Wynford2
08 Feb 2017
Discount Witan is around 5%, so maybe ATST could be as well, if they clear out all the non-believers first, and they must be some way towards that.Long term I'd guess there is always going to be selling pressure, because1. Spreading capital gains2. Most holders are probably baby boomers and will be withdrawing now. Alliance was about the only low cost global spread when I bought, now we have ETFs for the next generations.But I'm selling just in case (in a sipp).
Wynford2
08 Feb 2017
Re: Sold I think you are probably looking for this:[link] I read it your beneficiaries can continue with drawdown, paying tax on income only as they draw the income over their years, so your SIPP becomes their SIPP going forward, or can just be merged into theirs.This seems to be a dramatic change in the advantage of pensions vs IHT, so I really hope I've got it right!
In the dark yet again
08 Feb 2017
Re: Sold TJ,Well I certainly wouldn't recommend 'deciding to pop your clogs unexpectedly in the next 12/24 months' though how you decide the unexpected is new to me. Macabre humour(?) aside using the CGT allowance to the max to diversify sounds like a reasonable strategy though how long the discount will remain down here after Elliott are 'paid off' I have no idea. My fear is that's pretty much all that's holding it here but hold it here at least until the deal is approved is what I expect them to do as, if the price being offered to Elliott is close/same to the market price the deal is more likely to be approved; a significant difference in Elliott's favour smacks of one shareholder receiving preferential treatment over others and is more likely to raise objections and get it killed.There is always the other option of winding the whole thing up and giving all shareholders best part of 100% NAV but the Directors are about as likely to propose that as turkeys voting for Christmas.NAV. If you want a 'realistic' one always FairCum, the others have been used in the past so can be useful for like-4-like historical comparisons and maybe with other trusts than could the old fashioned way.Fair means they value any debts at the current market price of replacing it, effectively marking-to-market which is exactly what they should do given they are marking the assets daily. Interest rates have fallen in recent years so any fixed interest debt is liable to have a 'high' interest rate attached, certainly higher than would be available at present. As such it's worth more to the debt holders than par. If ATST wanted to buy them out today then 'fair value' would be greater than par (where book value usually is).Cum income because it's in the pipeline. Basically any accrued interest not yet paid on cash/bonds they hold plus any dividends gone ex but not yet received. Regardless of whether they sold those asset today that cash would still arrive in the near future - a very real asset. At these low interest rates it's not really worth trying to discount it to a present value as the difference would be tiny.ATST is a global generalist. It does have significant US holdings hence some attempt to adjust any most recent NAV figure reported to reflect movements in $/£ and the FTSE100 as a proxy for the market in general. As much art as science given the I can't be ar5ed to replicate the whole ATST portfolio and revalue on a live basis - unless it's a significant movement doing just a tiny fraction of the work will capture the vast majority of any intra-day move. 4.8% after costs was where I had it yesterday when I pulled the trigger.LKH,ummm, not sure here. Not sure a dead man is allowed to still have a pension. There was certainly something in HMGs documents about transfers only being IHT exempt if completed within 2 years. Can't remember exactly what. Makes sense to allow some time to wind things up, if not actual probate then I sure there's something similar needing to be done but I can't see HMG allowing people to let it roll indefinitely. I did talk it through with someone who was supposed to know (dream on!) and the word 'Trust' did come up. Maybe that's the only way to do it or maybe the only way he could generate a significant fee for himself?I'm seeing the Pensionwise people next month. Not sure how much they'll know. Heard both good and bad - some 'doing charity' work, merely jumping through hoops to keep the Dept of Work and Pensions at bay when any benefits they receive are questions while others retired IFAs who really know their stuff and aren't looking to grab as much as possible for themselves. Or maybe a letter to YouInvest to see what they say - did get a reply to my previous query; took over 3 months but....Regards,ITDYA
LK Hyman
07 Feb 2017
Re: Sold ITDYA,"If you're 75 or over they still get it but they'll be taxed on it as income at their marginal rate."I think ... hope ... I'm right in saying that they'll only get taxed on it as income at their marginal rate when they start drawing on the funds? If they leave your Sipp wedge invested they can treat it as part of their own pension fund and it'll roll up tax free until they reach retirement age and want to take an income from it.LKH on the flybridge
