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North American Income Trust (NAIT)
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North American Income Trust (NAIT)
North American Income Trust (NAIT) is currently sitting on a whopping -13% discount. The 12 month average is about -1% (according to Morningstar) which gives it a Zscore of -4.5 or thereabouts (ie: quite incredibly 'cheap')
The share price has dropped precipitously in May, having previously made up some of its March losses, but I'm at a loss to see why. Nothing on the RNS, no major changes in gearing, no negative press (as far as I can see) and the underlying holdings (though 20% financials) don't strike me as particularly risky, illiquid or destined to tank. The dividend appears to be covered (1.5times) and latest factsheet announces that "No Trust holdings announced notable dividend actions".
Any ideas?
- OllyDrod
The share price has dropped precipitously in May, having previously made up some of its March losses, but I'm at a loss to see why. Nothing on the RNS, no major changes in gearing, no negative press (as far as I can see) and the underlying holdings (though 20% financials) don't strike me as particularly risky, illiquid or destined to tank. The dividend appears to be covered (1.5times) and latest factsheet announces that "No Trust holdings announced notable dividend actions".
Any ideas?
- OllyDrod
Last edited by csearle on February 28th, 2021, 9:43 am, edited 1 time in total.
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Re: North American Income Trust (NAIT)
OllyDrod wrote:North American Income Trust (NAIT) is currently sitting on a whopping -13% discount. The 12 month average is about -1% (according to Morningstar) which gives it a Zscore of -4.5 or thereabouts (ie: quite incredibly 'cheap')
The share price has dropped precipitously in May, having previously made up some of its March losses, but I'm at a loss to see why. Nothing on the RNS, no major changes in gearing, no negative press (as far as I can see) and the underlying holdings (though 20% financials) don't strike me as particularly risky, illiquid or destined to tank. The dividend appears to be covered (1.5times) and latest factsheet announces that "No Trust holdings announced notable dividend actions".
Any ideas?
- OllyDrod
There was some discussion of this IT, on a recent thread (link below), in relation to the trust moving to a more defensive position due to pressure on dividend income. Not sure if that influenced the performance of the trust though:
29 April 2020
Aberdeen Standard’s Ralph Bassett and Francis Radano reposition the 4%-yielding equity income trust faced with the growing risk of dividend cuts in the US.
North American Income Trust (NAIT ) has increased its exposure to defensive stocks as it fights to maintain its yield amid a dividend drought.
The outbreak of Covid-19 and economic slump it has caused has forced an increasing number of companies to cut or cancel their dividends in a bid to conserve cash and shore up their balance sheets.
https://www.theaic.co.uk/aic/news/cityw ... -divi-cuts
viewtopic.php?f=54&t=22867&p=305592&hilit=NAIT#p305592
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Re: North American Income Trust (NAIT)
North American Income Trust (NAIT) is currently sitting on a whopping -13% discount. The 12 month average is about -1% (according to Morningstar) which gives it a Zscore of -4.5 or thereabouts (ie: quite incredibly 'cheap')
The share price has dropped precipitously in May, having previously made up some of its March losses, but I'm at a loss to see why. Nothing on the RNS, no major changes in gearing, no negative press (as far as I can see) and the underlying holdings (though 20% financials) don't strike me as particularly risky, illiquid or destined to tank. The dividend appears to be covered (1.5times) and latest factsheet announces that "No Trust holdings announced notable dividend actions".
OllyDrod,well no other observations or thoughts on this.
The only other observations I have are that my holding in USA (Baillie Gifford US Growth trust), (on a 4.7% premium) has been powering upwards, so perhaps NAIT (income focussed) is focussed on the wrong sectors in the US. Or is NAIT positioned for a post Covid recovery which of course is yet to take place, as opposed to technology which is on something of a roll currently.
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Re: North American Income Trust (NAIT)
I also have been following NAIT's recent weakness with some concern, since I have sizeable (for me) exposure.
At the right hand side of this graph, (from https://www.theaic.co.uk/companydata/0P00008ZMS) you can see the NAV increasing while the price decreases. That's quite a striking illustration of sentiment.
I'd be quite tempted by the prospect of a > 4% yield, dollar aligned, from the US Market. But I'm in too deep to buy any more.
At the right hand side of this graph, (from https://www.theaic.co.uk/companydata/0P00008ZMS) you can see the NAV increasing while the price decreases. That's quite a striking illustration of sentiment.
