Schroders PLC (SDR)

[idpickering]

For a high quality dividend stream, SDRC is starting to look like a very good buy to me. Looks like at today's price we're getting nearer to pandemic style yield and valuation. Sorely tempted to top up my modest holding which I previously purchased at this kind of valuation.

My account held with Halifax is set to buy some more SDRC next month. But, after todays events re Ukraine, I will make up my mind nearer the time as to whether to buy them or not.

Ian.

[idpickering]

Full-year results

We delivered strong results in 2021, with profit before tax up 25%, reaching £764.1 million.

Our three-year investment performance1, a key performance indicator for the Group, was strong again as 79% of assets outperformed their relevant comparator.

We generated net new business (NNB) of £35.3 billion, representing an annual organic growth rate2 of 5%. Our assets under management (AUM) increased by 10%, up from £663.0 billion at 31 December 2020, to a new high of £731.6 billion.

Our strong financial performance reflects the benefit of the investments we have made in recent years. We have developed capabilities in the strategic growth areas of Private Assets and Alternatives and Wealth Management, expanded our geographic reach and evolved our product range.

The Board has recommended a total dividend of 122.0 pence per share, representing an increase of 7% on the previous year.

https://www.investegate.co.uk/schroders ... 00054598D/

[Dod101]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

[BullDog]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

Agreed. Potential fly in the ointment, I understand they have a few hundred million exposure to Russian investments. Exactly how much, I am not sure.

[idpickering]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

Agreed. Potential fly in the ointment, I understand they have a few hundred million exposure to Russian investments. Exactly how much, I am not sure.

Agreed both. Thanks re the comment about the exposure to Russia. I still intend topping up my holdings of SDRC soon.

Ian.

[Dod101]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

Agreed. Potential fly in the ointment, I understand they have a few hundred million exposure to Russian investments. Exactly how much, I am not sure.

I think that is true. Every investment house will have at least some exposure I expect.

Dod

[simoan]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

Agreed. Potential fly in the ointment, I understand they have a few hundred million exposure to Russian investments. Exactly how much, I am not sure.

The exposure to Russia is meaningless. Less than 0.1% of total assets.

[Dod101]

I have held this company for many years and after two or three years of not very impressive results these are excellent. Contrast them with the recently announced results from abrdn. Underlying them is a strong conservative culture supported by the strong family shareholding.

Dod

Agreed. Potential fly in the ointment, I understand they have a few hundred million exposure to Russian investments. Exactly how much, I am not sure.

The exposure to Russia is meaningless. Less than 0.1% of total assets.

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

[simoan]

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

I don’t see the point of discussing semantics. Less than 0.1 is utterly meaningless in the grand scheme. They also have sell orders ready to go as soon as the Russian stock market opens, along with everyone else I imagine. I can’t see there being many buyers even from domestic investors.

I only recently bought so don’t really care about past share price performance, and indeed, I would never have bought at the kind of prices you mention. However, everything has a price, especially a well run conservative business with good profitability metrics.

[BullDog]

Thanks for the comments. Well as we know, everything has a price and a value. In the market they're seldom the same. Took a little nibble at a short term downward blip in the share price a couple of days ago. Happy to see the dividend increase. Onward and upward.

[KnightOfSpring]

Someone actually asked about the big NV discount at the results meeting. They said they had noticed the discount had increased but had no current plans to do anything about it. Assuming any plans would be buying in the market. Perhaps there is a way of screwing the NV shareholders but this would not be the type of thing Schroders would do. Also assume that a lot of the NV shareholders are staff who have got shares in some incentive scheme (NV used so that the Schroder family can keep control), so even less reason to do something that harms them. Regarding a lack of a vote, I can think of few companies where I would be less concerned with this as very happy with the management performance and their long term strategic outlook.

[Dod101]

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

I don’t see the point of discussing semantics. Less than 0.1 is utterly meaningless in the grand scheme. They also have sell orders ready to go as soon as the Russian stock market opens, along with everyone else I imagine. I can’t see there being many buyers even from domestic investors.

I only recently bought so don’t really care about past share price performance, and indeed, I would never have bought at the kind of prices you mention. However, everything has a price, especially a well run conservative business with good profitability metrics.

I do not understand why you have to be so aggressive. My comment was a throwaway aside. I did not buy 'at the kind of prices' I mention either but this company is a class act and you have I think bought at a decent price, well below the price it has been standing at for the last several years. At least back to 2015, the non voting shares were selling at well over £20. That is why I commented on the current low price.

