PrefInvestor1
09 Sep 2018
Investment Trust Pricing Hi Again @musker_ron, Ah the legendary Market Makers, some on these boards blame them for all of the sins of the market !. You could well be right though. That said I confess I believed that pretty well all FTSE 100 stocks like SMT were traded on SETS, which matches buyers and sellers automatically and MMs arent involved ?. But I believe that there is a new version SETSMM where Market Makers also enter the guaranteed prices they are prepared to trade and this has been used by the LSE to extend SETS to trading many more stocks beyond the FTSE 100 where liquidity is more likely to be a problem. I think I read somewhere that all SETS automatically matched trades have trade type AT and Market Maker trades trade type O (could be wrong). For stocks where market makers ARE involved then yes I would agree that they control the prices. I looked on the LSEs list of MMs per security and there are Market Makers designated for SMT & BRCI. So I’m guessing that you are correct and that is the answer. ATB Pref
musker_ron
09 Sep 2018
Investment Trust Pricing Hi Pref Like you I used to look at buy/sells but no longer do so. As you say the information is indicative only as LSE don’t publish the correct data. All it does is raise questions like yours with no definitive answer. Very briefly and probably simplistically, Market Makers are the ones responsible for setting bid/ask prices together with the spread. They do that by analysing the buy and sell orders. These are available to anyone with Level 2 access. They are the ones responsible for ‘making a market’, ie to provide liquidity and matching buyers with sellers. I’m not an expert in how MM’s work but they can use many techniques to do their job. Investors buy or sell based on the fundamentals of a stock. But there is a large group of traders, who care not one jot about the fundamentals like NAV but trade on price only using technicals to do so. On a large trust like SMT there will be many traders, on a smaller one like CYN, fewer. On some stocks, trader deals far exceed those of investors. So prices can move irrespective of NAV . It’s a fascinating subject and worthy of further study if that grabs you.
PrefInvestor1
09 Sep 2018
Investment Trust Pricing hi @musker_ron, My whole point of starting this topic was (is) that I dont know how this works and I would like to understand it better. It may be that ALL movement in an ITs share price is purely driven by buys and sells, but various words that I have gleaned from different websites imply that underlying asset prices are also factored in. Of course it may be that they are ONLY factored in because investors are watching the NAV or premium/discount and that is causing them to buy or sell. I am sure that is the case with any changes to their dividend, as with ordinary shares. However IF that were the case then IT share price movement should reflect buy and sell volumes. Looking at SMT this week (which has fallen significantly), I obtained the following info from a couple of financial websites:- Now admittedly they have to deduce buys and sells by comparing the trade price with the mid price ( so they could be a bit inaccurate) but if correct this appears to show more people buying than selling this week. Which is NOT what the share price did. Surely the only explanation for this is that the underlying asset prices are being factored into the share price in some way ?. Just maybe different ITs do this in different ways, but I do hope not !. Anyway still thirsting for knowledge here, so if anyone has intimate knowledge of how this works then do tell. Thanks Pref
musker_ron
09 Sep 2018
Investment Trust Pricing Hi Pref I was just confused about part of your statement . Of course the NAV plays a part but there are other factors as well the most important being market sentiment. For example, if the Board were to cut the dividend, the discount would widen considerably irrespective of any changes to the NAV. I was speaking to the Chairman a few years ago and he assured me that the divi was an important metric for the company and they would do what they could to maintain the dividend. No guarantees of course but that dividend has been maintained but no increases. CYN is a much unloved stock and has been for a number of years as commodities have had a torrid time. I don’t think we disagree fundamentally, just wanted to put a slightly different perspective forward.
PrefInvestor1
08 Sep 2018
Investment Trust Pricing Well yes, I realise that the SP is driven in the main by supply and demand but I thought that the price of the underlying assets played some part ?. So are you saying that if the price of the underlying assets drops by 50% but nobody sells then the NAV goes down by 50% but the SP stays unchanged - meaning that it trades at a substantial premium ?. If that’s how it works then fine, I just thought that the underying asset value formed some component of the SP. ATB Pref
musker_ron
08 Sep 2018
Investment Trust Pricing PrefInvestor1: But I confess I thought that significant positive changes in pricing of the underlying assets would be reflected in the buy/sell prices without the need for any investor to buy the stock ?. Is that really what you meant to say? All prices depend on supply and demand and if a stock has no orders there isn’t a big change in the price irrespective of the underlying NAV. That would be very unusual for a stock like CYN. It’s pretty clear that the discount has narrowed slightly over the last week or so from its 12 month average. As the share price has retreated , that means the NAV has retreated even further… Not sure at all from where you have the NAV uplifts.