I'd be quite tempted by the prospect of a > 4% yield, dollar aligned, from the US Market. But I'm in too deep to buy any more.
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Re: North American Income Trust (NAIT)
Went to check this out over on theaic. Strange description on the Overview almost put me off immediately. “Objective: To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment)“ . Checking the investments I see they’re 78% American + 10% Canadian & the top 10 holdings (~46% of total) are all large caps.
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Re: North American Income Trust (NAIT)
GrahamPlatt wrote:Went to check this out over on theaic. Strange description on the Overview almost put me off immediately. “Objective: To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment)“ . Checking the investments I see they’re 78% American + 10% Canadian & the top 10 holdings (~46% of total) are all large caps.
That must be an error. This is what it says on HL:
The company invests in a portfolio predominantly comprised of S&P 500 constituents. The company may also invest in canadian stocks and US mid and small capitalisation companies to provide for diversified sources of income. The company may invest up to 20% of its GA in fixed income investments, which may include non-investment grade debt. The investment policy is flexible, enabling it to invest in all types of securities, including (but not limited to) equities, preference shares, debt, convertible securities, warrants, depositary receipts and other equityrelated securities.
And from the NAIT factsheet:
Investment objective
To provide investors with above average dividend income and long term capital
growth through active management of a portfolio consisting predominantly of
S&P 500 US equities.
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Re: North American Income Trust (NAIT)
Yes, I was pointing out there’s an error on the aic site. Just at the “Overview” level though - the rest of it’s fine.
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Re: North American Income Trust (NAIT)
GrahamPlatt wrote:Went to check this out over on theaic. Strange description on the Overview almost put me off immediately. “Objective: To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment)“
Clearly an error on the AIC website and if we bring it to the attention of our resident AIC staff member it'll get fixed. So...
DavidM13 wrote:
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Re: North American Income Trust (NAIT)
digitaria wrote:I'd be quite tempted by the prospect of a > 4% yield, dollar aligned, from the US Market...
My thoughts exactly ("never bet against America", as a wise old 'Sage' once said). I'll monitor and may start to build a position.
Richfool wrote:OllyDrod,well no other observations or thoughts on this.
Thank you for your input! Noted re: Baillie Gifford US Growth. As you noted in your earlier post, perhaps NAIT's defensive shift does raise questions about how well-placed it is to benefit from an ongoing recovery... regardless, reassuring to see that I don't appear to have missed anything fundamental!
- OllyDrod
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Re: North American Income Trust (NAIT)
OllyDrod wrote:digitaria wrote:I'd be quite tempted by the prospect of a > 4% yield, dollar aligned, from the US Market...
My thoughts exactly ("never bet against America", as a wise old 'Sage' once said). I'll monitor and may start to build a position.Richfool wrote:OllyDrod,well no other observations or thoughts on this.
Thank you for your input! Noted re: Baillie Gifford US Growth. As you noted in your earlier post, perhaps NAIT's defensive shift does raise questions about how well-placed it is to benefit from an ongoing recovery... regardless, reassuring to see that I don't appear to have missed anything fundamental!
- OllyDrod
I have to say I bought back into NAIT after reading their comments about their defensive moves. Unfortunately, the SP has moved down since then! Thus I am considering a top up, but will wait and see how the SP progresses. I am trusting that they have a plan, albeit that it may take some time to come to fruition.
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Re: North American Income Trust (NAIT)
richfool wrote:OllyDrod wrote:digitaria wrote:I'd be quite tempted by the prospect of a > 4% yield, dollar aligned, from the US Market...
My thoughts exactly ("never bet against America", as a wise old 'Sage' once said). I'll monitor and may start to build a position.Richfool wrote:OllyDrod,well no other observations or thoughts on this.
Thank you for your input! Noted re: Baillie Gifford US Growth. As you noted in your earlier post, perhaps NAIT's defensive shift does raise questions about how well-placed it is to benefit from an ongoing recovery... regardless, reassuring to see that I don't appear to have missed anything fundamental!
I have to say I bought back into NAIT after reading their comments about their defensive moves. Unfortunately, the SP has moved down since then! Thus I am considering a top up, but will wait and see how the SP progresses. I am trusting that they have a plan, albeit that it may take some time to come to fruition.
Seems to me the problem is that the most defensive names in 2020 have been growth names like biotech and IT, which by definition a dividend fund would not hold. "Usual suspect" dividend sectors like financials, transports, energy, utilities and tobacco have been a disaster. Whilst non-yielders like Amazon and Facebook are at all-time highs. No dividend fund will do well in that setup.
