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Scottish Mortgage heading for where

Closed-end funds and OEICs
jackdaww
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Re: Scottish Mortgage heading for where

#324072

Postby jackdaww » July 6th, 2020, 12:55 pm

richfool wrote:I have a small amount in SMT, Monks and MNL (Manchester & London). I am thinking that Monks should give me similar themes to SMT but with less volatility and a lower risk than the other two?


=============================

yes , SMT has around 20% in un quoteds , so a bit riskier than MNKS .

i hold both .

:)

scrumpyjack
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Re: Scottish Mortgage heading for where

#324075

Postby scrumpyjack » July 6th, 2020, 1:03 pm

Not sure it's true that SMT having 20% in unquoted is riskier.

SMT is an investment trust not a unit trust so there's no liquidity risk as there would be with a fund where investors can ask for their money back at short notice.

The unquoteds are valued based on a careful review by professionals of what they are worth, rather than being valued by the daily whim of the market. Also much of SMTs biggest winners have come from the unquoteds. They got into the right businesses at an early stage with the unquoteds which is usually not possible with the quoted companies.

Of course it all comes down to the quality and judgement of the managers and Baillie Gifford have certainly proved themselves in that department. I'm very happy with them putting my money into their choice of unquoteds, whereas Mr Woodford... say no more!

richfool
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Re: Scottish Mortgage heading for where

#324081

Postby richfool » July 6th, 2020, 1:27 pm

SMT have larger positions (as in higher % holdings) in technology and media stocks than Monks, (and MNL even higher again) which I would think makes SMT and MNL more risky.

bluedonkey
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Re: Scottish Mortgage heading for where

#324101

Postby bluedonkey » July 6th, 2020, 2:53 pm

I wasn't aware of Manchester & London until it was mentioned recently here. Just had a quick look.

a) performance based fees
b) not a member of AIC
c) only started 2011, I think
d) appears to pay dividends out of capital.

Is it worth holding this in addition to SMT and MNKS? A question addressed to myself as much as others.

ADrunkenMarcus
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Re: Scottish Mortgage heading for where

#324107

Postby ADrunkenMarcus » July 6th, 2020, 3:17 pm

SMT headed towards 900p at this rate!

Best wishes

Mark

bluedonkey
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Re: Scottish Mortgage heading for where

#324109

Postby bluedonkey » July 6th, 2020, 3:20 pm

I'd settle for a steady 25% pa!

DavidM13
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Re: Scottish Mortgage heading for where

#324111

Postby DavidM13 » July 6th, 2020, 3:22 pm

bluedonkey wrote:I wasn't aware of Manchester & London until it was mentioned recently here. Just had a quick look.

a) performance based fees
b) not a member of AIC
c) only started 2011, I think
d) appears to pay dividends out of capital.

Is it worth holding this in addition to SMT and MNKS? A question addressed to myself as much as others.


Well one of them looks like a deal breaker to me!!! It actually started in the 1970s according to the f/s https://www.fundslibrary.co.uk/FundsLib ... LpzzRC&r=1

MaraMan
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Re: Scottish Mortgage heading for where

#324118

Postby MaraMan » July 6th, 2020, 3:45 pm

I did buy some Manchester and London shares a little while ago, mainly because my holdings in Monks and SMT have shot up in value and I feel a little overexposed. Also they are a far more focused IT, with only 30-40 holdings and all in tech co's. This is a differentiator to Monks/SMT, but also of course higher risk. They have performed well in the last 3 years and in the current market I think they may well continue to do so. They have been listed on the LSE since 1997 and their fee arrangement was adjusted in 2018 to 0.5% mgmt fee with up to an additional 0.25% based on performance of the NAV. I don't feel that 0.75% is too high, although obviously higher than SMT etc, but of course it isn't a multi-billion pound fund (yet). I also like their higher divi as it sits in my ISA and I like to take the natural yield rather than sell.

Just my views on it for what it's worth.

MM

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Re: Scottish Mortgage heading for where

#324124

Postby scrumpyjack » July 6th, 2020, 4:11 pm

Re M & L, if you hold at least 2,500 shares there is an annual draw for their 2 Wimbledon Centre Court debenture holders seats.