PrefInvestor1
28 Aug 2018
Investment Trust Pricing Hi All, OK so I am aware that the NAV of an IT reflects the value of the underlying assets and the actual buy/sell price is a function of what investors are prepared to pay for it and is driven by the market. But I confess I thought that significant positive changes in pricing of the underlying assets would be reflected in the buy/sell prices without the need for any investor to buy the stock ?. But perhaps that is not true or at best is a marginal effect ?. Watching CYN these last few days most the the underlying assets have seen significant uplifts in their prices. For example Ascendant Resources Inc (a 4.8% holding) saw its stock price increase by 175.% on 24/8 and another 25% on 27/8. Most other holdings were also positive on those days. Effect on the IT buy/sell price has been almost nothing as far as I can see. Pricing of other ITs (eg PCT, SMT, JUSC) DOES appear to reflect changes in the underlying assets and currency effects. But not CYN it would seem or BRCI for that matter (which is invested in all the big FTSE miners which are up significantly today but the SP has actually fallen). This effect is clearly visible on any site showing stock price vs NAV where the price and NAV lines are moving in opposite directions and the discount level is increasing. Interesting… ATB Pref
sage in the hills
12 Dec 2017
Big message Electric-Vehicle Boom Is a Boon for Coal King Glencore12/12/2017 5:17pmDow Jones NewsGlencore Plc (USOTC:GLNCY)Intraday Stock ChartToday : Tuesday 12 December 2017Click Here for more Glencore Plc Charts.Scott Patterson LONDON -- Glencore PLC, long known as one of the world's dominant coal traders, in a twist is finding itself the beneficiary of the greening of the global economy.The Swiss mining giant is benefiting from a coming boom in electric-vehicle production, which is driving up the value of copper, cobalt and nickel -- whose demand is expected to surge from production of the vehicles and the lithium-ion batteries that will power their growing fleets."Electric vehicles will be disruptive to the world," Chief Executive Ivan Glasenberg said on an investor call Tuesday, and will boost demand for those three commodities.The shift toward commodities that are likely to benefit from policies meant to curb global warming is a noteworthy shift for a company that once bet its future on coal. Mr. Glasenberg said days after Glencore's 2013 purchase of Xstrata PLC that the deal -- the mining sector's largest ever -- was a "a big play" on coal.But tumbling coal prices in the following years dinged Glencore's earnings, raising concerns that Mr. Glasenberg's bet had gone bust. Coal prices have rallied in the past year along with most other commodities.Now, commodities involved in the production of electric vehicles are becoming a primary earnings driver for Glencore. On Tuesday, the company forecast strong production growth in all three metals over the next few years, primarily due to electric-vehicle demand. It expects copper production to gain 25% by 2020 from 2017, cobalt -- of which it is the world's No. 1 producer -- to more than double and nickel to rise 23%.The company said it has completed an $880 million upgrade of one of its massive copper-mining operations in Congo -- Katanga Mining -- which will help it benefit from rising demand for copper and cobalt.Glencore had suspended production at Katanga in September 2015 so it could refurbish the mine and double annual production of copper to 300,000 metric tons, a goal it expects to reach in 2019. It said Katanga is expected to produce 34,000 tons of cobalt by then, likely making it the most productive cobalt mine in the world.A CRU Group report commissioned by Glencore forecast that by 2020, electric-vehicle related demand -- including grid infrastructure and storage, electricity generation, charging stations and the vehicles themselves -- could require an additional 390,000 tons of copper, 85,000 tons of nickel and 24,000 tons of cobalt.Year-to-date, copper prices have gained 19%, nickel is up 8.5% and cobalt has more than doubled, according to FactSet.Shares of Glencore are up 26% this year and have risen more than fivefold since investors fled the stock in 2015 amid concerns that tumbling commodity prices could strain the miner's debt-laden balance sheet. Since then, Glencore has slashed its net debt to $13.9 billion from nearly $30 billion.Cobalt, a byproduct of copper and nickel mining, is expected to see the biggest increase in demand from electric vehicles. Cobalt demand from electric vehicles could surge to 314,000 tons by 2030, a more than fourfold increase from global supply in 2016, according to the report by CRU, a London-based commodities researcher. Mr. Glasenberg said he doubts there is enough cobalt in the world to meet that demand."Cobalt is basically off the charts," Mr. Glasenberg said. He said metal prices are going to need to increase to provide incentives for miners to start new projects to supply the commodities required for rising electric-vehicle demand "which we believe is sitting around the corner."Analysts say rising demand for cobalt could provide a supply bottleneck for electric vehicles. One concern is over Congo, which supplies about 60% of the world's cobalt -- much of
II Editor
28 Apr 2017
NEW ARTICLE: Four investment trusts to play the Trump 'reflation trade' "Until the start of last year, commodities had become a byword for a terrible investment. After the wheels came off the 'commodities supercycle', commodities - and the trusts that invest in them - saw spectacularly poor performance: trusts in the ..."[link]
alandwd
25 Mar 2017
Re: Why is this dropping so much ...... This one feels like a good deal to me. Excellent discount and a good dividend yield that they've managed to maintain over many years. Commodities is still underlying out of favour since about 2012. I'm certainly dripping something in monthly now, sentiment could well turn.
