The Lemon Fool

Today I disposed of two tranches of Baronsmead 2nd Venture Trust shares.
Defining the gain as the (Sale Price + Dividends - Purchase Price)/(Purchase Price), this should amount to 42.8% if Baronsmead simply makes no gain or loss, and the 30% tax relief has been applied to the Purchase Price.
The first tranche was purchased in March 2016. The Gain (with tax relief) was 56.1%
The second trance was purchased in October 2017. The Gain (with tax relief) was 42.2%
Its 4 years since Gresham House took over the management. Have the glory days of Baronsmead gone?

I have held Baronsmead 2 since launch, I think it was around the year 2000.

It cost me a net 40% of purchase price as I had both income tax relief and a rolled over capital gain.

I don’t keep detailed records of returns on various investments - I’ve made many investments from some very small sums to my largest one of £100k, in which I eventually lost 100% of a commercial property investment caught up in the 2008/09 crash and leverage.

However I think Baronsmead 2 with its net cost of 40%, very large and significant dividends over the last 21/22 years, has probably been my best ever investment.

Sadly, the majority of sales/mergers, allowing previous successful and key management to exit, doesn’t often end well and that has certainly been the case here.

I will remain sentimental, and also aware of the rolled over capital gain, and shall continue to hold.

I hold both Baronsmead first and second merged VCTs and have been somewhat concerned about recent performance but I don't calculate returns.

I am happy just to get the tax-free dividends so will hold for the foreseeable future. However I can't see the dividends keeping up with inflation so may reconsider my position in due course.

Although I bought VCTs from the very early days, I don't have any CGT relief rolled into them. If I did then I would be looking at selling enough each financial year to maximise usage of the CGT allowance before it is swept away.

Like you Scotia I also disposed of BVT and BMD recently having held them for 8-9yrs. They were initially my best performer but had fallen from grace in the past few years. They have lost 14% on total return in the last year according to the AIC. I think someone suggested because they had a high AIM content ( AIM tanked 50% in the last year ). As for Gresham House as I mentioned in a previous post they have now taken over Mobeus!!!

I see that, yet again, Baronsmead is offering the dividend payment due on 3 March 2023 to new subscribers to their top-up offer, provided that they get in early. Effectively a double early bird offer. This is consistent with previous offers (I have complained about this before), but I think that it is bad practice and unfair to existing shareholders who are the ones funding this unnecessary incentive. Perhaps they consider that they need this to sweeten the pill in what has been a very poor year. Unimpressive.

I sold half my BVT last week. Not very impressed with current managemet of the fund.

Y

james188 wrote:I see that, yet again, Baronsmead is offering the dividend payment due on 3 March 2023 to new subscribers to their top-up offer, provided that they get in early. Effectively a double early bird offer. This is consistent with previous offers (I have complained about this before), but I think that it is bad practice and unfair to existing shareholders who are the ones funding this unnecessary incentive. Perhaps they consider that they need this to sweeten the pill in what has been a very poor year. Unimpressive.

Way back in the (Good/Bad?) old days, when new tranches of shares in an existing VCT were offered, they were often put into a new share class - e.g. in 2006 Baronsmead 4 VCT put the new shares into a new Baronsmead 4 VCT Class "C". This ensured that existing investors were not disadvantaged by dilution. Then after a few years (3 years for Baronsmead 4) , when the Class C investment became close to those in the original VCT, the two components were merged into one, at an appropriate NAV ratio.
However, although this may have been a fair policy for existing investors - it probably wasn't as attractive for new investors. So it has long gone!
And now we have the early dividend payments to new investors - another inducement for new investors. Why? I think that is obvious.

I believe that the practice of paying dividends very quickly to new shareholders has a bad effect on reserves as the dividend will have to be paid from distributable reserves whereas the new shares will not contribute to that pool in any way.

I am happy to have dilution by new shares if they are issued by a rights issue but that method has never been used for a VCT.

Indeed, Kidman. And contrast the behaviour of the Mobeus VCTs (same manager, different board members) who consistently declare dividend payments limited to existing shareholders shortly before launching new top up offers. They probably won’t, but the Baronsmead boards should follow this example.

