Overlooked opportunities within IT's

[richfool]

After some re-jigging arising during the Covid 19 market upsets, I have been looking through the IT sector to see if there are any trusts which I may have overlooked, offering any combination of value, higher yield, or a larger discount, than usual. During my re-jigging I increased my exposure to global growth and technology focused trusts. I also added more to JGGI (JP Morgan Global Growth & Income trust), with its technology slant.

Most trusts SP's and discounts now seem to have recovered (maybe too much too soon!). However, my attention fell on JETI (JP Morgan European Income trust), which I had reduced my holding of at the start of the falls, but I subsequently bought back into, when it was yielding over 6%. I note that it is still at a discount of c15.4% and yielding c 5.7%. Whilst I have some reservations about the European sector and JETI has a poor record for capital performance, I note and like many of their top ten holdings, which include: Nestle, Roche, Novartis, Sanofi, Allianz,& Iberdrola, Bayer & Unilever (includes exposure to Swiss stocks and big pharmas).

Also, MCT, which I have also increased my holding of, is currently at a discount; 15.2% of and yielding: 6.1%

https://www.hl.co.uk/shares/shares-sear ... ome-shares

https://www.hl.co.uk/shares/shares-sear ... ome-gbp-pc

I wondered if anyone else had spotted any particular bargains or had any views on the above trusts.

[monabri]

How about NAIT ( North American Income). Discount to NAV -8.3% (12month avg of -1.7%)and yield 4%.. importantly, the cover is quoted (AIC) at 1.5 years. I note MCT & JGGI ( both zero divi cover...so if looking for income...might be a concern).

NAIT
https://www.theaic.co.uk/companydata/0P00008ZMS

JGGI
https://www.theaic.co.uk/companydata/0P00008ZO6

MCT
https://www.theaic.co.uk/companydata/0P00008Y6C

[richfool]

How about NAIT ( North American Income). Discount to NAV -8.3% (12month avg of -1.7%)and yield 4%.. importantly, the cover is quoted (AIC) at 1.5 years. I note MCT & JGGI ( both zero divi cover...so if looking for income...might be a concern).

NAIT
https://www.theaic.co.uk/companydata/0P00008ZMS

JGGI
https://www.theaic.co.uk/companydata/0P00008ZO6

MCT
https://www.theaic.co.uk/companydata/0P00008Y6C

Thanks for the response and thoughts.

Indeed I did add and top up NAIT during the period of volatility. (I also added USA (Baillie Gifford US Growth trust) and out and out growth with no dividend yield and at a c 5% premium!!).

Re the dividend cover on JGGI, it is one of the trusts that subsidise income from capital, so will likely show low or negligible cover.

I did read somewhere that MCT was alert to the Coronavirus pandemic implications and was modifying its holdings appropriately and more defensively. It holds a mix of Canadian utilities, REIT's, pipelines and financials, and some US holdings.

[monabri]

Strange, the JGGI indicates the divi is paid from "income" rather than " capital " on the AIC page ( I considered this when looking at the cover)...ditto MCT.

(I would need to consult the Annual Report to verify but I'll take the word of "an owner" ).

[Dod101]

From the last Annual Report for JGGI, revenue per share was 4.87p, dividend per share 12.52p. They set the dividend at 4% of NAV in any one year, and clearly are prepared to heavily contribute to the dividend from capital.

They have a good spread of leading companies in their portfolio but I think I would prefer to take the natural yield rather than take such a big bite into capital to provide the dividend.

On the general subject it depends of course what you are looking for. The world of ITs is a very big one.

Dod

[jonesa1]

Strange, the JGGI indicates the divi is paid from "income" rather than " capital " on the AIC page ( I considered this when looking at the cover)...ditto MCT.

(I would need to consult the Annual Report to verify but I'll take the word of "an owner" ).

Today's dividend declaration describes their policy: https://www.londonstockexchange.com/new ... n/14599806

[richfool]

Strange, the JGGI indicates the divi is paid from "income" rather than " capital " on the AIC page ( I considered this when looking at the cover)...ditto MCT.

(I would need to consult the Annual Report to verify but I'll take the word of "an owner" ).

Today's dividend declaration describes their policy: https://www.londonstockexchange.com/new ... n/14599806

Thanks for the update on JGGI's dividends, as a holder that's appreciated.

Though I am fully stocked with JGGI. I was really looking at JETI and MCT and/or any other trusts I may have overlooked.

However, my attention fell on JETI (JP Morgan European Income trust), which I had reduced my holding of at the start of the falls, but I subsequently bought back into, when it was yielding over 6%. I note that it is still at a discount of c15.4% and yielding c 5.7%. Whilst I have some reservations about the European sector and JETI has a poor record for capital performance, I note and like many of their top ten holdings, which include: Nestle, Roche, Novartis, Sanofi, Allianz,& Iberdrola, Bayer & Unilever (includes exposure to Swiss stocks and big pharmas).

