"Finding sustainable income at a sensible price is becoming increasingly difficult for investors as the nine-year bull market rumbles on.Pockets of potential value remain, most notably among UK domestic stocks, which have caught the attention of ..."
In absolute terms it's remained arount £2 for a while, so a slight rise today!
However, what has happened is that there is a special divi of 41p (paid in a week or so) and a 19->15 share consolidation. The sp drop reported by ii is based on the adjusted price for share consolidation (and doesn't take account of the divi). In theory, you are no worse or better off.
The special div is a lot less than the NAV of the two sales. Presumably the balance remains as part of the 3i NAV. But I can find no information on the sale price - hopefully more than the NAV on the books!
Just returning to look at 3in and HICL after being out of these for a while and just read the latest article in Moneyweek on the risks posed with infrastructure funds.
"combined with a 19->15 share consolidation a week or two earlier to keep the share price the same."
I guess this makes this not a big dividend but a capital return which is giving back shareholders their own money, so no real gain here.
It's interesting though that 3in is the least exposed to UK PFI and public partnership programs amongst the main infrastructure funds including HICL and JLIF.
The recommendation in the cover story in this weeks edition indicates that 3IN is the least exposed to political risk and especially so now that it has sold Anglian Water. Only 7% of 3IN's funds are exposed to UK PFI and it has less than 1% exposure to Carillion.
The overall sentiment toward these funds has still dragged them down below Net Asset Value with HICL trading at a near 2% discount to estimated NAV and 3IN at a 1% discount.
Going forward, all these funds are going to have to look elsewhere though, because the UKPFI activity is grinding to a halt because of the recent report of the "bad deal" they offer the tax payer (whether this is right or wrong - that is now the perception amongst politicians and the public).
This is not going to be easy, and possibly exposes them to more risk if the cosy relationship with PFI is no longer a realistic option.
Mind you I'd be worried about HICL, as it has 14% exposure to Carillion, and still has 74% of it's funds tied up in UK PFI.
There must be a real question mark over the value of these assets given that a Labour government is threatening to introduce new legislation that would effectively break the existing funding contracts and therefore compensation for investors, given a public snatch, would be poor indeed.
If faced with even a set of court cases started by Jeremy and John (the two Marxists) the price of infrastructure shares would probably all fall and fall pretty hard due to sentiment.
A lot depends on if you believe Labour will be returned to power. I'm loathe to say they are, but I believe they might even win a landslide at the next election.
Let's face it, Teresa May has almost handed it on a plate to Jeremy due to her incompetence and devious approach to thwarting Brexit -- many will never forgive her for this mess, assuming of course she is not removed in the meantime.
One thing that concerns me about all of these funds going forward, is the fact that their ROCE is realistically very low and they have to keep tapping investors for new money.
Warren Buffet's sidekick indicated that if the return on capital is X, over time you can expect a long term return of X, almost no matter what level you enter the shares at.
Infrastructure offers low single digit ROCE at best.
The really interesting thing about the sale is that the value difference of £227m since Sept 17s valuation almost exactly equals the NAV premium at the beginning of this week. No wonder the SP has shot up. Even at 204p the premium is still only 3.5% approx.
I remain a huge fan of 3IN.
It may be that this is just a re-adjustment from the strange fall back to 190p from 200p, which also seemed to have no reason behind it. I believe this is the strongest pure infrastructure but trust - but thats only my personal opinion. I remain a great fan of this share and added to my holding at 190p.
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