How to find the correct Discount/Premium on IT's

Sue58

I am trying to find the correct premium or discount on individual IT's - how do I do this? All platforms seem to differ as an example Bankers is at a discount of -2.65% on Interactive Investor and on HL it is at a 1.65% premium. Looked at a few other platforms and they all seem to differ? 

masonic

The best way is to locate the most recent RNS announcement of NAV and corresponding share price, then calculate it yourself.

bowlhead99

Most recent RNS release: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BNKR/14442214.html

As at close of business on 27 February 2020, the unaudited net asset value per share calculated in accordance with the AIC formula (including current financial year revenue items) was 943.2p and the net asset value per share with debt marked at fair value was 940.5p

Close price 27 February  was 939p

You can compare the 939 to the 940.5 and see that there was no significant premium or discount (ok it's a 0.16% discount, but basically nothing).   

If you looked at the data to do the same exercise for a day earlier, at the closing share price 26 February 978p vs the NAV reported for c.o.b. 26 February 962.8p, you'd see people were paying a 1.58% premium.

Close price Friday 28th was 903p.  If you did what some sites do, which is to compare the latest available price against latest available NAV (i.e. the Thursday close of business 940.5p NAV which was reported Friday at noon) you would think you were getting almost a 4% discount, and that can be seen for example on HL's discount/premium charting tool, though there is a caveat on one of the charts that 'The chart is based on estimated NAV but will be updated with actual NAV when available'.

Of course nobody believes that during Friday afternoon UK time you were really getting  a 4% discount by obtaining assets with a fair value of 940p for only (say) 905p, because they know that the 940p will have fallen, because that 940p was simply the sum of the values of all the financial instruments held by Bankers on Thursday night, whereas we know all the global markets were down substantially between that point and mid afternoon Friday, so the 940p of NAV would not really be 940p any more (though the administrator will not be able to do their accounting and publish the c.o.b. Friday NAV until Monday).

On HL's banner for the stock they show estimated NAV: 961.98p' (tooltip: the estimated NAV from the previous trading day) and 'estimated premium/discount 1.67p' (tooltip: the percentage difference between the price per share and the most recently estimated NAV per share). These headline figures are sometimes out of sync with their price/discount chart.

They are right that Wednesday's share price of 978 was a 1.67% premium to that internal estimate they had made of 961.98p, but we know that their estimate was a little off (actual Wedesday NAV was reported by BNKR on Thursday as 962.8p as mentioned above, so the premium was really only 1.58% not 1.67%), and we also know that Thursday actual NAV and actual price have both been made available since then, and we have been through a whole extra day's trading by now since the 'close of business 27 February' which is the last NAV we know...

 So in choppy markets you can take the headline discount/premium numbers on the major platforms with a pinch of salt.

Thrugelmir

As referenced by @bowlhead99.  You can open an account on the London Stock Exchange site. Then set filters to receive news on a whole variety of topics and events that relate to any companies that you wish to follow. Very usefull facility.