musker ron
22 Mar 2017
Re: Why is this dropping so much ...... This may be the reason, in part at least why we have seen a drop over the last few days.Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor, said: "European markets are down for a second day, as investors start to question current equity valuations. Financials and commodities have been the winners since the US election and these are the sectors under most pressure now as concerns rise that the Trump trade has gone too far, too fast, without seeing the relevant policy changes to support market expectations.""It is a measure of how calm markets have been that the 1%+ fall seen in the US yesterday was the biggest sell-off since Trump was elected. High expectations and low volatility has seen money pouring into markets, providing the foundations for valuations. However, the key questions are: how sticky this money is, whether the market has become overly complacent, what happens if investor confidence falls, or is this simply a buying opportunity?"
musker ron
22 Mar 2017
Re: Why is this dropping so much ...... Holland, I'm a LTH having first bought in 2012 at a price much higher than it is now. Since then re-investing divis has lowered my average price but still showing a loss. Not too worried about that as long as the divi is maintained. Bought for the similar reasons to you, diversifying and exposure to gold miners. The irony is that should the price eventually reach my buy in price I will have to sell some as it would form too large a part of my (small) portfolio.I use Stockopedia now which is superb for individual stocks, less so for IT's and ETF's although the charting facilities are far superior to III even for those. But it is subscription only although I believe they do offer 14 day trials sometimes.
holland44
22 Mar 2017
Re: Why is this dropping so much ...... Another 2.5% down so far today, alongside pretty well everything else being heavily down across my portfolio, in all sectors. The 5% dividend eases the pain, but only a little.I've held CYN since the summer of last year to share (somewhat late) in the commodities recovery and access some gold miners, for diversification. Musker Ron: what website do you use to view the Fibonacci levels as well as other charts? Interactive Investor's Technical Analysis function doesn't include Fibs.
musker ron
22 Mar 2017
Re: Why is this dropping so much ...... I agree Holland. Gapped down today, discount now widened to >20% from its average of around 18%, now at 92% of its 200 day ma and dropped below the Fibonacci 61.8 level. All bear points. Bull points are the well covered dividend of around 5% which the board continue to pay. They did that all through the lows of a year ago and they have stated their intention of maintaining that dividend whilst at all possible.As to gold, 27% of the portfolio is exposed to gold miners so it's a significant part.As a LTH I will continue to hold, being paid by the dividend, to wait.
holland44
21 Mar 2017
Re: Why is this dropping so much ...... This has been a pretty savage sell-off: from 145 to 120ish in barely 5 weeks, but the 200-day MA seems to be providing some support, we had an Inside Bar on 17 March, suggesting the balance between sellers and buyers may be evening out, and CCI and MACD are showing signs of having bottomed out. However, that's not counting (cough) yet another 3.8% drop so far today, so perhaps we are still due more misery and CYN is acting like a canary before a more general correction. As regards CYN following the gold price or gold miners, it's been moving in a completely opposite direction from, say, Fresnillo and Golden Prospect Metals over the last three weeks, so I've no idea what's going on!
