With many long-anticipated deals, it is often better to travel hopefully than to arrive. This was certainly the case with the recently announced sale of Vodafone’s shareholding in Verizon Wireless. After many months of speculation, and a rising Vodafone share price, when the deal was actually announced Vodafone’s share price immediately dropped 5%, although it has recovered somewhat since. I suspect the reaction was largely technical: a large number of shareholders had probably decided to wait until the deal was actually announced before selling their shares. Certainly, whilst there were a few aspects of the deal with which investors could quibble, there were no major surprises. I have a small position in Vodafone (around 2% of my portfolio), which I bought a couple of years ago. In light of the deal, I thought it was a good opportunity reassess whether I should sell my shares or continue to hold them, or possibly buy more.
Aurora Russia (ticker: AURR) is an AIM-listed investment company, launched in 2006. It is a private equity fund investing in small Russian companies. (Note it is completely unrelated to Aurora Investment Trust, which I have also recently invested in.)
I have just initiated a new position in Great Eagle Holdings (ticker: 41 HK), a Hong Kong-listed property and holding company, at a price of HK26.30 per share. The company is currently trading at a substantial discount to its net asset value. In addition to net cash of nearly HK$16 per share, it has shareholdings in other listed entities worth a further HK$25 per share, without taking into account its own, wholly-owned hotel and property assets. The shares have fallen around 10% in the last couple of days, following its interim results, mainly I suspect because of disappointment that it is not returning more of the cash to shareholders (it announced a special dividend of only HK$1 per share in addition to its usual interim dividend). I have initially bought a small position of just under 3% of my portfolio, with the possibility of increasing this. I plan to write a more detailed research post in the near future.
I recently initiated a position in Aurora Investment Trust (ticker: ARR). I bought the shares at a price of 146.5p, which at the time represented a discount of around 16% to NAV. I think the trust is likely to be wound-up at some point over the next 12 months.
I have separately posted detailed research on the trust here.
Aurora Investment Trust (ticker: ARR) is a UK-listed investment trust. After a run of poor performance, it recently announced plans to consult with shareholders about the trust’s future. It is currently trading at a discount of around 14% to its net asset value.
In my first post asking whether Hong Kong property is a bubble (see Part 1 here), I focused on historical price trends and ratios. I concluded that residential property prices are currently around 50-60% above historic trend levels; and suggested that, for this not to be a bubble, there had to be something different this time. The aim of this post is to look in detail at some of the possible reasons for the recent run-up in prices to try to determine what if anything is different this time.
I have reduced my position in Caledonia Investments (ticker: CLDN), selling more than half my shareholding, having already sold part of it in March. CLDN now accounts for just over 4% of my portfolio, down from 9%; prior to the sale it had been my largest position. The sale price of 1827p represented a discount of around 17% to NAV. The discount has narrowed considerably over the past year and is now at its lowest level since 2011.
I recently sold my shareholding in Impax Environmental Markets (ticker: IEM) at a price of 132p per share. The discount has narrowed considerably in since the start of the year from around 20% to 9%. Prior to the disposal, the shareholding had accounted for around 5% of my portfolio.
One of the key lessons with investment trusts is not to buy them when they are trading at a premium to net asset value. Why pay more than the actual underlying value of the assets? Anecdotal support for this comes from recent volatility in Baillie Gifford Shin Nippon (ticker: BGS), the Japanese smaller companies investment trust, which clearly illustrates the dangers of investing at a premium.
As early as 2009, commentators have been asking whether Hong Kong property is a bubble. Since then, the debate has continued as, apart from a brief pause in the second half of 2011, prices have continued to climb inexorably upwards; despite efforts by the Hong Kong government to cool the market. Prices have more than doubled from their recent low point at the end of 2008. In fact, for most people, whether or not the property market is a bubble is not in doubt. The question now being asked is when the bubble will burst.