Smithson

[monabri]

DOD made a comment over on the HYP P board regarding how much Smithson (SSON) had fallen in shareprice last week. I was surprised that the SSON shareprice would react so violently.

Whilst the underlying assets (NAV) fell, the type of investor who would be attracted to SSON in the first place wouldn't be the type to panic and sell out of a share ( SSON) so readily? I expected the shareprice to be more stable even if a premium to the NAV were to develop?

[Alaric]

Indeed, SSON has whipsawed back up 70p so far today.

Indeed, looking at the prices of the Vanguard ETFs, VUKE, VWRL, VERX and VUSA, there has been a modest recovery so far today.

[Dod101]

Market volatility was not the question. I think it is a genuine puzzle, why Smithson should have been subject to such large swings in the market price of its shares. It is an IT after all, not an OEIC, and so the price does not immediately reflect the value of the underlying assets. I guess we just have to accept that some of the Smithson shareholders are not as LTBH as we would think.

Dod

[monabri]

Market volatility was not the question. I think it is a genuine puzzle, why Smithson should have been subject to such large swings in the market price of its shares. It is an IT after all, not an OEIC, and so the price does not immediately reflect the value of the underlying assets. I guess we just have to accept that some of the Smithson shareholders are not as LTBH as we would think.

Dod

Yes, that's where I was coming from and it was the only conclusion I could think of ( ie. The non-LTBH nature). I raised the question in case there was another reason.

[MusingMarket]

Smithson issued more equity today, very yo-yo. Prices are determined at the margin, no-matter how many shareholders are LTBH-types there will be hot money for stock managed by the most in vogue fund manager.

Also today, Fundsmith Emerging Equity Trust issued its latest factsheet, still not bought back a single share despite the drop to a mid-teen discount.

In a sustained bear market there's every chance Smithson will see a similar drop to FEET[1]. Obviously there are differences, the board may be of a different mindset regarding buybacks, FEET is a far smaller trust and Fundsmith's strategy may well work better for Smithson. However, I see this as an unnecessary risk when you can just buy the Fundsmith Equity Fund. If Mr Market offers Smithson at a juicy discount, while the NAV hasn't particularly under-performed, that could be an excellent opportunity.

mm

[1]Capital Gearing Trust's Q4 December 2019 has more on this:

"The scale of the challenge faced by these forced sellers has only reinforced our belief that investment trust discounts will widen sharply if there is a broader bear market in equities. The improvements in investment trust governance over the last decade has played some role in the discount narrowing, however it has largely been a cyclical trend of the sort that occurs in every bull market. When, during a bear market, the the scale of forced selling expands from a trickle to a flood, then the really interesting opportunities emerge."

http://www.capitalgearingtrust.com/~/me ... 202019.pdf

[Dod101]

Peter Spiller sounds like an old guy running out of time. A bit like CGT itself. I appreciate that there is a following but really?

Dod

[Dod101]

The Smithson Annual Report is now on its website www.smithson.co.uk. Not sure if that link will work. Interesting as usual although I must say I have not heard of most of its shareholdings. Not paying a dividend but then I guess we did not buy for one!

Dod