trader jack
07 Feb 2017
Re: Sold Good afternoon ITDYA,I appreciate your comments. All my ATST holdings are outside my PEP and ISA allowances as they were used up in my savings schemes and in any case I have been quite content with the progress of ATST over the years. This is obviously something I should have started looking into earlier but with the discount being well over 10 percent there was no immediacy. So if I do decide to pop my clogs unexpectedly in the next 12/24 months my children will be holding out their begging bowls as soon as possible. So, as I said, I must try and ensure that my grandchildren get the benefit of anything I have carelessly left behin rather than spend it first!So the immediate poblem is how to take all the accrued gains without attracting the attention of HMRC, as I see it the only way that I can do it is to ensure that all my CGT allowances are used to the full over the next 5 financial years or so and only being used by "lightening up" on my ATST holdings. I can use up what is left of this year's allowance within the next 8 weeks and perhaps use up next year's allowance in mid April.According to the documents I received today the repurchase of the Elliott holdings (52,881,891 Ordinary Shares and 42,596,685 shares held as CFD's, a total value over £633 million!!!) will take place in 5 tranches of equal size on 5 seperate Business Days an will take place on the later of the date of the General Meeting (28th February) and the date upon which the Company receives PRA approval to effect the Repurchase. The purchase price will be a figure representing 4,75 percent discount to the NAV per ordinary share on each relevant calculation date and the deal will be "fully financed through thr pro rata realisation of the appropriate proportion of the Company's underlying equity portfolio."I can see us poor private investors losing out if I understand correctly what Alliance are proposing, let's see 662.50p as I write and depending on which of the 4 different published NAV's are used and that range today from 4.31 percent to 5.63 percent on my calculations means to me that Elliotts will get the best possible pay out whilst us poor so and so's on the same day and at the same time will be left with whatever crumbs are left..Now the number of shares which Aliance will repurchase is just under 20 percent of all the shares currently in issue and about the same as percentage of the total equity of the company.I am confused, my head hurts, my memory wants to tell me that Alliance suggested the amount involved was about 10 percent....good job I am not a mathematician I would probably be even more confused.As you say, setting up any sort of Trust gets rather expensive both in legal fees and management fees and any other sort of fee they might be able to dream up.Kind regardsTJ
trader jack
07 Feb 2017
Re: Sold "But back to the same old problem, way too much cash in search of a good home."A good problem to have I think. I remain quite confused as to the future direction of the share price given that Alliance intends to buy back and cancel the shares and CFD's built up by Elliotts and then cancel them.But I am coming to a similar view but more from the point of using up my annual capital allowance. My relatively small holding in ATST (taken out in 1990 and with all dividends reinvested) will take up to 5 years or more (at current SP) to be able to use up my capital allowances safely and without even thinking about the need to take profits on any other holding that I have during that period.But what to do with the proceeds, can I invest in a relatively safe, possibly quarterly dividend paying stock that is not expensively priced?Alternatively, working on the basis that I have seen out my biblical three score yers and ten and then some I could just enjoy the thought that my family would see their "nest egg" diminished by HMRC on my inevitable demise. Nah, I think I need to get the profits reinvested ASAP and (hopefully) profitably and make sure that my grandchildren get to reap the benefit when I finally make my way off this mortal coil.Kind regardsTJ
In the dark yet again
07 Feb 2017
Sold Another 5000 just shipped. Not a perfect science but using yesterday's NAV, adjusted for $/£ move and a 50 rise in the FTSE (maybe not a perfect proxy but simple and should catch the essence of any intraday NAV movement) they went at a 4.8% discount.But back to the same old problem, way too much cash in search of a good home.Regards,ITDYA
alandwd
27 Jan 2017
Re: Alliance Trust to shrink by a quarter I love this bit "Existing shareholders are unlikely to feel disadvantaged by the offer: the trust's active repurchasing of shares has driven the price up closer to the value of underlying assets in recent weeks.". No, it's still at a bigger discount than Elliott is being allowed to exit at. Plus no dealing fees or bid/offer spreads for the arbitrageur to deal with.If I was a shareholder, I'd vote against it, unless I was offered the same deal.
