Dunedin Enterprise and High Discounts

If Alliance Trust shareholders might be concerned about the high discount to NAV their shares trade at, then that’s nothing in comparison with the position of investors in Dunedin Enterprise Trust. At the time of writing it is trading on a discount of 38%!

On Friday (28/8/2015), they reported results for the half year ending June – and it was another very disappointing set of figures. Net asset value total return was -0.1% for the half year and over three years they are down 5.9%.

When most private equity investment trusts fell to deep discounts during 2008/9, ShareSoc made representations about what might be done. Subsequently the company undertook an aggressive programme of tender offers financed by disposing of some of their portfolio assets. This enabled investors to exit at a good price to some degree. However, as with any investment trust, if the fund performance does not improve then any discount control mechanism will only work to a limited extent. They are now back in the same difficult situation.

The new Chairman, Duncan Budge, says that there are prospects of good realisations, but the previous Chairman said much the same thing before departing. It’s unclear when or if matters will improve.

ShareSoc has made representations to investors and the directors on this company in the past (search our blogs for previous comments), and I have again written to the Chairman making some suggestions and requesting a conversation. Anyone reading this who is a shareholder in this company may care to contact me.

Roger Lawson

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2 thoughts on “Dunedin Enterprise and High Discounts

  1. Dunedin RNS today- mostly about realising their investment in CitySprint, but then
    “…the Board reviewed Dunedin Enterprise’s investment strategy and has concluded, following consultation with major shareholders, that it would be in the interests of shareholders as a whole to conduct a managed wind down of the Company. Accordingly, the Board intends to seek shareholder approval for the new strategy at the Annual General Meeting, which will be held in May 2016. “.

    Shareprice up 42p to 335p, discount down to a mere 35%.

    • Thanks for pointing that out which I had not noticed. The discount is still 35% though even after this good news (at the time of writing) but that’s probably because any wind-up is likely to take a long time and the value of some of their investments might be uncertain.
      Roger Lawson

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