Also, MCT, which I have also increased my holding of, is currently at a discount; 15.2% of and yielding: 6.1%

[OllyDrod]

Leaving aside the more esoteric ITs (some of which are trading on truly phenomenal discounts at the moment), here's a few 'nice and boring' ones I'm keeping an eye on:

- RIT Capital Partners (RCP) still trading on a ~5% discount compared to its 12-month average of 2.65% premoum (and today the subject of an upgrading by Stifel)

- North American Income (NAIT), as mentioned above - still looks good value historically, but may be a bumpy ride if the US have a second spike

- Brunner (BUT) - trading on a ~14.5% discount at the moment (Zscore -2.5). Not one currently hold, but am considering purchasing

- F&C Investment Trust (FCIT) - on a ~8% discount; normally around 3%

- Witan (WTAN) - around 6% discount; typically 3 or 4

- TR Property (TRY) - on a ~14% discount; normally around 2 or 3%. I used to hold and it had performed very well up until the crash and I sold on the bounce-back. I don't see the world of property being that much fun over the next few years and, even though TRY is primarily in securities, with only few direct holdings, this is a 'bargain' I'll gladly pass on for now. Raising in case others have a stronger stomach than I.

- OllyDrod

[baldchap]

I am quite hopeful for JETI. As you say it has performed horribly, but barring the liquidity fund, 4 of the top 5 holdings are Swiss (Nestle, Roche) etc, and it has over 20% in Swiss stocks.
The rest are large European blue chips. More big hitters than CTY (I hold) for example.
Granted, technology doesn't get a look in, but in the main they are large well run multinationals.
EU Financial sector is a worry and maybe the reason that the IT & geographical sector is being punished?
I am confident of a rebound.....but maybe not this year

[richfool]

I am well stocked with NAIT.

I am quite hopeful for JETI. As you say it has performed horribly, but barring the liquidity fund, 4 of the top 5 holdings are Swiss (Nestle, Roche) etc, and it has over 20% in Swiss stocks.
The rest are large European blue chips. More big hitters than CTY (I hold) for example.
Granted, technology doesn't get a look in, but in the main they are large well run multinationals.
EU Financial sector is a worry and maybe the reason that the IT & geographical sector is being punished?
I am confident of a rebound.....but maybe not this year

In addition to JETI, I also looked at HINT (Henderson International income trust) a couple of times. Although a global G&I trust, it holds several of the same European (and Swiss) stocks as JETI, but HINT's capital performance was poor compared to its sector peers and its yield only 3.8%, discount of -2.94%. Whereas JETI, when I topped up, was yielding over 6% and is now still around 5.90% and at a substantial discount of c 14.4%. Noted that JETI is a Europe only trust (excluding the UK), whereas HINT is a global growth & income trust (though also excluding the UK).

I conclude that Europe is somewhat out of favour currently, but I like the JETI holdings and at a discount.

[GrahamPlatt]

Re JETI: Despite the fact sheet detailing top ten holdings (~25% of total) being comfortingly secure looking Swiss/big pharmaceutical/solid utilities & ULVR, if you look at the sector weighting, it’s 24% financials.

[OllyDrod]

Lots of food for thought here from Gavin Lumsden and team - bumper edition with a roundup of the 'winners and losers of 2020' in addition to the usual weekly Zscores.

link: https://citywire.co.uk/investment-trust ... -news-list

- OllyDrod

[richfool]

Lots of food for thought here from Gavin Lumsden and team - bumper edition with a roundup of the 'winners and losers of 2020' in addition to the usual weekly Zscores.

link: https://citywire.co.uk/investment-trust ... -news-list

- OllyDrod

Thanks for the link to the article.

I did take a look at TRIG during the week (as a potential top up), but its SP was creeping upwards through the week. Yield now 5.2%. Premium to NAV +14%, though (the premium is) half that of JLEN. I hold both.

I did look at PGIT, (Premier Global Infrastructure), but was put off by the Chinese holdings, held through Hong Kong, which are likely to suffer adverse sentiment in the light of the HK situation.

Sad days for Temple Bar, which I am happy to no longer hold.

There are quite a few REITS amongst the trust on large discounts, not least SLI., but they are a weak hold for me, - not top up territory.
RGL (Regional REIT), under discussion on its own thread, is well down, but I am fully stocked already.

I hold a few of the Baillie Gifford trusts, sitting on significant premiums, which are far from overlooked top up opportunities.

[flyer61]

Had a quick look at Value and Income (it is raining!) as it appears on the 'cheap' list.

https://www.olim.co.uk/wp-content/uploa ... 20-001.pdf

Probably leave alone.