trader jack
27 Jan 2017
Re: Alliance Trust to shrink by a quarter Ends five-year campaign to overhaul structure at Alliance* Elliott welcomes move, to sell back its 19.75 pct stake* Alliance Trust shares up 0.4 pct in flat FTSE All Share (Recasts, adds background, updates share price)Lawrence White and Simon JessopLONDON, Jan 27 (Reuters) - Alliance Trust, one of Britain's oldest investment managers, agreed on Friday to buy back shares held by a U.S. activist hedge fund, bringing an end to a campaign that has forced it to reform how it is run.Dundee-based Alliance, which traces its roots to the late 19th century and loans to farmers across the British Empire, said it would buy back a 19.75 percent stake held by U.S. billionaire Paul Singer's Elliott Management.It marks an end to an at times bitter five-year campaign on the part of Elliott to force the Scottish asset manager to improve its performance, including through a radical overhaul of both the board and the firm's investment process.Casualties along the way included former chief executive Katherine Garrett-Cox, one of the City of London (LSE: CIN.L - news) 's highest profile businesswomen, who was forced to step down from the group's board in October 2015.Sustained pressure from Elliott also resulted in Alliance changing the way it invested, moving to outsource its equity stock-picks and management to an external advisor and group of fund managers at other companies."Elliott has done quite nicely out of its stake in Alliance, and has instigated wholesale change at the investment trust, though it still remains to be seen whether that is to the long term benefit of shareholders," said Laith Khalaf, senior analyst at investment advisor Hargreaves Lansdown (Frankfurt: DMB.F - news) ."The withdrawal of Elliott from the shareholder register should lead to more stability for the trust, which now needs to focus on making sure the new investment strategy delivers."Elliott's stake is worth around 632 million pounds, based on Alliance's current market value of 3.2 billion pounds ($4 billion). While Elliott declined to say how much is profit, Alliance stock is up 92 percent since the end of December 2011.EXIT ROUTEAs a 'closed ended' investment trust company, Alliance raises money from investors in exchange for shares in the firm, which then trade at a discount or premium to the value of its investment portfolio.The launch of a share buyback follows agitation from Elliott for an exit route after the gap between the share price and the value of Alliance Trust's assets closed to less than 5 percent from as wide as 15 percent."Elliott welcomes the opportunity to participate in the offer being made to all other shareholders under the buyback programme," a spokeswoman for the activist investor said in an emailed statement.The repurchase, at a 4.75 percent discount to the value of the shares, requires approval by Alliance's independent shareholders, Alliance Trust said in a statement."Hedge funds tend to have a reputation as disruptive short term investors. In this case, however... we believe its activism has resulted in a far more attractive vehicle for all shareholders," analysts at Numis said in a note to clients."It is encouraging that the agreement with Elliott is broadly in-line with the discount level of previous repurchases, and also that the Board has committed to further buybacks at the same level."Alliance Trust shares were up 0.4 percent at 1045 GMT, narrowly outpacing the FTSE All Share index.The firm ended up more than 23 percent in 2016, outperforming peers including RIT Capital Partners (Other OTC: RITPF - news) , the investment trust run by financier Jacob Rothschild, which had mulled a takeover bid for Alliance.
trader jack
27 Jan 2017
Alliance Trust to shrink by a quarter From today's TelegraphAlliance Trust, the £3.5bn fund in which tens of thousands of savers invest their Isas and pensions, has agreed to repurchase shares worth around £620m from Elliott International, the American hedge fund that has owned a stake since 2010.The trust's board plans to buy the shares at a 4.75pc discount to the value of the underlying assets in a series of tranches once the deal is approved at the trust's annual meeting next month.This will clinch a substantial profit for Elliott, which built its stake by buying when the discount to the underlying assets was nearer 10pc or even larger.The deal will see the giant fund shrink substantially: over the past month it has already repurchased more than 30 million shares from disgruntled investors, representing 6pc of the total pool of shares in issue.Buying Elliott's stake would effect a total reduction in the fund of more than a quarter, excluding market movements.Existing shareholders are unlikely to feel disadvantaged by the offer: the trust's active repurchasing of shares has driven the price up closer to the value of underlying assets in recent weeks.At yesterday's close, the shares traded at 646.5p while the value of the underlying investments was 681.75p a share. This gives a discount of just over 5pc.Following the announcement this morning Alliance's shares rose to just above 650p, narrowing the discount towards the 4.75pc range on offer to Elliott.Analysts generally welcomed the proposals. Charles Cade of Numis, the stockbroker, said Alliance's offer of similar exit terms to large and small investors "contrasts with some historic situations in the sector where boards have been willing to provide an exit for a 'hostile' value investor at a tight discount without offering the same terms to all shareholders".Getting shot of Elliott will mark another step in the new board's efforts to turn around the fortunes of this giant and widely owned vehicle. In December it announced the sale of its fund management division and outlined a "multi-manager" approach under which its assets would be overseen by selected external fund managers.This approach was pioneered by Alliance's more successful rival Witan more than a decade ago.Alliance's board has also pledged to keep costs low.The gaping discount between share price and underlying asset value - which was what drew Elliott to build its holding in the first instance - has been central to the trust's problems over much of the past decade.It has narrowed only very recently: the discount over the past 12 months still averages 10pc. It reached a high of more than 14pc in June.
