HICL INFRASTRUCTURE PLC (HICL)

MarcoM

Hello,

this has plunged to levels not seen since 2013.
I understand the issues with interest rate rises and cockups in the USA regarding infrastructure but is there something else at play here?
The drop looks very dramatic.

Regards

Johnjdc

As you imply pretty much every income-generating stock has fallen significantly recently. I'm not sure the drop is that dramatic in context - about 25% from the peak. Call it 7.5% because the market in general is down from the peak, 5% to reflect the rising value of the £ making the international assets less valuable, and 12.5% to reflect the rerating of income assets in the context of rising rates. If the share price was still at the peak then the dividend would be worth 4.5% - less than you can get in government bonds... I think valuable questions in whether that makes it a buying opportunity would be 1) how long are government rates staying high; 2) is any of their income stream at risk in a recession,, and 3) how much of their income stream gets increased by inflation vs how much by a fixed amount or not at all during the life of the contract.

Prism

Nothing that worries me. Its my biggest non equity holding. The share price is down as the trust has moved to nearly a 20% discount - it is out of favour right now. Most infrastructure and property trusts are the same. However if dig beneath the surface you will see that the income from their holdings is up 10% over the last year and the overall NAV is steadily rising.

The have not put up the dividend in several years and are choosing to reinvest their profits for the time being. Some people may be unhappy with that and have sold to look elsewhere.

JohnWinder

 Its my biggest non equity holding’

They issue shares, they pay dividends, they’re listed on the London STOCK Exchange. Your holding represents your holding in, or share of, the business. It’s the one hundreth largest component of the FTSE250 stock index. 

A business by any other name would smell as an equity.

Linton

JohnWinder said:

 Its my biggest non equity holding’

They issue shares, they pay dividends, they’re listed on the London STOCK Exchange. Your holding represents your holding in, or share of, the business. It’s the one hundreth largest component of the FTSE250 stock index. 

A business by any other name would smell as an equity.K

HICL is an investment trust which has a separate UK legal identity to a normal listed company, in the same sense as say a REIT. As far as I know there is not a US equivalent.

An IT has characteristics of both a fund and a straight equity but for UK investment purposes is normally regarded as a type of fund.  Like a fund it is judged on the basis of its choice and management of its underlying investments rather than profit/loss etc.

wmb194

Linton said:

JohnWinder said:

 Its my biggest non equity holding’

They issue shares, they pay dividends, they’re listed on the London STOCK Exchange. Your holding represents your holding in, or share of, the business. It’s the one hundreth largest component of the FTSE250 stock index. 

A business by any other name would smell as an equity.K

HICL is an investment trust which has a separate UK legal identity to a normal listed company, in the same sense as say a REIT. As far as I know there is not a US equivalent.

An IT has characteristics of both a fund and a straight equity but for UK investment purposes is normally regarded as a type of fund.  Like a fund it is judged on the basis of its choice and management of its underlying investments rather than profit/loss etc.

It's definitely a company but just a type of company. 

The US equivalent is a close-ended company and the idea of REITs in the tax advantaged form they now have in the UK came from the US where they have them as well. You don't hear much about them but a possible example of a US close-ended company is the FTSE100 listed Pershing Square*.

https://en.wikipedia.org/wiki/Closed-end_fund

Edit: *Yes, it is.

https://pershingsquareholdings.com/

JohnWinder

Perhaps ‘infrastructure’ or ‘property’ describes its asset class.

Prism

Just bought a bit more of this with some recent dividends after another 10% drop. Happy to pick up a lower price for those selling beacuse they want a better yield somewhere else. I am using this as a diversifier rather than yield.

Linton

JohnWinder said:

Perhaps ‘infrastructure’ or ‘property’ describes its asset class.

Yes, in this case infrastructure.