The Lemon Fool

clearly all 3 VCTs are similar but does anyone have any view on which is the best? I have been looking a bit today into performance fee hurdles and understand that Northern 1 is 15%, Norther 2 is 12% and northern 3 is 14.2%. On that basis, Northern 1 may be seen as a bit superior?

I think it's the other way around the hurdle is the same in each case (7% max). As I recall (from memory), the 7% assumes fully invested and then it is adjusted downwards depending on the ratio of assets held as qualifying investments and assets held as cash

Therefore Northern 2 has the best (i.e. lowest) performance fee from an investor perspective, see table on performance fees I compiled as part of the comparative analysis on the Albion VCT performance fee

https://drive.google.com/file/d/11B_0y4 ... sp=sharing

BusyBumbleBee wrote:

Vulgaris wrote:Application cheque cashed immediately, which is unusual for Northern, who usually sit on a pile of them, send out a note of provisional acceptance, then encash.

but it's now Mercia and is the first of many changes to come (does the 'Merc' come from Mercenary?)

Or Merci as in beaucoup

BusyBumbleBee wrote:(does the 'Merc' come from Mercenary?)

No, it means they're on the edge. Though from a modern perspective one might argue they're in the middle.

The offer documents have just arrived through the post today. I'll think about it - and I suspect that is all I'll do.

UncleEbenezer wrote:

BusyBumbleBee wrote:(does the 'Merc' come from Mercenary?)

No, it means they're on the edge. Though from a modern perspective one might argue they're in the middle.

It was meant to be a joke, UncleE.

Anyway - from Wikipedia

For 300 years (between 600 and 900), having annexed or gained submissions from five of the other six kingdoms of the Heptarchy (East Anglia, Essex, Kent, Sussex and Wessex), Mercia dominated England south of the River Humber: this period is known as the Mercian Supremacy. :

Seems you are safe in the West country (if you are not in Wessex) but the rest of us ain't

Thanks for clarifying Timbo, I have now found the wording i was looking at on p35 of the prospectus and see that i misread it. Performance fee applies if exceed hurdle rate which was 5.7% for 3 VCT and 6% for the other two. Northern 2 has the lowest % so a bit more attractive on that basis

The Manager is also entitled to receive a performance-related management fee from each of the Companies equivalent
to a specified percentage of the amount, if any, by which the Total Return in each financial year (expressed as a
percentage of opening NAV) exceeds a performance hurdle. The relevant specified percentages are 15.0% for Northern
Venture Trust, 12.0% for Northern 2 VCT and 14.2% for Northern 3 VCT. The hurdle is a composite rate based on the level
of long-term investments and cash and near-cash investments during the year. For the most recent financial year the
hurdle rate for Northern Venture Trust was 6.0%, for Northern 2 VCT 6.0% and for Northern 3 VCT 5.7%. Following a year
in which the NAV declines, a “high water mark” will apply to the calculation of the performance-related fee, but will then
be adjusted downwards to the extent that a positive return is achieved in the following year. The performance-related fee
payable by each of the Companies is subject to an overall annual cap of 2.25% of net assets

After reading the Octopus Titan allotment thread a thought occurred to me.

I believe that Northern is planning to do one and only one allotment this financial year around the 1st April, even if they have used all their capacity before then. (By 17 Jan they are £14.9m full, £25.1m to go).

Wouldn't it be a good idea for them to do an allotment on 10 March whether full or not to ensure they are safe against any Budget changes?

Kidman
Spot on !
Interestingly Amati made an allocation of new shares 2 days before the election in December, despite the previous allocation having been made only 2 weeks earlier, I guess for that very reason. After all when Denis Healey limited mortgage relief back in the 1970's he, I recall, announced that he would be limiting relief to the first £25,000 of a mortgage in the near future but would be backdated to the day of or day after, his announcement to stop a surge of applications before the budget. McDonnell probably had a few unpleasant surprises which he could pre announce had he become Chancellor.
Any VCT sitting with unallocated subscriptions would be taking a risk, as one never knows what may come out in a budget, especially under current circumstances.

Just in case any VCT readers had missed it, there are recent entries over on the Share Ideas board concerning Mercia - who are taking over the management of the Northern VCTs.
https://lemonfool.co.uk/viewtopic.php?f ... 49#p260759
The comments are not particularly complimentary.