Dod

[simoan]

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

I don’t see the point of discussing semantics. Less than 0.1 is utterly meaningless in the grand scheme. They also have sell orders ready to go as soon as the Russian stock market opens, along with everyone else I imagine. I can’t see there being many buyers even from domestic investors.

I only recently bought so don’t really care about past share price performance, and indeed, I would never have bought at the kind of prices you mention. However, everything has a price, especially a well run conservative business with good profitability metrics.

I do not understand why you have to be so aggressive. My comment was a throwaway aside. I did not buy 'at the kind of prices' I mention either but this company is a class act and you have I think bought at a decent price, well below the price it has been standing at for the last several years. At least back to 2015, the non voting shares were selling at well over £20. That is why I commented on the current low price.

Dod

Not being aggressive at all, but if that's the way it came across you can be the pot and I'll be the kettle. It was you that suggested using "immaterial" is somehow better than using "meaningless"! If that's not passive aggressive I don't know what is.

It is very possible SDRC will get a good bit cheaper yet. Even a well run fund manager is not exempt from falls in stock markets and the outflow of funds by retail and institutional customers in such an environment.

[77ss]

.....

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

You are fond of this 'well run' phrase - but what does it actually mean and how exactly do you judge it?

I held SDRC for 3 years, before bailing out at £23.16 last March. it just didn't seem to be doing the job for me.

i don't know whether the businesses I have put the proceeds into are 'well run' or not - but I do know that they have all done a lot better than SDRC. Lucky perhaps and early days of course. Put into BRGE/DGE/HLMA - as top-ups

[Dod101]

.....

Well immaterial might be the better expression but what surprises me is that the share price has been steadily falling for some time, despite the fact that this is a business which is well and conservatively run. The Non Voting shares were £24 last October. Now? Around £18. active fund managers are clearly not flavour of the month.

Dod

You are fond of this 'well run' phrase - but what does it actually mean and how exactly do you judge it?

I held SDRC for 3 years, before bailing out at £23.16 last March. it just didn't seem to be doing the job for me.

i don't know whether the businesses I have put the proceeds into are 'well run' or not - but I do know that they have all done a lot better than SDRC. Lucky perhaps and early days of course. Put into BRGE/DGE/HLMA - as top-ups

As I was saying earlier, for some reason the Schroders share price has not just hit a brick wall it has actually dropped around 25% in the last six months, The market usually knows better than me so I was pleasantly surprised at these results this morning. I guess it may have something to do with the slightly higher profile of abrdn and its run of poor results but obviously fund managers are not exactly flavour of the month.

By well run I mean that they are conservative with relatively low borrowings. a long term outlook and no surprises. These attributes are usually associated with family companies or at least companies with a large holding by one family. Another term for it is culture. You can see it at work with Caledonia Investments and ABF as well.

Dod

[BullDog]

I have no idea what happened today to SDRC for it to close up nearly 7%. It's very nice to see after it I topped up my holding recently.

[idpickering]

I have no idea what happened today to SDRC for it to close up nearly 7%. It's very nice to see after it I topped up my holding recently.

Sadly, I hadn't got around to buying more SDRC just yet, as yesterday I bought more PHNX instead. But I do still intend buying more SDRC soon.

Ian.

[PeterBill]

SDR v SDRC

I did post this on another board to see if there was anything negative about buying SDRC ... (the original article was from citywire several years ago when the discount between the two was between 5% - 10%, not sure if all the info is still correct) I did look at buying them in around 2015, but must have had second thoughts - I have now recently bought them for the dividend yeild of over 6%. I know it could get worse, but hope that peace talks suceed in Ukraine.

Looks like the C-shares (SDRC), offer advantages over the ordinary shares (SDR) IMHO.
‘C’ or ‘conversion’ shares represent a distinct pool of capital and sit alongside ordinary shares. They differ from ordinary shares because they do not offer voting rights.
The Schroder family holds 51% of the ordinary shares and therefore command a majority when it comes to votes. (from an old citywire article)
‘Historically the non-voters have always traded on a slight discount to the voters because you are giving up a vote, but actually the dividend and everything on a per share basis is the same – so economically they are the same.
'Really, your vote is not worth anything because Bruno [Schroder] is going to outvote you because he has 51%,’

This discount on the C-shares to ordinary shares has typically ranged between 5% and 10%. Now a wopping 40%!
The voting share class is listed on the FTSE 100, while the C shares are not.