alandwd
24 Jan 2017
Re: Buy backs Always nice for the small shareholders to see a big arbitrageur get a nice offer close to NAV too. I've sold out completely, but I'm definitely keeping it on the radar. With their track record since about 2002, there's no doubt if this trust continues to exist that the discount will drift back out from where it came.
Wynford2
24 Jan 2017
Re: Buy backs So they do have a plan:RNS this morning effectively says that Elliott can sell out at 5% discount if they ask.So far ATST has shrunk by close to £200M, and the buybacks continue.The trust undoubtedly has a very loyal core set of shareholders (just look at how they (we!) have stayed through being exploited over the last decade), but quite a few, like myself, were probably reluctant to sell because of the discount and are now throwing in the towel.
Wynford2
19 Jan 2017
Re: Buy backs ATST are changing their investment strategy, completely. The newly appointed managers will want their own picks, not inherited 'sustainability/green' stuff. Just about everything is turned into cash, then parceled out to the new managers for their choices. In the meantime, there's a vast heap of cash knocking around for buy-backs. That all fits neatly together for a few weeks at least.But I still can't see where Elliott are going with this, they are said to be short term raiders, but if so how do they get out without the discount going through the roof again. Either they have been misjudged and are really in for the long term, or there is a plan to buy them out in the near term.
In the dark yet again
18 Jan 2017
Re: Buy backs "The rate of buy-backs by far exceeds the Company's income rate and can only have been achieved through substantial sales of holdings"Not true. It's an Investment Trust so perfectly at liberty to borrow cash to fund the buybacks. Can't find anything in the articles of association that puts a limit on how much borrowing, how much gearing is allowed. I have seen other trusts gear up beyond 125% (i.e. 125 shares funded by 100 shareholder equity and 25% debt) and we are well short of that mark here (about 5% at the last count).Looking at the most recent NAV statements, the dividend yield on the portfolio should cover the cost of debt (well just about unless they are paying way too much for their money) so that should be OK.On the downside, that's all extra risk. In the past ATST (and 2nd Alliance in the old days) were extremely conservative and there never was any gearing. Now with Elliott on their backs attitudes appear to have changed.How far should the go? Good question. From a simple arithmetic (marginal cost of funds vs return) point of view there's loads more room bearing in mind that, even with the SP at only 5% discount to NAV, they are still only paying 95p for the dividends on £1 worth of assets. As long as there isn't a substantial correction in the market as a whole it all woks sweetly.But I agree with you - it cannot be sustained indefinitely as it means ever increasing risk (not what the long-term holders bought into) and history does tend to show that, once buybacks cease, discounts tend to revert to their norm. The exception is where there is a perception that the whole ballpark has changed for good and the management will actively manage the discount by gearing up then back down then back up etc.Me, I've sold 2 tranches now. Got loads left. Wouldn't mind banging out quite a few more at 5% discount or less just struggling to think of good places to put the proceeds - pretty much max up on most things I really like. And it's all my SIPP with which I tend to be more cautious (God only know why, SIPP, ISA, dealing account, I should see it as just one big pot but I don't)Regards,ITDYA
New pilgrim
17 Jan 2017
Buy backs Buy-backs continue apace. Yesterday alone the Company bought back shares to a value of three and a half million pounds (£3,535,050). This represents about 0.11% of the Company.Friday last week the buy back was for over six million (£6,025,473) about 0.19%.This is of course just a continuation of an aggressive buy-back campaign that the Company has been undertaking almost every trading day since 16th December. The rate of buy-backs by far exceeds the Company's income rate and can only have been achieved through substantial sales of holdings. This is, of course, a game that cannot be sustained indefinitely. In the meanwhile it serves as an artificial prop to the share price and reduces the discount margin. While the Company management transitions to the new structure, who is in charge, and who is taking the investment decisions? What happens to the share price when the Company is no longer active in the market?
