Great profits from Wind-down opportunities...

[SKYSHIP]

VULUNTARY LIQUIDATION (“VL”), or WIND-DOWN in current parlance, can provide attractive profit opportunities; especially when compared with the negligible upside from CASH on deposit.

Over the years we’ve seen many such opportunities, especially in the trust sector – mainly from Private Equity and REITs.

The valuation methodology most appropriate to these VL opportunities is as follows:
1. Calculate the likely net cash value of the investments
2. Estimate the time frame for the cash return
3. Calculate the Gross Redemption Yield (GRY) using the share price, estimated liquidation pay-outs and liquidation timetable.

There are of course many other aspects to be considered, such as: warrants, debt, swap costs, management costs etc.etc.etc.; but by and large one can come to a reasonable analysis of the position just by reading the RNSs and the many knowledgeable posts on the relevant thread , both here and over on ADVFN.

One of the most important things to bear in mind with wind-downs is that the Company will invariably make stage payments during the process. They may take 24months to complete the process, but the average timescale, because of early payments, may amount to just 18months. This obviously boosts the GRY pa figure.

There are quite a few wind-downs in progress – ADIG, API, ASLI just three of them; but it is the last two which provide the most assured upside. Both of them have threads here on this site, under the REITs heading.

API: Sp 53p; NAV 78.5p; Yield 7.5%

GRY Estimate: On my spreadsheet I’m assuming that the likely total return including routine though reducing dividends, will amount to 74p over a further 21months to 31/03/26. This would provide a GRY of 20.9%pa. Reduce the average timescale to 31/12/25 and the GRY climbs to 24.75%pa. To put it another way – a 39% profit in the full timescale of 21months.

ASLI: Sp 60.8%; NAV 79.4p; Yield 7.9%

GRY Estimate: On my spreadsheet I’m assuming that the likely total return including routine though reducing dividends, will amount to 74p over a further 15months to 30/09/25. This would provide a GRY of 17.6%pa. Reduce the average timescale to 30/06/25 and the GRY climbs to 22.6%pa. To put it another way – a 21.7% profit in the full timescale of 15months.

For many less experienced investors this whole concept may seem too difficult; but for the more experienced investor who can read a balance sheet and understand returns, these wind-down opportunities are too good to resist.

[Gerry557]

I might take a look. I thought RGL might be joining that list. Although too many might mean achieving less than the current value.

[88V8]

VULUNTARY LIQUIDATION (“VL”), or WIND-DOWN in current parlance, can provide attractive profit opportunities; especially when compared with the negligible upside from CASH on deposit.

The valuation methodology most appropriate to these VL opportunities is as follows:
1. Calculate the likely net cash value of the investments....

Assessing the NAV has always seemed to me the key stumbling block.
How can one be confident?

V8

[SKYSHIP]

From trade sales and takeovers the NAV stats always seem to bear out; though currently perhaps slightly lower than actuality as valuers are being over-conservative.

If you personally don't believe what we're being told; then the REIT sector is not for you.

[88V8]

From trade sales and takeovers the NAV stats always seem to bear out; though currently perhaps slightly lower than actuality as valuers are being over-conservative.
If you personally don't believe what we're being told; then the REIT sector is not for you.

You may be right.
My only venture into REITs was New River NRR, back when it was a Woodford darling and he could do no wrong.
It was such a sure-fire winner that I bed & spoused it into OH's ISA.
That went well..

V8

[SKYSHIP]

Fantastic post by Checkers2 on my new Voluntary Liquidations thread over on ADVFN ("VL" - P. No. 48) - Ennismore Fund Management flag up ASLI as a great buying opportunity. More about it in the thread Header.

If ever there was a "Good thing" this certainly looks like one. I now have a 13% allocation.

https://uk.advfn.com/cmn/fbb/thread.php3?id=52941685

[SKYSHIP]

Last NAV stated 93.7c (79.0p). Add in some reducing income of perhaps 4.8p over 15months and we could maximally see 83.8p for a max of 35% in, say, 15months.

That would certainly be a great result.

I'm looking for a rather more conservative 78p total for a still great 26% return in that same 15months.

However we look at it, ASLI is an opportunity which no-one should miss...

[terminal7]

I have a very small holding in ASLI (some 1% of personal pension assets) - partially acquired a few months ago based on the factors in SKYSHIP's assessment. As usual in these cases - it looks to good to be true. In the meantime the divis are reasonable and have been maintained for some time. However being in retirement I am also risk adverse and ask myself why the market doesn't recognise SKYSHIP's assertions?

T7

[88V8]

... As usual in these cases - it looks too good to be true. In the meantime the divis are reasonable and have been maintained for some time. However being in retirement I am also risk adverse and ask myself why the market doesn't recognise SKYSHIP's assertions?

In the RNS of 20th May where the rationale for wind-up was set forth, there were as one would expect, a good deal of ifs and buts.
One also notes that they had been paying an uncovered divi, and had previously cancelled the 4/23 divi which of course enhanced the NAV at that time.

So I suppose that the market has reservations about the ultimate outcome and/or timescale.

For the moment I am maintaining my holding, which is also in the order of 1%.

V8

[SKYSHIP]

terminal7 - The "Market" quite often gets things totally wrong. Usually on account of a change of position by an institution.

A holder may become a sudden seller for a host of diffe3rent reasons. The most usual being fund redemptions to be financed; a change in fund manager; a change in sector allocation. A host of other reasons.

The effect is that shares are held down whilst a fund exits its position; and as soon as they're done - the sp rises accordingly.

A recent example was API which just 4 weeks ago slumped briefly below 50p! Now 54.5p.

ASLI's tap-seller held it down at 61p; now perhaps holding down at 62p. They'll soon be done; and we'll shortly see 64p.