[jackdaww]

Had a quick look at Value and Income (it is raining!) as it appears on the 'cheap' list.

https://www.olim.co.uk/wp-content/uploa ... 20-001.pdf

Probably leave alone.

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

big discount and massive gearing .

[flyer61]

jackdaww...you are right, it has mediocrity written all over it. Wouldn't mind being a director though

[OllyDrod]

I did look at PGIT, (Premier Global Infrastructure), but was put off by the Chinese holdings, held through Hong Kong, which are likely to suffer adverse sentiment in the light of the HK situation.

I bought both PGIT and Ecofin Global Utilities and Infrastructure (EGL) a few of years back - both seemed a neat way to get exposure to the infrastructure boom without paying a significant premium for the privilege. Indeed, quite the opposite - both were trading on significant discounts, I suspect partly because they were misleadingly classified as 'Utilities' (renamed 'Infrastructure Securities' by the AIC in 2019). PGIT did very little capital-wise, so I sold and bought more EGL - the discount on which has evaporated and which has been a very good investment. Wouldn't bother with PGIT - the fees of 3.55% are exorbitant and quite unjustified by the performance.

Sad days for Temple Bar, which I am happy to no longer hold.

Agreed - I fortuitously sold out in December after the post-election bounce. Only wish I'd also got rid of Merchants (MERCH) and Mercantile (MRC) at the same time!

There are quite a few REITS amongst the trust on large discounts, not least SLI., but they are a weak hold for me, - not top up territory.
RGL (Regional REIT), under discussion on its own thread, is well down, but I am fully stocked already.

I can't really see any positives for commercial property in the short to medium-term future... lots of these feel like value-traps to me, rather than bargains. TR property (TRY) might be one to keep an eye on - Marcus Fayre-Mudge has a stellar track record and its focus on securities, rather than direct holdings, should mean he can be more agile in his positioning than the average... That said - sold my holding on the bounce in June (along with a couple of direct property ITs) and am in no hurry to reinvest! I did pick up Civitas (CSH) and Tritax Big Box (BBOX) last year and both are doing well, but I'm steering clear of traditional REITs for the foreseeable.
- OllyDrod

[Noiseboy]

I have been looking at some of the more obscure things Reg Hoare mentioned in his Investment Trust Webinar on PiWorld as I have quite a good core portfolio and looking to add some Satellite things.

The Private Equity/ VC side of things looks quite interesting to me. I've been looking at Oakley Capital (OCI) Draper Esprit (GROW), Allied Minds (ALM), Augmentum Fintech (AUGM) and IP Group (IPO). (Not all Technically IT''s in the strictest sense) Obviously these are perhaps quite a bit riskier than the usual candidates but some good food for thought and DYOR

[richfool]

I have been looking at some of the more obscure things Reg Hoare mentioned in his Investment Trust Webinar on PiWorld as I have quite a good core portfolio and looking to add some Satellite things.

The Private Equity/ VC side of things looks quite interesting to me. I've been looking at Oakley Capital (OCI) Draper Esprit (GROW), Allied Minds (ALM), Augmentum Fintech (AUGM) and IP Group (IPO). (Not all Technically IT''s in the strictest sense) Obviously these are perhaps quite a bit riskier than the usual candidates but some good food for thought and DYOR

Private equity is not a sector I have much knowledge of and I therefore shy away from. Though I did for a while in the past hold SLPE - which was something of a fund of private equity funds.

In my travels (search), I did come across AGT (AVI Global Trust) (in the global growth sector), which holds Oakley Capital (a 7% stake), along with Pershing Square Holdings, Softbank Group, Kinnevik, Third Point Offshore and Sony in its top ten holdings. (33% in Japan). I believe it targets value investments. Yield: 2.38%. Discount: 10.61%

https://www.hl.co.uk/shares/shares-sear ... lc-ord-10p

[richfool]

I bought both PGIT and Ecofin Global Utilities and Infrastructure (EGL) a few of years back - both seemed a neat way to get exposure to the infrastructure boom without paying a significant premium for the privilege. Indeed, quite the opposite - both were trading on significant discounts, I suspect partly because they were misleadingly classified as 'Utilities' (renamed 'Infrastructure Securities' by the AIC in 2019). PGIT did very little capital-wise, so I sold and bought more EGL - the discount on which has evaporated and which has been a very good investment. Wouldn't bother with PGIT - the fees of 3.55% are exorbitant and quite unjustified by the performance.

I too hold EGL, like you bought when it was in a sector labelled "Utilities" and at a discount. It's currently one of my best performers. I also hold INPP (current yield: 4.25%), and SEQI (current yield: 5.93%) within the infrastructure sector. (SEQI invests in debt and bonds as opposed to equity.) Though all at premiums now.