Blue Planet Investment Trusts

[tuckswood8]

Blue Planet Growth & Income is currently at a discount of 26.8%
Blue Planet Worldwide Financials is currently at a discount of 8.6%
The largest holdings of both trusts are almost identical so why the huge disparity in the discount?
It seems to me that BPFU and the warrants BPFV have to be the bargain of the year.

 

[Splitlink]

Blue Planet Growth & Income is currently at a discount of 26.8%
Blue Planet Worldwide Financials is currently at a discount of 8.6%
The largest holdings of both trusts are almost identical so why the huge disparity in the discount?
It seems to me that BPFU and the warrants BPFV have to be the bargain of the year.

Sorry, disagree. I don't know what TA and short term trading attractions there may be but the fundamentals speak for themselves, as far as I can see.

Growth & Income earnings have gone from 39p in 2001 to 0.01p in 2006.

Worldwide 4.1p in 2001 to 1.42p in 2006.

What reasons do you have for comparing the two trusts?

Split

 

[tuckswood8]

Neither trust paid a dividend this year. EPS is largely irrelevant for investment trusts of this nature. (Perhaps the name of G&I is a misnomer).

The current portfolio holdings of both trusts are very similar yet G&I currently trades at 26.8% discount to NAV whilst Worldwide is at 8.6% discount.

G & I has recently undergone a 10 for 1 split in order to increase market liquidity.

Suggested reading:

http://www.blueplanet.eu.com/download.php?id=AjQDOFRkAjw=&ext=pdf

http://www.blueplanet.eu.com/download.php?id=ATcGPQk4X2k=&ext=pdf

 

[Splitlink]

Hi tuckswood8,

I just had a look on The Motley Fool for these trusts and found a link that may help you. It has 18 posts starting in 2004 and going to 2005 but the last ones may be of use and you can always ask and get the thread going again. Good Luck.

http://boards.fool.co.uk/Message.asp?mid=8949698&sort=whole#9332723

Split

 

[tuckswood8]

Hi Split,

Thanks for the link but rather a confused thread. I stopped using Motley Fool last year when they abandoned Portfolio. I find trustnet most useful for ITs.

I am familiar with the structure of G&I and the history from Cairngorm BS days. One unit warrant (BPFV) now entitles the holder to purchase ten units (BPFU) at a price of 1000p.

I held both units and warrants from October 2005 until I was stopped out in March 2006 for a profit of around £1000 and £3600 respectively. I don't expect the same performance this year but I bought in again last month and am close to covering my spread and dealing costs. The 10% spread on warrants is a deterrent but some people will happily buy small caps at 20-22!

What I don't understand is the large disparity between the discounts of BPFU and BPW. I appreciate that there is no chance of BPFU being broken up to realise the assets because of the chairman's large holding, but I would expect the discount to be around 15% given the general narrowing of discounts over the last two years. Any thoughts on this?

What do you make of the holding in the BP hedge fund..... up to 4.6% of BPFU assets last week?

The 2-year chart of BPFV/BPFU/BPW/BLP is interesting.

 

[Splitlink]

Hi Tuckswood8,

I'd like to be able to give an intelligent answer but , honestly, don't know how to go about those types of calculations.

Perhaps, you'll find someone else, here, who will be able to help.

Good Luck

Split

 

[Jack o'Clubs]

A really interesting observation Tuckswood. I've owned various Blue Planet trusts at different times, but hadn't noticed this anomoly. I notice that the discounts were quite similar about a year ago, and that it was a year ago that BPFU stopped paying a dividend - I would assume that the difference has arisen as income focused investors dumped BPFU from their portfolios. Looking in the annual report for BPFU it seems clear that the management want to resume a dividend as soon as possible, which would suggest the discount would normalise. If you believe the Chairman's statement, then you're right - over the medium term these could be a bit of a bargain, and you could even try and arb the discount by going long BPFU and short BPW to get rid of the portfolio risk (emerging markets financials?? Hmmm...)

 

[tuckswood8]

BPFU are now up 11% and BPFV up 18% since I posted on 16th Sept. Discount is still above 20%.
I went back in to both in July and am now showing a true profit overall of 18% after spreads and dealing costs.
I would expect G&I to outperform any other trust over the next three years.

 

[Jack o'Clubs]

Tuckswood,

There's an interview with the guy who manages the Blue Planet funds in this week's Investment Week - here's a link to the online version:

http://www.investmentweek.co.uk/public/showPage.html?page=348649

It doesn't say a whole lot of interest, but always interesting to read the views of the guys managing funds you've got I think.