Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

CIP - an investment company on a 37% NAV discount...

Discuss Stock buying Shares, tips and ideas for stock market dealing
SKYSHIP
Lemon Slice
Posts: 476
Joined: November 6th, 2016, 12:24 pm
Has thanked: 2 times
Been thanked: 553 times

CIP - an investment company on a 37% NAV discount...

#415579

Postby SKYSHIP » May 27th, 2021, 1:41 pm

CIP is an investment company - like PRIM (see another thread here) though 5x the size.

CIP is an interesting one as over recent months they successfully rejected a "fishing" putative offer of a miserly 50p/share when the NAV was c75p!

The rejected suitor (Corp. Financiere Europeene) was left with an unmarketable 16.36% stake. What does it do - well, on 30th March it increased its stake, adding c418,000 shares to increase its stake up to 17.12% (9.413m shares).

So what next, will they return with a more sensible offer; or will they do a deal with CIP and convince them to buy back their stake at, say, 55p.

Would seem a sensible solution as it would of course be accretive to CIP's underlying NAV. The current 85.3p would rise to 95.1p

CIP shares recently traded slightly higher due to an increasing NAV following a couple of good investments (HSS & VTU) and a bid for one of their holdings (PHD).

Today the shares are 51p-53.7p, so on a 37% NAV discount.

They don’t pay a dividend; still, with the possibility that CFE might return with a more sensible offer; coupled with the likelihood that a 37% discount will attract new investors, CIP looks very good value.

SKYSHIP
Lemon Slice
Posts: 476
Joined: November 6th, 2016, 12:24 pm
Has thanked: 2 times
Been thanked: 553 times

Re: CIP - an investment company on a 37% NAV discount...

#417257

Postby SKYSHIP » June 4th, 2021, 10:16 am

After Simon Thompson re-tipped these in the IC, CIP have made very nice progress. Today they are now 58.8p bid; so I've taken the turn.

Others may hold for the longer term as the discount is still at 32.7%.

GLA

SKYSHIP
Lemon Slice
Posts: 476
Joined: November 6th, 2016, 12:24 pm
Has thanked: 2 times
Been thanked: 553 times

Re: CIP - an investment company on a 37% NAV discount...

#417652

Postby SKYSHIP » June 6th, 2021, 11:32 am

I was well pleased that Simon Thompson of the IC revisited CIP this week; however I would hope that on some occasions he would challenge management on the negatives, rather than just listing the positives.

In the case of CIP the positives are the discount; and the opportunity to buy into a select portfolio of microcaps.

The negatives are more apparent to the long-term holders:

# The 19% decline in asset value over the 3yrs since two Italian private equity managers took control. A pretty lamentable performance by any measure.

# That underperformance compounded by the 2%pa management fees - a level one might expect from a successful hedge fund

# Further compounded by the fact that the fees are levied on cash balances - something pretty verboten these days; but not recognised by the Italian duo it would seem.

# Over the 3yrs to Dec'20 they have charged a total of £2.88m in management fees - a full 30% of the asset value decline - shifted from shareholders into Italian pockets!

The Directors have got to change things; and I have suggested to Simon Thompson that there are a number of things which might rectify matters:

# Most importantly and easily done: No management fees on cash balances

# The Company strategy at launch was for capital gain, so no dividends. As they have blatantly failed on that score; they should provide shareholders with some measure of return. I would suggest taking a leaf from Private Equity and offer an annual dividend levied at the rate of 3% of NAV

# They should institute a 3yrly Continuation Vote

# …and finally they should confirm that Interim and Preliminary statement should be published within 3 months of the half year and end year. To publish the Dec'20 Prelims on 1st June was far, far too late...


Return to “Stocks and Share Dealing Discussions”

Who is online

Users browsing this forum: No registered users and 8 guests