Sadly my fears on Northern after Mercia were not ill founded, the MERC rns today was 22% off the Northern valuations which is reflected in the share price this pm of 67/73 down 21+% and a spread wide enough to get a double decker bus through sideways !
Wait till they start "investing" their newly raised cash into MERCS eis stocks, then you will see rather worse news, if my experience with MERC is anything to go by....
Woodford/Barnett/Searle, the diamond trio.

Hmmm. I suspect all VCT NAVs are going to suffer a heavy markdown, unless they happen to have shares in biotechs that supposedly have new cures or new tests..... What I do note is the RNS on the offer:

" In relation to the offer for new shares pursuant to the prospectus dated
9 January 2020, the Company intends to allot Offer Shares on or around 2
April 2020. Subject to FCA approval, the Company intends shortly to
publish a supplementary prospectus reflecting the fact that the
publication of the updated unaudited NAV as at 24 March 2020 reflects a
significant new factor for consideration by prospective investors. Upon
the FCA approving the supplementary prospectus, investors who have
already submitted application forms for Offer Shares will have a period
of 48 hours in which they may withdraw such applications, should they
wish to do so, under section 87Q(4)--(6) of FSMA. Further details of
this right, including the deadline for withdrawal, will be contained in
the supplementary prospectus, which will be available at
https://nvm.co.uk/investor-area/vcts/. "

This is cryptic: does it mean that allocations will be based on the new, low NAV of 24/3, which'd increase the allocations, or on some historic NAV, which'd be a rotten deal. Withdrawing isn't a good option, evidently, as no time to go elsewhere so late in the tax year.

Vulgaris wrote:Withdrawing isn't a good option, evidently, as no time to go elsewhere so late in the tax year.

But withdrawing and potentially avoiding a large capital loss may be better financially than staying in even with 30% tax relief.

It is ironic that not that long ago people actually drove to Newcastle to ensure their applications arrived ASAP, as the 3 issues were open & closed in very short order, now they may need to go to Henley to withdraw them, lockdown permitting !
You couldn't make this up.

Just received a message via e-mail which includes this:

"Please note that under the terms of the Offers, the number of Offer Shares that you will receive will be calculated in accordance with the pricing formula set out on page 37 of the prospectus and based upon the latest published NAV of each Company, which is currently the unaudited interim net asset value as at 24 March 2020. Therefore, as a consequence of the reduction in NAV, you will now receive more Offer Shares than was the case based on the previous published net asset value, as at 31 December 2019."

Indeed, I've had the same. Allocations will be based on the reduced, unaudited NAVs of 24/3. If there's still value in anything it's existing holders who are skelped. On a 5 year view I'm quite happy with the situation and won't be withdrawing

Just had a covid19 update (snail-mail) letter (dated 29 March 2020) from Northern VCTs to shareholders (I hold NVCT2, certificated, opted in to e-mail updates)

Am slightly underwhelmed that they sent it snail mail*, but the electronic version (for those NVCT holders who don't get communications) can be found at: https://nvm.co.uk/manager-update/


*:

• I happen to think that the country's resources are stretched enough just at the moment (covid19), the valiant posties are still delivering post and risking their own livelihoods (both getting and transmitting covid19) (I suppose letters could carry covid19), without delivering non-essential letters that could be sent via e-mail
• I sent an e-mail to the NVCT, and had a very swift and helpful (if short) reply:

  NorthernVCT wrote:"We only have 700 shareholders who have opted to receive e-communications and we had to communicate with c. 8,200 as a matter of urgency. To do this at such short notice meant that we had to use the data used in January to mail the share offer brochure and application form and it was not possible to easily extract those who have opted for e-communications. To produce new data would have resulted in a delay of up to five days and we felt that time was of the essence. "

• As an observation, it's good that 700 shareholders have opted into e-mail, but sad that it's 700 out of 8,200; I wonder if 8% is representative amongst shareholder registers: I hope it's generally more than that, or else that's a lot of still paper being sent round

yorkshirelad1 wrote:Just had a covid19 update (snail-mail) letter (dated 29 March 2020) from Northern VCTs to shareholders (I hold NVCT2, certificated, opted in to e-mail updates)

And both myself and my wife got the letters today - although we are both registered for communication by email. Handled with tongs - into the bin.

scotia wrote:And both myself and my wife got the letters today - although we are both registered for communication by email. Handled with tongs - into the bin.

Tongs?

I just leave post at least 24 hours on the doormat for any germs to die off.

And I haven't got any of this paperwork. The advantage (in this case) of my remaining holdings being in a nominee account.

As for signing up for email comms, I expect more people would if registrars made it easy and non-confusing!

I haven't received my share certificates yet - has anyone else?

No, not yet