The postman has at last delivered the second of my two Baronsmead annual reports which I have been reading and I have also been deciding on my votes.

I am getting more annoyed by the greed of VCT directors in raising their fees well beyond what I consider reasonable. I am pleased to see that there were significant votes against both remuneration policy and report previously. I will be voting against both this time and urge you to consider doing so as well.

They have four meetings a year, the managers write the annual reports for them, at least those parts that aren't just copied from year to year, there is little governance as the managers suggest new directors who they know will be pushovers and I could go on and on. On top of that is this year's performance!

I am also voting against Malcolm Groat's re-election on the basis that he has served over nine years.
On page 40 of the Second VT annual report it says he was appointed 11 March 2016 but they have omitted to say that he was appointed as a director of Baronsmead VCT 4 on 16 April 2013. Another example of poor governance and lack of transparency.

The opening section of the Chair's statement makes key reference to changes in the managar's senior leadership, but I'm struggling to find details of either the changes or the rationale elsewhere in the report. Very curious.

parallellines wrote:The opening section of the Chair's statement makes key reference to changes in the managar's senior leadership, but I'm struggling to find details of either the changes or the rationale elsewhere in the report. Very curious.

It appears to me that the Mobeus team have basically taken over and few of the former senior Livingbridge/Baronsmead employees remain.

oxmatt wrote:

parallellines wrote:The opening section of the Chair's statement makes key reference to changes in the managar's senior leadership, but I'm struggling to find details of either the changes or the rationale elsewhere in the report. Very curious.

It appears to me that the Mobeus team have basically taken over and few of the former senior Livingbridge/Baronsmead employees remain.

Does that bode well for future performance?

Seasider wrote:

oxmatt wrote:

parallellines wrote:The opening section of the Chair's statement makes key reference to changes in the managar's senior leadership, but I'm struggling to find details of either the changes or the rationale elsewhere in the report. Very curious.

It appears to me that the Mobeus team have basically taken over and few of the former senior Livingbridge/Baronsmead employees remain.

Does that bode well for future performance?

Thanks to oxmatt for summarising the changes. I recognised Trevor Hope as from the Mobeus side as having popped up in the Baronsmead picture gallery but no more.

My sense is that Mobeus transitioned more successfully than Baronsmead to the post 2015 investment regulations, so that is a positive. But the curious reporting or lack of it makes me wonder if we have the full story.

parallellines wrote:Thanks to oxmatt for summarising the changes. I recognised Trevor Hope as from the Mobeus side as having popped up in the Baronsmead picture gallery but no more.

My sense is that Mobeus transitioned more successfully than Baronsmead to the post 2015 investment regulations, so that is a positive. But the curious reporting or lack of it makes me wonder if we have the full story.

Didn't Mobeus poach Hope from Beringea post-2015?

UncleEbenezer wrote:

parallellines wrote:Thanks to oxmatt for summarising the changes. I recognised Trevor Hope as from the Mobeus side as having popped up in the Baronsmead picture gallery but no more.

If you look at the Gresham House Ventures team page there appears to be a lot more ex-Mobeus and recent joiners than ex-Livingbridge.

UncleEbenezer wrote:Didn't Mobeus poach Hope from Beringea post-2015?

I remember him at Beringea when I held ProVen VCT but I couldn't say when he moved.

oxmatt wrote:If you look at the Gresham House Ventures team page there appears to be a lot more ex-Mobeus and recent joiners than ex-Livingbridge.

Maybe that is because the Livingbridge people have got past their earn-out points so have taken the money and run?
What about Hazel who were taken over by Gresham House a year earlier. Perhaps their people have also left now.

Kidman wrote:

UncleEbenezer wrote:Didn't Mobeus poach Hope from Beringea post-2015?

I remember him at Beringea when I held ProVen VCT but I couldn't say when he moved.

Yes it was in the winter of 15/16. Mobeus didnt do another offer until autumn 2017.

Generally, not surprising people leave after a short transition… With Northern that just opened this morning, looks like there’s nobody left now from NVM.