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Edinburgh Investment Trust - Barnett sacked

Closed-end funds and OEICs
MusingMarket
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Re: Edinburgh Investment Trust - Barnett sacked

#294720

Postby MusingMarket » March 27th, 2020, 10:44 am

New manager statement with portfolio update:
https://www.londonstockexchange.com/exc ... 80082.html

98% of intended trading done, 1.1% of the legacy portfolio remains. Net 5.7% gearing. "Following the payment of this financial year’s third interim and final dividends, payable in May and July 2020, the Board will review the Company’s dividend for the following year."

Portfolio looks reasonably defensive and the largest foreign holdings are gold miners.

mm

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Re: Edinburgh Investment Trust - Barnett sacked

#294729

Postby Dod101 » March 27th, 2020, 11:03 am

MusingMarket wrote:New manager statement with portfolio update:
https://www.londonstockexchange.com/exc ... 80082.html

98% of intended trading done, 1.1% of the legacy portfolio remains. Net 5.7% gearing. "Following the payment of this financial year’s third interim and final dividends, payable in May and July 2020, the Board will review the Company’s dividend for the following year."

Portfolio looks reasonably defensive and the largest foreign holdings are gold miners.

mm


Many thanks for that mm. It seems a sensible statement for the times and of course like all ITs they need to distribute at least 85% of their revenue earnings so that will put a floor under the dividend but of course it is not difficult to see a reduction for next year. I have held for a long time.

As a PS I quite liked the new manager's comment about likely future corporate actions 'Corporate Darwinism on steroids'.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#294736

Postby Arborbridge » March 27th, 2020, 11:16 am

EDIN with its 18% discount to NAV (anyone know what it really is?) could be a bargain right now - if only we had some visibility on the dividend prospects.

The portfolio they have seems pretty sensible.

Arb.

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Re: Edinburgh Investment Trust - Barnett sacked

#294758

Postby monabri » March 27th, 2020, 11:47 am

Arborbridge wrote:EDIN with its 18% discount to NAV (anyone know what it really is?) could be a bargain right now - if only we had some visibility on the dividend prospects.

The portfolio they have seems pretty sensible.

Arb.



Seems to have good cover (1.6 years)... I recently bought some LWDB ( 2 years cover).

As for NAV discount...?

With ref to

viewtopic.php?p=294690#p294690

Might be a good idea to look for IT funds with the biggest cover!

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Re: Edinburgh Investment Trust - Barnett sacked

#294766

Postby Dod101 » March 27th, 2020, 12:09 pm

I do not think we should pay much attention to discounts or premiums to NAV at the moment nor for that matter to yields. There is far too much volatility for them to mean much. Obviously we should take note of the Revenue Reserves but these days of course ITs can distribute realised capital gains so if they have a mind to, so dividends could probably be maintained in many cases. I think all we can do is take a view on the holdings and buy or not on that basis. I am doing nothing but am just sitting out the volatility and hoping that I can garner enough dividends to see me through the remainder of this year.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#294785

Postby richfool » March 27th, 2020, 12:54 pm

The debenture doesn't sound cheap to me at 7.75% when we have virtually negative interest rates.
The Company has in place a £100m debenture which matures in 2022. It carries an annual coupon of 7.75%. When this debenture matures in 2022, we anticipate looking to replace it with a similar instrument with a lower annual coupon.


Plus I spotted 4 banks in the portfolio. It seems a bit like Temple Bar in that respect.

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Re: Edinburgh Investment Trust - Barnett sacked

#294788

Postby Dod101 » March 27th, 2020, 1:02 pm

richfool wrote:The debenture doesn't sound cheap to me at 7.75% when we have virtually negative interest rates.
The Company has in place a £100m debenture which matures in 2022. It carries an annual coupon of 7.75%. When this debenture matures in 2022, we anticipate looking to replace it with a similar instrument with a lower annual coupon.


Plus I spotted 4 banks in the portfolio. It seems a bit like Temple Bar in that respect.


They had two very long term Debentures. One even more expensive than the remaining one matured a couple of years or so back. Many shareholders including me have complained that they should have bitten the bullet and paid a premium to buy it out early but they have been disinclined to do that. Anyway it only has a couple more years to run and I guess that interest rates will still be very low then. In fact they might even be paying them to take the money off their hands at the rate we are going.