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Re: Scottish Mortgage heading for where

#324130

Postby Laughton » July 6th, 2020, 4:18 pm

How would you be feeling if you were this year's winners (unless, of course, they hold them over until next year)?

DavidM13
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Re: Scottish Mortgage heading for where

#324151

Postby DavidM13 » July 6th, 2020, 5:03 pm

scrumpyjack wrote:Re M & L, if you hold at least 2,500 shares there is an annual draw for their 2 Wimbledon Centre Court debenture holders seats.


You were right until very recently. Due to Covid they scrapped it and reinvested the money.

https://www.theaic.co.uk/financial-advi ... 3A04/P2D2B

Shareholder Benefits
The company owned two centre court debentures which were the subject of an annual draw that shareholders owning more than 2,500 shares could win.
After the AELTC cancelled the competition this year, the Manager consulted with a number of Shareholders as to whether it would be better to sell the Debentures and cease providing this shareholder benefit. A majority of respondents agreed that the benefits were now potentially outweighed by the costs (including risk of cancellation and further waves of Virus outbreaks) and so the Debentures have been sold.
This shareholder benefit will not be offered in future periods.
Proceeds from the sale will be reinvested in the portfolio.

bluedonkey
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Re: Scottish Mortgage heading for where

#324152

Postby bluedonkey » July 6th, 2020, 5:06 pm

bluedonkey wrote:I'd settle for a steady 25% pa!

Bought in May 2020, and now in July 2020 it's +25% in two months! This does seem crazy.

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Re: Scottish Mortgage heading for where

#324158

Postby jackdaww » July 6th, 2020, 5:18 pm

bluedonkey wrote:I wasn't aware of Manchester & London until it was mentioned recently here. Just had a quick look.

a) performance based fees
b) not a member of AIC
c) only started 2011, I think
d) appears to pay dividends out of capital.

Is it worth holding this in addition to SMT and MNKS? A question addressed to myself as much as others.


================================

MNL has slightly higher charges.

more concerning to me is its a single-stable trust .

i feel more secure with trusts in a group of trusts , with several managers .

:)

scrumpyjack
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Re: Scottish Mortgage heading for where

#324164

Postby scrumpyjack » July 6th, 2020, 5:24 pm

jackdaww wrote:
bluedonkey wrote:I wasn't aware of Manchester & London until it was mentioned recently here. Just had a quick look.

a) performance based fees
b) not a member of AIC
c) only started 2011, I think
d) appears to pay dividends out of capital.

Is it worth holding this in addition to SMT and MNKS? A question addressed to myself as much as others.


================================

MNL has slightly higher charges.

more concerning to me is its a single-stable trust .

I feel more secure with trusts in a group of trusts , with several managers .

:)


Yes I wouldn't touch MNL. It is tiny, about £200m compared to SMT £13,200 m
It takes short positions and can borrow up to 3 times capital and reserves to gear up
etc etc
Potentially very high risk

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Re: Scottish Mortgage heading for where

#324242

Postby OllyDrod » July 7th, 2020, 9:26 am

MNL is also peculiar in that the fund manager, Mark Sheppard is the majority shareholder via his control of M&M Investment Co plc - as well as owning M&L Capital Management Ltd, which actually manages the Trust. Citywire article below from Feb puts him at 58% of the shares. As an IT, the trust still has an independent board of directors - but I'm sceptical as to how independent they can possibly be in this case. All well and good whilst Sheppard and co continue to make stellar returns, but I don't see how the board could stick up for the investor, in the event his performance collapsed... caveat emptor!

Link: https://citywire.co.uk/investment-trust ... e/a1321888

- OllyDrod

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Re: Scottish Mortgage heading for where

#324363

Postby Lootman » July 7th, 2020, 2:31 pm

OllyDrod wrote:MNL is also peculiar in that the fund manager, Mark Sheppard is the majority shareholder via his control of M&M Investment Co plc - as well as owning M&L Capital Management Ltd, which actually manages the Trust. Citywire article below from Feb puts him at 58% of the shares. As an IT, the trust still has an independent board of directors - but I'm sceptical as to how independent they can possibly be in this case. All well and good whilst Sheppard and co continue to make stellar returns, but I don't see how the board could stick up for the investor, in the event his performance collapsed... caveat emptor!

