Capital Gearing Trust - waiting for the starting gun?

aroominyork

Are many people - like me - waiting for the Discount Control Policy to restart before selling, and are you - like me - wishing you hadn't waited and had swallowed the increased discount a few months ago? I no longer find Peter Spiller convincing (see this link) in defending a fund that is 50% inflation-linked (which you can get cheaper in ETFs) and which is bigging up the weakness of Japan's and Sweden's currencies.

NoviceInvestor1

When I suggested the outlook for CGT may not be favourable a year ago, people wanted to get into semantics of how my post was worded rather than have any sensible discussion around the outlook for the fund. It's down 7% since then which isn't ideal. I suspect a large number of people will indeed be looking to sell once the discount goes (if it ever actually does).  

masonic

I sold the last of my holding just over a year ago. But there was another good opportunity to sell after the recent santa rally. You are probably right that there are those waiting for an opportunity to sell, in which case the price will remain depressed for some time to come and the -2% case seems the more likely one. The current discount is only 4% and the widening discount (from 1 -> 4%) accounts for less than half the share price loss over the past year, NAV is down 4.5%. Is it worth hanging on for a possible 2% "reward"?

If the market was convinced that the short term 7% gain promised in December would materialise, wouldn't it have been a self-fulfilling prophesy with speculators piling in? Perhaps that was the hope.

Hoenir

Been a steady stream of buybacks when the discount widens above 3%. Given the current heavy bond weighting  NAV fluctuates as investors continually attempt to second guess interest rate movements. Same as early 2023 when inflation was debated to death. With market commentators in the main proved hopelessly wrong. Worth remembering that the NAV is mark to market pricing not ultimate maturity value. When the discount hits the 4% level I've been a buyer. Adds some defensive ballast to the portfolio. 

aroominyork

masonic said:

I sold the last of my holding just over a year ago. But there was another good opportunity to sell after the recent santa rally. You are probably right that there are those waiting for an opportunity to sell, in which case the price will remain depressed for some time to come and the -2% case seems the more likely one. The current discount is only 4% and the widening discount (from 1 -> 4%) accounts for less than half the share price loss over the past year, NAV is down 4.5%. Is it worth hanging on for a possible 2% "reward"?

If the market was convinced that the short term 7% gain promised in December would materialise, wouldn't it have been a self-fulfilling prophesy with speculators piling in? Perhaps that was the hope.

Exactly. Hanging on for jam (or maybe slightly less bitter dripping) tomorrow. But with the N. Ireland court case concluded it shouldn't be too long until they can buy back more than 2000 shares a pop. I'll hang on, but it feels like any decision will be the wrong one. Luckily I am good at not checking fund prices 'to see what might have been' after I've sold.

Hoenir

The company brokers may well have been instructed to mop up shares once the discount reaches a preset threshold. Unless there's a major seller in the market imagine the policy will continue to quietly chug away in the background. In order that the share price isn't caused to gyrate widely.  2,000 shares is a £90k trade. Hardly insignificant. 

With the fire power now available. Other mechanisms are available to the board to shrink the issued share capital if they so wish.  

talexuser

I dumped it from the ISA last year because it didn't cost me any CGT. Have some left in the unwrapped and £132 of CGT allowance left this year, and am highly tempted to use next years £3000 to get rid of most of the rest. I don't have any losses to offset. It is the worst performing of all my stuff including Personal Assets and Caledonia which have been part of the preservation part for years.

talexuser

Price up 2.23% today.

Hoenir

talexuser said:

Price up 2.23% today.

Be interesting to see if the inhouse broker mopped up any quantity of shares today following the restriction being lifted. . 

talexuser

Do share buy backs ever work? For a company it seems wasted compared to investment for future growth and future  dividends, and if you narrow the discount with no fundamental improvement in performance or prospects it might just convince more people to sell? Maybe good for management and their bonuses but for anyone long term else?

MarcoM

this crap is at -6% on my portfolio