I am happy not to second guess them but let the new managers get on with it.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#294910

Postby MusingMarket » March 27th, 2020, 7:12 pm

Dod101 wrote:As a PS I quite liked the new manager's comment about likely future corporate actions 'Corporate Darwinism on steroids'.

Dod

The Times liked it too, it's now their business section's lead headline: Weak to fail in ‘corporate Darwinism (paywalled). The article itself is rather good, last bit:

"Simon Elliott, an analyst at Winterflood, said some income-focused investment trusts would be in a quandary over whether to cut dividends.

Some trusts base their marketing on not having cut the dividend for decades.

Investment trust share prices have fallen to wide discounts to net assets, according to Interactive Investor, the investment platform. The average discount earlier this week was 18.4 per cent, wider than the 17.6 per cent hit in December 2008. Discounts a month ago averaged 5.5 per cent."

mm

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Re: Edinburgh Investment Trust - Barnett sacked

#294914

Postby richfool » March 27th, 2020, 7:22 pm

MusingMarket wrote:
Dod101 wrote:As a PS I quite liked the new manager's comment about likely future corporate actions 'Corporate Darwinism on steroids'.

Dod

The Times liked it too, it's now their business section's lead headline: Weak to fail in ‘corporate Darwinism (paywalled). The article itself is rather good, last bit:

"Simon Elliott, an analyst at Winterflood, said some income-focused investment trusts would be in a quandary over whether to cut dividends.

Some trusts base their marketing on not having cut the dividend for decades.

Investment trust share prices have fallen to wide discounts to net assets, according to Interactive Investor, the investment platform. The average discount earlier this week was 18.4 per cent, wider than the 17.6 per cent hit in December 2008. Discounts a month ago averaged 5.5 per cent."

mm

They will have the option to subsidise dividends from capital!

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Re: Edinburgh Investment Trust - Barnett sacked

#294921

Postby 77ss » March 27th, 2020, 7:37 pm

richfool wrote:......
They will have the option to subsidise dividends from capital!


Isn't that the way EDIN already works?

It subsidises your dividend by evaporating your capital.

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Re: Edinburgh Investment Trust - Barnett sacked

#294945

Postby Dod101 » March 27th, 2020, 8:31 pm

77ss wrote:
richfool wrote:......
They will have the option to subsidise dividends from capital!


Isn't that the way EDIN already works?

It subsidises your dividend by evaporating your capital.


I do not think so. I have held Edinburgh fro about 25 years and I do not think they have ever have done that.

RIT does, Scottish Mortgage (an Edinburgh based Trust) does so I think and is it European Assets which also does and no doubt several others but not I think Edinburgh IT. Personal Assets may do so as well but I am not sure on that one.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#294947

Postby Dod101 » March 27th, 2020, 8:33 pm

I have held Edinburgh for about 25 years and I do not think they have ever done that. An Edinburgh based Trust, Scottish Mortgage does I think, as does quite a few others such as RIT, European Assets, and maybe Personal Assets but not I think Edinburgh.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#294966

Postby 77ss » March 27th, 2020, 9:21 pm

Dod101 wrote:
77ss wrote:
richfool wrote:......
They will have the option to subsidise dividends from capital!


Isn't that the way EDIN already works?

It subsidises your dividend by evaporating your capital.


I do not think so. I have held Edinburgh fro about 25 years and I do not think they have ever have done that.

RIT does, Scottish Mortgage (an Edinburgh based Trust) does so I think and is it European Assets which also does and no doubt several others but not I think Edinburgh IT. Personal Assets may do so as well but I am not sure on that one.

Dod


Tongue in cheek Dod! If I could ever be bothered to figure out what all these ridiculous orange symbols mean.....

However, the underlying point is, I think, a fair one - if I may be permitted a touch of hyperbole. As I see it, EDIN delivers a decent dividend on a wasting asset. Fine if income is your prime objective (as I understand yours to be) , but if not then one should look carefully. We all differ.

