Where are the bargains?

[SalvorHardin]

JP Morgan Indian Investment Trust. Share price 712.5p, net asset value 802p = 11.1% discount. Annual management fee of 1%.

I know that many investors are put off single country funds. I take the view that India in a similar position economically to where China was twenty years ago and where Japan was in the early 1960s – a country with tremendous scope for long-term growth particularly since Indian national and state governments are increasingly coming to realise that the bureaucracy is holding the country back. Consequently I'm prepared to hold this for the long-term (I've already been holding for over a decade).

Caledonia Investments. Share price 2,846p, net asset value 3,373p = 15.6% discount (the NAV is a month out of date as Caledonia only publishes NAVs on a monthly basis). Some of the discount is clearly because Caledonia holds a lot of private equity investments. Also Caledonia cannot engage in the buyback and share issuance programmes that many trusts use to manage their discounts and premiums because the Cayzer family’s near-50% stake prevents it from doing so under current rules.

Hansa Trust’s huge discount is in part because of its massive holding in Ocean Wilson Holdings (around 30% of NAV), a Bermuda investment company whose main asset is 58% of the Brazilian shipping and logistics company Wilson, Sons. Ocean Wilsons itself is on a discount of roughly 35% to its NAV.

[Dod1010]

Caledonia would be my choice. I have held it for around 20 years and at its current discount is still worth buying. It is unusual in that it holds a lot of stuff which I would not or could not access directly, and I trust the management.

You have the explanation for Hansa's big discount but no reason to buy. I held it for a long time but got fed up and sold. I have missed nothing.
Alex Hammond Chambers, the long time Chairman of Hansa, is a well known Edinburgh worthy, writes eloquently in defence of Hansa and is I am sure the poodle of the controlling shareholders, the Salomon family, where he will be well paid as the front man. As usual in that sort of situation the interests of the main shareholders do not always coincide with mine at least, as an individual shareholder.

This situation is in direct contrast to Caledonia where as far as I can see what you see is what you get and the Cayzer family seem not to have any deals behind the scenes, so whilst it may not be a bargain, it is I think worth buying for a long term holder, but DYOR.

Dod

[Nocton]

So its payday, and I am hunting for ITs at a discount.

It would seem that you are investing regularly from income. Therefore, I would not pay much attention to discounts as over years of investing they will average out. Just go for the ITs you think are good. The potential growth on an IT like Scottish Mortgage over 10 years completely dwarfs any premium or discount. In fact larger discounts, e.g. over 10%, may indicate that investors have no faith in the management.

[Rooky102]

Manchester & London Ord MNL - isn't it a bit of a strange animal?

- Manager Mark Sheppard (via M&M Investment Co,) has 11.2 million shares, 52.22%, (approx £39M)
- But he has sold 2.3 million of shares (for around £7.5 million) since Feb
- it holds a mixed bag of shares and IT's, including Scottish Mortgage so there are some double charges to pay
- mapping 3 or 5 year performance against Scottish Mortgage shows just why the discount probably doesn't make it a bargain!

Another IT with one man having majority control is New Star Investment Trust plc (NSI), where the discount is nearly 30%, so there is a pattern here; and NSI has outperformed MNL over 3 and years.

[Rooky102]

P.S. don't forget the Wimbledon Centre Court debentures that the company owns - needs 2,500 shares plus to get put in a draw for them though. Very much one family's idea of an investment portfolio.

[Rooky102]

The discount for Manchester & London IT (MNL) is magical.

-25% on 10th Jan, then improved suddenly to below -9% just two month's later.
No RSN of a big buyer, but there was a big seller during the improved period - the majority owner and manager sold around 2.3 million shares.

The discount started dropping again at the beginning of May, now back to -18.

So a big seller causes the discount to reduce??

Doesn't seem to work for other IT's.

[flyer61]

How about Middlefield Canadian (MCT) whilst it is supposedly a Canadian Investment Trust it does hold a lot of American shares as well.
Trades at a discount.
Pays a quarterly dividend.
Unhedged.

[SalvorHardin]

There's an interesting article on Caledonia Investments in today's Daily Telegraph, in the Questor column. It concentrates on the discount (18% in the article) - a lot of Caledonia's good performance over the last five or so years has been due to the narrowing of the discount (my last purchase, some five years ago, was when the discount was almost 30%).

http://www.telegraph.co.uk/investing/fu ... -explains/

As the article says, this is a "bottom drawer investment" - one to tuck away for the long term.

Bear in mind that Caledonia is self-managed, so calculations of an annual management fee may end up including things which don't appear in other investment trusts' annual management fees, such as directors' and auditors' fees.

The situation regarding share buybacks seems to be changing. I had a look earlier today at the most recent monthly factsheet (April 2017), in which they stated that they had issued a share buyback instruction but that no shares had been purchased in April.

http://www.caledonia.com/

[Dod1010]

There is often nothing magical about an IT at a discount. Caledonia is in my opinion a much better buy than M & L and at about the same discount, in Caledonia's case probably because it has a number of unquoted investments. Anyway in its recently announced Annual Results it has increased the full year dividend by 4.2%, the 50th year in succession, joining a select band. It is in addition paying a special of £1 per share. I have held it for about 25 years and it has done the business for me.

BTW M & L is not a poor man's Scottish Mortgage.

Dod