Alliance Trust's Strategic Review Outcome

[scrumpyjack]

Presumably physically buying the shares would incur stamp duty whereas buying CFDs doesn't

Also it may be that physically buying 4 million shares would put the SP up rapidly - would have thought CFDs might do as well, though ATST have been buying shares back in the market on a relatively large scale - over 8 million in the last few days

Maybe Elliott want the SP increase to make it seem the market approves of the strategy and a new much lower discount becomes the norm.

[Lootman]

Presumably physically buying the shares would incur stamp duty whereas buying CFDs doesn't

Also it may be that physically buying 4 million shares would put the SP up rapidly - would have thought CFDs might do as well, though ATST have been buying shares back in the market on a relatively large scale - over 8 million in the last few days

Maybe Elliott want the SP increase to make it seem the market approves of the strategy and a new much lower discount becomes the norm.

I would have thought that whoever is doing the CFD deal with Elliott would have to hedge their position, either by buying the underlying or via options (if options even exist on ATST). Usually corporate raiders want to be able to influence proxy battles but you need to actually hold the shares to do that, rather than derivatives.

Or maybe it's just year-end window-dressing?

[InTheHighlands]

Does anyone know what the World Equity Index actually is? Notably, does it include reinvested dividends? If it doesn't, then the 2% presumably represents under-performance in real terms......

[Hariseldon58]

InTheHighlands

If you visit the AIC site you can download a very useful set of stats for Investment Trusts, this also contains the figures for a variety of indices and allows a direct comparison on the performance of a trust. http://www.theaic.co.uk/aic/statistics/aic-stats

In the case of Alliance its performance does not compare favourably with a World Index, the stats on the site reflect dividends reinvested.

In fact the size weighted average of all investment trusts does not compare favourably with a World Index, a factor in this may be the large concentration of US holdings which have had a good run recently. The stats are very interesting and worth a look if you are not familiar with them.

[tjh290633]

I went to the Shareholders' Forum at the IET in London today.

The Chairman said that the presentation slides would be available on their web site, but I can't find them as yet. There are also a lot of broken links and out of date information there.

Willis Towers Watson gave a good presentation on their plans for the multi-manager arrangements. There were a lot of questions, and obviously a lot of interest.

TJH

[Rooky102]

Having forced down the discount to below 5% by shrinking the trust by over £200M, the board now proposes to buy out Elliott at around the same level.
Alliance Trust will be significantly smaller and the pressure will be off. The whole process will take a while, so the repurchases have to keep up the present manic rate in the short/medium term otherwise the deal can't go through.
http://www.londonstockexchange.com/exch ... 08600.html
So will the discount then revert to type? I guess it can be held down to Witan levels if all the doubters have sold up, but it looks like there is a way to go to that if the current level of buy-backs is an indication. And the status of Alliance Trust Savings hasn't been resolved.

[tjh290633]

And the status of Alliance Trust Savings hasn't been resolved.

That was a question at the Shareholders' Forum. Clare Dobie responded and the comments from her and Karl Sternberg were to the effect that ATS is now profitable and they are keeping it.

TJH

[tjh290633]

By the way, the slides from the Shareholders' Forum are now available at https://www.alliancetrust.co.uk/48ef2f/ ... n-2017.pdf

TJH

[Dod1010]

So at least in the very short term Alliance should prove a good investment. After they take out Elliott they will be a much smaller Trust but that should not matter and might even make them easier to manage. Meanwhile Elliott will come away with a nice profit I have no doubt.

If Alliance are buying out Elliott at a 4.75% discount, given the size of Elliott's stake, that should give a noticeable increase in the NAV (they say 1% for continuing shareholders) and seems a worthwhile use foor nearly 20% of their capital.

Dod

[scrumpyjack]

I can't help feeling the SP is being pushed up by the sustained share buybacks.A cynic might say this was being done so that Elliot can be bought out at near NAV and once they have been bought out the buybacks will slow/stop.

Sure in a year or two the SP may get back to near NAV if the new strategy is shown to have worked but my guess is that once Elliot has been bought out the discount will widen again, perhaps to about 10% (only a guess!)