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Re: Edinburgh Investment Trust - Barnett sacked

#295001

Postby Dod101 » March 28th, 2020, 6:27 am

OK. very difficult to judge the 'mood' of bare comments, but certainly latterly under Barnett it was a bit of a wasting asset but over many years it has done well enough. With a new manager it will probably do a bit better because new managers cannot afford to get it wrong and a fresh approach is usually beneficial.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#295014

Postby colin » March 28th, 2020, 9:10 am

Dod101 wrote:OK. very difficult to judge the 'mood' of bare comments, but certainly latterly under Barnett it was a bit of a wasting asset but over many years it has done well enough. With a new manager it will probably do a bit better because new managers cannot afford to get it wrong and a fresh approach is usually beneficial.

Dod

Barnett was a 'new' manager and obviously did not do so well, please explain the logic behind your post?

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Re: Edinburgh Investment Trust - Barnett sacked

#295018

Postby Dod101 » March 28th, 2020, 9:23 am

colin wrote:
Dod101 wrote:OK. very difficult to judge the 'mood' of bare comments, but certainly latterly under Barnett it was a bit of a wasting asset but over many years it has done well enough. With a new manager it will probably do a bit better because new managers cannot afford to get it wrong and a fresh approach is usually beneficial.

Dod

Barnett was a 'new' manager and obviously did not do so well, please explain the logic behind your post?


When Invesco was appointed, Woodford was the attraction not Barnett and in these days Woodford did well as the new manager. At that time he thought he could walk on water and left to form his own set up as we all know. It was then that Barnett took over so he was never a 'new' manager for Invesco. He had of course to keep a lot of the income shares (Edinburgh is an income trust first and foremost) but changed the portfolio a bit to what I would say was a more value style and it all went horribly wrong.

I think that a new manager from another investment house is likely to be refreshing and Majedie will hopefully relish the exposure because they have been I think fairly low profile since their own reorganisation some years ago. They will not want to get it wrong and that is why I say the new appointment will probably be beneficial.

Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#295022

Postby monabri » March 28th, 2020, 9:36 am

From the EDIN annual report.. Quite a heavy holding of Oil and Tobacco (traditional dividend payers).

Further down the list, B.Land, Provident Financial, Easyjet, Capita, BT, GFS, TSCO,NRR. I don't think there would be many HYP-ers who would hold so many of these "challenged" businesses ( maybe 1 or 2 of the companies?). Throw in a couple of support services too.


Image

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Re: Edinburgh Investment Trust - Barnett sacked

#295030

Postby richfool » March 28th, 2020, 10:06 am

Decades back, I used to hold Keystone (KIT), which I recollect was managed by Mike Barnett (and back then performed quite well), though I see now it is managed by James Goldstone.

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Re: Edinburgh Investment Trust - Barnett sacked

#295035

Postby Dod101 » March 28th, 2020, 10:27 am

monabri wrote:From the EDIN annual report.. Quite a heavy holding of Oil and Tobacco (traditional dividend payers).

Further down the list, B.Land, Provident Financial, Easyjet, Capita, BT, GFS, TSCO,NRR. I don't think there would be many HYP-ers who would hold so many of these "challenged" businesses ( maybe 1 or 2 of the companies?). Throw in a couple of support services too. [/url]


If you are quoting from the Annual Report you are well out of date. Majedie took over at the beginning of March and changed most of the portfolio. See the post earlier in this thread.

The list you quote was the main reason that Barnett was sacked.
Dod

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Re: Edinburgh Investment Trust - Barnett sacked

#295087

Postby 77ss » March 28th, 2020, 12:20 pm

Dod101 wrote:
monabri wrote:From the EDIN annual report.. Quite a heavy holding of Oil and Tobacco (traditional dividend payers).

Further down the list, B.Land, Provident Financial, Easyjet, Capita, BT, GFS, TSCO,NRR. I don't think there would be many HYP-ers who would hold so many of these "challenged" businesses ( maybe 1 or 2 of the companies?). Throw in a couple of support services too. [/url]


If you are quoting from the Annual Report you are well out of date. Majedie took over at the beginning of March and changed most of the portfolio. See the post earlier in this thread.

The list you quote was the main reason that Barnett was sacked.
Dod


Quite. It will be (mildly for me) interesting to see the first factsheet from the new management:

Majedie Asset Management will produce the next factsheet in April showing data to 31 March 2020.


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