Apologies for the lack of posts. Been a little busy with some projects.
In my last post on APW (December 1, 2014 click here) the unit price was 11.5c and I took the view it was worth on holding on for further gains given the massive discount to NTA and lots of cash.
That view proved to be correct.
The price has marched forward to 14.5c. NTA has also marched forward to 18.52c, thanks to further buy-backs and movement in the underlying NTA.
Controversially has management changed its investment guidelines to allow it be 100% invested in one security or manager. I read this as meaning APW could be fully invested in other AIMS securities. Management has stated previously it intends (and has done) to invest in other AIMS securities. Some people despise this given the potential conflict of interest it creates. Judging by the strengthened share price, it seems that on-balance the market seems to be fairly comfortable with this. As previously stated I am little more indifferent to this: I can see both sides of the argument.
I have gradually sold down my position completely, although regrettably less than the current price. I took the view - possibly incorrectly - the price may never reach NTA. I tend to find with these types of situations you need to be really cheap and sell cheap. Please don't take that as gospel, and clearly I was premature in this case. My original investment case was buying at ~50% discount to NTA and the view the NTA should grow over time. The discount has closed (but not fully) and the NTA has grown, so the investment case has worked out. Personally I'd be happy to buy back-in at cheaper prices.
Kristian
Disclosure: no position in APW
That view proved to be correct.
The price has marched forward to 14.5c. NTA has also marched forward to 18.52c, thanks to further buy-backs and movement in the underlying NTA.
Controversially has management changed its investment guidelines to allow it be 100% invested in one security or manager. I read this as meaning APW could be fully invested in other AIMS securities. Management has stated previously it intends (and has done) to invest in other AIMS securities. Some people despise this given the potential conflict of interest it creates. Judging by the strengthened share price, it seems that on-balance the market seems to be fairly comfortable with this. As previously stated I am little more indifferent to this: I can see both sides of the argument.
I have gradually sold down my position completely, although regrettably less than the current price. I took the view - possibly incorrectly - the price may never reach NTA. I tend to find with these types of situations you need to be really cheap and sell cheap. Please don't take that as gospel, and clearly I was premature in this case. My original investment case was buying at ~50% discount to NTA and the view the NTA should grow over time. The discount has closed (but not fully) and the NTA has grown, so the investment case has worked out. Personally I'd be happy to buy back-in at cheaper prices.
Kristian
Disclosure: no position in APW
I share some of you concerns about APW. In some ways, management has been very securityholder friendly, while in other ways the manager's interest have proceeded those of securitryholders.
ReplyDeleteAs you point out above, the buy-back has been and continues to be a fantastic creator of securityholder value. As the NTA creeps up, so does/should the share price. The reinstatement of distributions has been a win for securityholders also.
On the other hand, being able to invest all of the funds capital in one security or manager is in my opinion risky and probably more in the interest of the fund's manager than that of securityholders. Also, many of the recent investments made by the fund seem to be in other funds managed by APW's manager.
I suppose this is why the market continues to be reluctant to price APW at NTA or higher. The share price is reluctantly moving north as the NTA increases while the market is still deliberating whether the fund's manager should be rewarded a share price that matches its NTA.
Whichever way you look at it, this manager has done a remarkable job since taking over the management of this fund. The fact that there has been a continuous flow of insider/director buying hasn't hurt the security price either.
Although this stock isn't as cheap as it once was, I think there are enough signs to warrant holding the stock while management slowly works away at creating value – be it in their somewhat unorthodox style!
Minimum trading price of s$0.20 in sgx will play a good catalyst.
ReplyDeleteHi Kristian - with APW falling back to circa $0.12, and NTA now above $0.19...any further thoughts on this one?
ReplyDeleteHi, you could do worse. However, it may never trade at NTA, at least in the medium term. If the gap closes to say 20%, then the price is 15c plus distribution plus any further NTA growth. You could very well get a total annual return of ~15%. Not bad really.
ReplyDeleteHi Kristian, - I'm still in this one but starting to think you are right - it may never reach NTA. It is still at 12c with a very lean buy side - so I am concerned about getting out at a reasonable price. The St Kilda project is a massive question mark compared to it's normal and relatively boring other projects. Could be a boon or....not!
ReplyDeleteI appreciate this may not be on your radar now but would appreciate any thoughts.
Hi, I remain of the view that unless the trust is wound-up, getting parity with NTA will probably never be achieved. There is just so much in the way of related party transactions here, in-fact it really is a vehicle to invest in other AIMS vehicles. Saying that, I can think of some far worse A-REIT type investments - just look at RNY! In fact, there have been lots of other worse investments you could have (and I certainly did) make over the last few years. I don't know if you should sell at these prices, but to answer your point, achieving NTA will probably be difficult.
ReplyDelete