volatile than Scottish Mortgage as well with what I think is a slightly less adventurous portfolio.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#232467

Postby JoyofBrex8889 » June 28th, 2019, 8:38 am

Returning to this thread to suggest that those interested in the largecap tech exposure that is typical of SMT, MNL,ATT and the rest might like to take a look at this ETF: Xtrackers MSCI World Information Technology UCITS ETF 1C (XDWT).

Looks very promising and quite cheap at 0.3%.Downside is it is dollar denominated.

There is a very similar GBP variant here: Lyxor MSCI World Information Technology TR UCITS ETF - C-USD (GBP) (TNOG)

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Re: Scottish Mortgage to Polar Capital Tech Trust

#236852

Postby monabri » July 15th, 2019, 5:23 pm

Audited results for Year to 30th April for Polar Capital Technology Trust (PCT). Results look pretty good ("strong") triggering a performance fee.

https://www.londonstockexchange.com/exc ... 48483.html



and

https://www.londonstockexchange.com/exc ... 49480.html

"As at close of business on 12th July 2019 the unaudited net asset value per share, calculated in accordance with the AIC formula (including current year deficit and based on bid market values) was 1,506.66p"

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Re: Scottish Mortgage to Polar Capital Tech Trust

#236887

Postby Dod101 » July 15th, 2019, 7:56 pm

monabri wrote:Audited results for Year to 30th April for Polar Capital Technology Trust (PCT). Results look pretty good ("strong") triggering a performance fee. "


There is another reason for not buying PCT. I would not buy a trust which is prepared to pay a performance fee. These are out dated and a one way benefit to the manager.

Dod

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Re: Scottish Mortgage to Polar Capital Tech Trust

#237466

Postby JoyofBrex8889 » July 18th, 2019, 10:54 am

PCT tipped as a buy in today’s Daily Telegraph.... Discount widened at 7%. I am in for more!


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