Last i checked the S&P 500 growth index was up slightly for the year, whilst the value index is down 20% or so. Not much NAIT can do about that. Its two top holdings are reasonable enough though - Abbvie and Verizon.
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Re: North American Income Trust (NAIT)
Who knows, perhaps it will yet go back to being an S&P tracker?
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Re: North American Income Trust (NAIT)
Lootman wrote:Seems to me the problem is that the most defensive names in 2020 have been growth names like biotech and IT, which by definition a dividend fund would not hold. "Usual suspect" dividend sectors like financials, transports, energy, utilities and tobacco have been a disaster. Whilst non-yielders like Amazon and Facebook are at all-time highs. No dividend fund will do well in that setup.
Well... you say that - but its top 5 holdings (in order) currently comprise AbbVie, Verizon, Philip Morris, Bristol-Myers Squibb, and Gilead (ie 2 x pharma, a biotech, a tobacconist and a TMT firm). Looking at the last report (Jan), the top 5 were Citigroup, Bristol-Myers Squibb, Philip Morris, Chevron and Verizon (with Gilead and AbbVie down in 11th, 13th place respectively). They will have taken a hit on the 'usual suspect' holdings as you say, but seem to have been relatively well-positioned going in to this - at least for a fund paying 4%+ run by a 'value' house... As digitaria points out, NAV has been growing whilst the SP has collapsed. At the current price, struggling to see what's not to like about this for a nice boring long-term buy and hold.
Putting my money where my mouth is - small position initiated this morning.
- OllyDrod
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Re: North American Income Trust (NAIT)
OllyDrod wrote:Lootman wrote:Seems to me the problem is that the most defensive names in 2020 have been growth names like biotech and IT, which by definition a dividend fund would not hold. "Usual suspect" dividend sectors like financials, transports, energy, utilities and tobacco have been a disaster. Whilst non-yielders like Amazon and Facebook are at all-time highs. No dividend fund will do well in that setup.
Well... you say that - but its top 5 holdings (in order) currently comprise AbbVie, Verizon, Philip Morris, Bristol-Myers Squibb, and Gilead (ie 2 x pharma, a biotech, a tobacconist and a TMT firm). Looking at the last report (Jan), the top 5 were Citigroup, Bristol-Myers Squibb, Philip Morris, Chevron and Verizon (with Gilead and AbbVie down in 11th, 13th place respectively). They will have taken a hit on the 'usual suspect' holdings as you say, but seem to have been relatively well-positioned going in to this - at least for a fund paying 4%+ run by a 'value' house... As digitaria points out, NAV has been growing whilst the SP has collapsed. At the current price, struggling to see what's not to like about this for a nice boring long-term buy and hold.
Putting my money where my mouth is - small position initiated this morning.
- OllyDrod
Yes, it's holdings are quite interesting and far from a tracker. I am tempted to top up, but with the rising market and a wide spread my broker is wanting 227.89p currently.
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Re: North American Income Trust (NAIT)
just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
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Re: North American Income Trust (NAIT)
jackdaww wrote:just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
North American Income mostly invests in S&P500 companies. The AIC website is wrong (no surprise there)
From the 2019 annual report, the heading under "Strategic Report" on page 4:
"The objective of the Company is to provide investors with above average dividend income and long term capital growth through active management of a portfolio consisting predominately of S&P 500 US equities."
https://www.northamericanincome.co.uk/en
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Re: North American Income Trust (NAIT)
jackdaww wrote:just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
Just look back a few posts, that subject has already been covered.
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Re: North American Income Trust (NAIT)
jackdaww wrote:just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
So, perhaps we should all 'fill our boots' and then inform the AIC website of it's error?
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Re: North American Income Trust (NAIT)
jackdaww wrote:just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
Already noted just a few posts up from yours and, as noted a couple of posts after that, already reported to the AIC.
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Re: North American Income Trust (NAIT)
mc2fool wrote:jackdaww wrote:just looked at AIC website .
NAIT is described...
To generate capital growth for shareholders over the long term, from a focused portfolio of UK micro-cap companies (whose market capitalisations are under GBP 150m at the time of investment) targeting a compound return of 15% p.a. over the long term.
yet the portfolio is clearl big US stocks.
puzzled...
Already noted just a few posts up from yours and, as noted a couple of posts after that, already reported to the AIC.
Too soon!
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