It's an important point. Back in my fund management days, our retail funds had either external directors or trustees. But they were regularly wined and dined, taken on golf trips and other jollies, and were generally kept sweet.

They may have accepted all that and still been truly independent anyway, but it does cast doubt.

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Re: Scottish Mortgage heading for where

#324375

Postby OllyDrod » July 7th, 2020, 3:30 pm

It's a thorny issue, but the perception of independence is almost as important as actual independence.

Hypothetically, would the MNL board increase their scrutiny over (or possibly even remove) a struggling Sheppard? Most probably (one would certainly hope so). But if Sheppard was struggling and the board didn't act; was perceived not to have gone far enough; or worse, was latterly found to have been unable act (eg: by virtue of him being the majority shareholder) it would naturally bring their actual independence into question.

This is not to say that other all ITs are necessarily paragons of good governance (as the shenanigans at Woodford Patient Capital illustrate) but there's an awful lot to be said for an independent board, empowered to hold the manager to account on behalf of shareholders. Personally, I'd be uncomfortable investing in an IT where the manager and majority shareholder is one and the same.
- OllyDrod

Dod101
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Re: Scottish Mortgage heading for where

#324385

Postby Dod101 » July 7th, 2020, 4:40 pm

OllyDrod wrote:It's a thorny issue, but the perception of independence is almost as important as actual independence.

Hypothetically, would the MNL board increase their scrutiny over (or possibly even remove) a struggling Sheppard? Most probably (one would certainly hope so). But if Sheppard was struggling and the board didn't act; was perceived not to have gone far enough; or worse, was latterly found to have been unable act (eg: by virtue of him being the majority shareholder) it would naturally bring their actual independence into question.

This is not to say that other all ITs are necessarily paragons of good governance (as the shenanigans at Woodford Patient Capital illustrate) but there's an awful lot to be said for an independent board, empowered to hold the manager to account on behalf of shareholders. Personally, I'd be uncomfortable investing in an IT where the manager and majority shareholder is one and the same.
- OllyDrod


Caledonia and the Cayzer family are as described although at least the Cayzer holding of around 46% is well spread out, unlike MNL which seems to be in the hands of one individual. Conflicts of interest are supposed to be avoided through related parties protection and so on but I wonder in practice. This is well off topic but never mind.

Dod

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Re: Scottish Mortgage heading for where

#324388

Postby bluedonkey » July 7th, 2020, 4:45 pm

Back to SMT. The rapid increase in the share price is of course due to the similar increase in the price of the underlying holdings. We are reliant on the management knowing when it's time to sell a very overpriced holding. That's not to say that their holdings are overpriced right now but presumably there could come a point when even the SMT management get vertigo.

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Re: Scottish Mortgage heading for where

#324394

Postby Lootman » July 7th, 2020, 4:53 pm

bluedonkey wrote:Back to SMT. The rapid increase in the share price is of course due to the similar increase in the price of the underlying holdings. We are reliant on the management knowing when it's time to sell a very overpriced holding. That's not to say that their holdings are overpriced right now but presumably there could come a point when even the SMT management get vertigo.

When Tesla was at $300 people said it was overpriced, as did people when Amazon was $1,000. On conventional metrics that was true but, as we have seen, that didn't matter.

I think at this point investors know that SMT is a vehicle for investing in the disruptive high-flyers that are difficult or impossible to invest in as individuals. So the last thing we want is for SMT to change. At this point it is a thematic investment and we are entitled to know what its strategy is. If it kept chopping and changing, or timing and switching, then we would never know what its style is.

If you think Tesla, Amazon, Ali Baba and Tencent are over-priced then sell SMT, or short it. But don't ask SMT to keep changing its spots, especially when it has rewarded us so well. The only IT that has given me a better return in recent years is Lindsell Train. The rest are way behind.

I hope it keeps its faith and doesn't get tempted to second guess and market time.


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