2022 Xmas Stocking 🎄

So if you were to fill your sack with shares this Christmas, what stocks would you pick?

For me I think I would go with the following:

  • BIDStack - the in game advertising company, but I am waiting for the expected trading update mid December as already have a position. The negatives are a poor track record from management and a high proportion of impatient retail investors holding the SP back, however with all the progress made in the last 2 years, I believe we may be about to see an inflection point.

  • CWR Ceres Power - think a clean energy hydrogen version of ARM. They design electrolysers and allow others to user their designs for a small royalty fee. The efficiency of their designs is dependent on the material used in the build, and it works both ways. Electricity can be used to produce hydrogen, or in reverse hydrogen can be used to produce heat and electricity. The share price has taken a beating this past year like most technology stocks and could once again be a good long term entry point.

Then for a little more diversity, I might go for some investment trusts:

Chrysalis is one of my favourite, sadly I’ve been in this for a while, and have hit my private equity limit so will not be topping up. FCIT and UKW are two others I have held, but sold out of recently.

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Could go really boring here but I wont!

I quite like the early look at Euronext ENX

For me, this is a lot of the benefits of owning something like LSEG or Nasdaq, etc but with a much more reasonable price!

&

Disney ($DIS) - who doesn’t love Disney at Xmas?

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My Christmas shopping list looks something like this:

  • HarbourVest Private Equity: Private equity fund of funds, which is on a 45% discount.
  • HG Capital: Tech trust which invests in unquoted firms. Discount’s about 20%.
  • Mid Wynd: Core holding focused on quality. Still trades at a slight premium.
  • AVI Global: Another core holding. As it’s value-focused, there’s a so-called double discount.
  • International Biotech: New position I’m slowly building. I like IBT’s management a lot.
  • TR Property: Also hoping to top up this property securities trust under the £3 mark.
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Can somebody more knowledgable than me explain how this fund has always been on discount? Harbourvest Global Private Equity Share Price (HVPE) Ordinary Shares | HVPE

I’m sure someone else can do a better job of explaining but I’ll give it a go:

In a nutshell, it boils down to supply and demand.

Private equity valuations lag the market and the underlying holdings are relatively illiquid, so trusts such as HVPE tend to always trade at significant discounts to NAV.

The average discount for the sector is roughly 15% over four-five years.

There are a few exceptions, such as III and HGT, which have traded at a premium at times due to highly regarded managers, particularly strong performance, investor sentiment etc.

I’m hoping the relatively wide discounts will provide a margin of safety but things could get worse – in 2008-9, the average discount on PE trusts widened to about 60%.

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Haven’t looked at this one before. Given it’s AUM, an OCF of 2.33% seems quite high. It seems the performance fees bumping it up, but to me they should be based on the lower of the NAV or market price. I might query that with them, how they can justify the performance fee vs investor return.

That said its discount is appealing vs its track record. We do need to see it crystallising some of its profit which should help support sentiment in the market. Similarly the share but backs are a good path as well. I need to do some digging into the underlying holdings. Initial view is the complex structure doesn’t help investors understand the product, but the statement of investments/distributions is impressive at first glance.

Trade volume is low as well, but as a long term investor I would be tempted to make this 2% of my portfolio for diversity.

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Based on current valuations and my recent buys I would say to pick 3 its:

  • Pets at Home
  • Tritax Big Box
  • Pershing Square Holdings
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The charges do make me balk. It is relatively standard for the sector though: all PE trusts charge at least 1% and there’s often performance fees too.

According to HL, which is very often wrong, the ongoing charge for PIN – probably HVPE’s closest competitor – is nearly 4%.

Unfortunately, there’s no real way of getting cheap, broad PE exposure as the assets are usually too illiquid to hold in an open-ended, passive vehicle.

SMT’s probably the closest but that’s narrow exposure to relatively racy, capital intensive firms.

It’s very much a long-term play, and HVPE plus HGT will make up no more than 5%.

@Hbomb PSH has been on my radar for a while. I’m still umming and ahhing about that one: lots of pros and cons – what tipped the balance for you?

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Both of these based on the largeish discount to NAV?

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My guess is the manager and the discount to
NAV, but let’s see.
The costs are quite high…

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Thanks for the breakdown.

Ok so for me is almost always about valuation, and so yes NAV discounts are a significant part of why I am currently/recently adding. However here are my thoughts on both:

Tritax are my favourite warehouse REIT, and I dont want housing, office or other REITs. Warehouses are here to stay and yes may get bumpy but there will be demand for them. But as an investment in this sub 150p range why do I think Tritax Big Box is a no brainer for me? Well they have high quality assets (locations), are run well financially, and I see significant upside after short/med term capex plays out. In the meantime You can collect about a 4.5% yield that is fairly safe and med term will keep rising due to nature of REIT rules.

Pershing Square Holdings is a bit more complicated, or perhaps just a bit more unusual. Yes the NAV discount is massive, hence this year they have been buying back lots of stock as essentially buying your equities back at large discount. They are also looking to domicile in the US which should help close some of the NAV gap, also through this they likely need to acquire a larger stake in a US business with assets which is believed to be HHC (Howard Hughes Cop) which through tender PSH now own 30% although they wanted and need more I believe 40%.
I also believe Bill Ackman is a world class investor over time, albeit slightly more volatile with his results historically, and I see PSH as the best way to invest along with him as he is heavily in PSH. It does have high fees, but this is a unique proposition with high upside, also they use some debt but its not one that can be margin called etc so little fear of blowing up.

I wouldn’t recommend anyone going into PSH lightly, but Tritax is easier to understand and have conviction I expect, just be aware it could be a volatile year or three in anything property focused.

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I added some Nanoco to my stocking - let’s go win the court case in January 2023!

Hi there

I am in ASLI- abrdn European Logistics Income plc is a United Kingdom-based investment trust
Divi yield of >6% and is trading below 70p
Looks good

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I do like a bargain, but according to the AIC website, its 5 year track record is not that great, would you know why that is - possibly wasn’t fully invested from the go?

I need to do some digging first but if they’ve consistently hit a 6% yield and it’s currently trading at a 35% discount, now could be a good time to buy and diversify a little.

That said - its 4th biggest rental holding is to Arrival, which is really struggling with its cash flows at the moment. Might be worth drilling down into the underlying businesses first before buying this I think.

https://www.theaic.co.uk/companydata/0P0001CC83/portfolio

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Morning Dougal1984
I think like you said there is not enough data but going forward it looks at 35% discount and 6% yield something to think about
As asset are building is asset rich too.
Thanks

It seems to be a good idea. I like your style!