SDR - Dividend yield: 3.54%
SDRC - Dividend yield: 6.09%

[monabri]

https://www.investegate.co.uk/schroders ... 00039822H/

"11 April 2022
Schroders Completes Acquisition of Majority Shareholding in Greencoat Capital
Further to the announcement on 21 December 2021, Schroders plc confirms that all necessary regulatory approvals have now been received and the acquisition of a 75% shareholding in Greencoat Capital Holdings Limited completed on 11 April 2022."

Separately, I had an email from Schroders Investor Relations - copy below.

Dear all,

Schroders is today announcing that it has completed the acquisition of a 75% shareholding in Greencoat Capital, one of Europe’s largest investment managers dedicated to the high-growth renewable infrastructure market. Greencoat, will become part of Schroders Capital, our growing private markets division. The business will be known as Schroders Greencoat.

Schroders Greencoat is a leading player in its field across the UK & Ireland and is the pioneer of large-scale renewable energy infrastructure investing. The business has delivered AUM growth of over 48% per annum over the past four years (four year CAGR to March 2021) and today manages £6.8 billion (as at 31 December 2021) on behalf of its clients. It has a strong platform in Europe and is rapidly expanding in the US, this positions the business well to capture opportunities in a market expected to grow significantly over the near-term. Schroders Greencoat has the ambition to become a global leader in this fast-growing sector.

The recent heightened geopolitical uncertainty, which has resulted in global natural resource supply issues, has increased the urgency and demand for a rapid expansion of renewable power globally, further supporting the strategic importance of this acquisition.

Peter Harrison, Schroders Group Chief Executive, commented:
“As governments around the world look to accelerate towards net zero goals, providing capital for the energy transition will become ever more important. In the UK, pension schemes are increasingly focused on their net zero investment obligations following recent regulatory requirements for UK schemes to publish their climate risk disclosures by the end of 2022.
“The completion of the Greencoat Capital transaction expands our offering in an area of high client demand. Institutional investors in the UK and globally are looking for renewable infrastructure investments which provide, long-dated, inflation-linked returns.”

Richard Nourse, who founded Greencoat in 2009, commented:
“We are delighted to have found a partner in Schroders that shares our mission to build a global leader in renewables. Combining Greencoat’s leading renewable investment expertise with Schroders’ global distribution network will enable clients to capitalise on the unrivalled opportunity that our sector represents, a trillion dollar investable universe and the chance to support meaningfully the global transition to net zero.”

Schroders announced its intention to acquire a majority stake in Greencoat in December 2021. "

[idpickering]

Proposals to simplify the Company's dual share class structure through enfranchisement.

The Board of Schroders plc ("Schroders" or the "Company") is today announcing proposals which would lead to the enfranchisement of the Non-voting Ordinary Shares ("Non-voting Shares"). This will enable all shareholders, who share the same economic rewards and risks, to have the same voting rights. It will also increase the liquidity of the shares.

Under the enfranchisement, each Non-voting Share will be converted into one Ordinary Share and all such re-designated shares will have the same rights as the existing Ordinary Shares, including full voting rights. Under the proposed terms of the enfranchisement, holders of Ordinary Shares will receive a bonus issue of three additional Ordinary Shares for every 17 Ordinary Shares held on a record date to be determined in order to compensate them for the dilution of their voting rights. The Board believes these terms are fair for both classes of shareholders and reflect the longer term discount between the Non-voting Shares and the Ordinary Shares.

Shareholders of both classes of shares will be required to vote separately on the proposals. Further details of the proposals, including resolutions relating to the enfranchisement, will be set out in a shareholder circular to be published ahead of a General Meeting, to be held in due course, and will require approval of 75% of votes cast by each class of shareholders.

The Principal Shareholder Group ("PSG"), comprising the Schroder family interests, holds approximately 47.93% of the Ordinary Shares and 20.44% of the Non-voting Shares. Members of the PSG have indicated their intention to support the proposals. Together with other Non-voting shareholders who have been consulted, holders of over 40% of the Non-voting Shares have indicated their intention to support the proposals.

Following the enfranchisement, the PSG's shareholding of Ordinary Shares will be approximately 43.11%.

Michael Dobson, Chairman of Schroders, commented:

"The Board believes it is right to enfranchise the Non-voting Shares and that these proposals are in the best interests of all shareholders. In undertaking this important step for Schroders, we are pleased to have an indication from shareholders representing over 47% of the Ordinary Shares and over 40% of the Non-voting Shares that they intend to support the proposals."

Further information will be announced on publication of the shareholder circular in due course. Completion of the enfranchisement proposal is subject to various conditions including shareholder approval as described above and any necessary regulatory and other approvals.

https://www.investegate.co.uk/schroders ... 00092728J/