Raj K;312935 wrote:Big boy;312931 wrote:Tim D;312909 wrote:Raj K;312907 wrote:I purchased HGT in 2014 and if I had done that sold out everytime the discount narrowed ( and we will use a lower discount marker for HGT as it rarely goes above 10% ) and bought again when it went to a higher discount I actually doubt I would have got the returns that I have achieved by letting it simply compound.
Granted I wish I hade a bigger stake in HGT from the getgo but that’s another matter.
I also think this principle of leaving along might well work out for some other trusts.
It's a mathematical truth that the longer you hold an IT, the more the SP return will converge towards the NAV return... any discount/premium you're exposed to at time of purchase/sale is amortized away. And it's NAV return that long-term investors should primarily be interested in.
This is from HGT's Q1 2024 update:
(at
https://www.hgcapitaltru...1-2024-presentation.pdf )
Wildly different numbers over the shorter timescales, but over the long haul SP & NAV CAGR %pa become much closer.
As at to-day how do you rate HGT based on "past performance".?
I see the discount is 12-13% below the 12 month average discount and SP. near the 12 month High.
Clearly the SP recently has outperformed the NAV so do you buy based on past performance or do you sell as clearly relatively overvalued.
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Hi
Personally i will buy more on a small pullback (and that maybe an error), but i certainly wont be selling on todays stats.
I really cant make a judgment about over or under value as you do solely with discounts. To me fundamentals should drive the investment decision. What cash are the underlying portfolio companies producing, what it the ancticipated growth in these earnings, how much debt.... has the trust got enough firepower to fund commitments etc. basically fundamentals.
99% plus of the Global Investors do "due diligence" daily and as we see from 12 month high/lows this produces wide fluctuations ...ie correctly priced at 12 month High and 12month low so clearly wild swings in valuations where both are correct.??
Not sure how your due diligence is any better than the rest of the market so assume your timing will be difficult to gage and you are likely to be behind the curve as clearly most FMs are.
I have found that when 99% of investors tend to be the same way due to the same due diligence and this in turn creates these wide swings from overvalued to undervalued. So potentially based on your and other Global Investors due dilgence your timing will be incorrect.
Not sure that due diligence is much help when SP at 12 month low or 12 month high...
One example was the market after due diligence decided that UK Smaller Cos had not got much future and the Global market was the only way to go.
UK Smaller equities started to fall and then the Trusts moved to 25% discounts at which level I was a large buyer with disclosable stakes. In the November I was buying HSI at 27% discount but they had costly debt.
Say 6 months later we had the dot.com/tech boom and the sector boomed, As discounts narrowed I sold which was towards the top of the market as those doing due diligence were getting in. All Wealth Managers had to have an interest in Vodaphone at top of the market.... With cash I had 20% in ZDPs with assured growth.which lead to considerable outperformance....this has happened a number of time and it was an excellent lesson on how to manage money.
It was also fun being one of the top performing Managers in the bull market and the bear market...
I hope this helps....one thing that KL got right was you need to be "different"...