UK government capitalise on NatWest share price gain by selling down stake

UK Investor Magazine
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UK government capitalise on NatWest share price gain by selling down stake

The UK government has shown a rare sign of financial deftness by selling a £1 billion stake in NatWest following a rally in the bank’s shares appreciated in recent months.

UK Government Investments Limited sold £1 billion of NatWest shares at 380.6p, bringing its stake down to 11.4%.

The new Labour government unleashed a tax raid on businesses and investors to fund spending increases, and although the £1 billion will hardly touch the side of the ‘black hole’ supposedly left by the conservatives, it does demonstrate a semble of financial markets nous.

“The government has taken advantage of NatWest’s share price having just traded at its highest level in nine years to offload a £1 billion stake in the bank,” said AJ Bell investment director Russ Mould.

“Rachel Reeves is vindicated in her decision in July to scrap a ‘Tell Sid’ public offer of the government’s remaining stake in NatWest. Ditching the share sale was one of the first things she did after Labour won the general election, saying it was ‘a bad use of taxpayers’ money’ as the initiative – created by the previous government – was expected to offer the shares at a potentially large discount to the market price to incentivise take-up by the public.

“By sitting tight and waiting for the market to strengthen, and restricting the sale to institutional investors, Reeves has so far managed to get a better price for the shares. Whether that trend continues remains to be seen.”

CyanConnode – Breaking into current year profitability on the back of a record order book, shares 10.5p brokers TP 26p 

Mark Watson-Mitchell
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CyanConnode – Breaking into current year profitability on the back of a record order book, shares 10.5p brokers TP 26p 

Last Friday morning, 8th November, saw CyanConnode Holdings (LON:CYAN) announcing its Interim Results- they were very positive and clearly point the way for the technology group to break into profits in the current year. 
In early September, the £40m capitalised group’s shares were trading at just 7.50p. 
That was very different from the 29.85p level at which they peaked in November 2021. 
Since the low point two months ago, they subsequently recovered to hit 12.85p by the end of last month. 
That share price advance was reflecting investor hopes in the run-up towards last ...

Investment trusts: a versatile choice for long-term investors 

Aberdeen Investment Trusts
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Investment trusts: a versatile choice for long-term investors 

Investment trusts: a versatile choice for long-term investors 

  • Investment trusts are a flexible, liquid option for investing in a range of asset classes, including shares, bonds and property 
  • Trusts also have advantages for investors who need an income from their investments 
  • After a period of volatile markets, investment trust discounts are higher than normal 

Investment trusts have stood the test of time. The first investment trust was launched in the 1860s, “to give the investor of moderate means the same advantages as the large capitalists”. They have been fulfilling this role ever since, democratising access to investment markets and bringing choice and diversification to investor portfolios.  

The premise of an investment trust (or investment company) is straightforward. They are listed companies that invests in shares, bonds and other assets, such as property. In their simplest form they will invest in a portfolio of shares, but there are also investment trusts that invest in areas as diverse as wind farms, commercial property or student accommodation. The choice is vast, and there is something to suit every investor.  

The benefits of the company structure 

The company structure brings a number of advantages compared to an open-ended fund such as an OEIC. First, it brings pricing transparency, investors can buy or sell on the stock exchange as they would a normal share. This means it is easy to get access through an investment platform or trading account.  

It also means there is a board of directors, who look after the interests of shareholders. This board of directors appoints the investment manager, monitors them to ensure that they are doing their job properly, and can replace them if they’re not. The board will also ensure that the manager is communicating effectively with shareholders, and that the investment goals of the trust are upheld.  

Investment advantages 

The company structure also allows for more investment flexibility. With an open-ended fund, the investment manager has to buy and sell when capital flows in and out of the fund. If lots of investors want to sell the fund, the fund manager may find that they have to liquidate assets very quickly. This can be difficult, particularly in areas that have lower trading volumes, such as smaller companies, or very illiquid assets such as commercial property. The manager might have to accept a lower price as a result. 

Investment trusts are closed-ended, which means managers don’t have to trade the underlying holdings when investors buy in to or sell out of the fund. Fund managers are not as constrained by liquidity considerations when they invest. This makes investment trusts a compelling option for areas such as smaller companies, emerging markets, or property and infrastructure assets.  

Investment trusts can be a good option for investors who need an income. Some trusts have a long and illustrious track record of paying high and increasing dividends. It may be written into the investment aims of the trust. The Association of Investment Companies (AIC) compiles an annual list of ‘dividend heroes’ – these are trusts that have raised their dividends every year for 20 consecutive years or more. You should of course always remember that dividends are not guaranteed and past performance does not predict future returns. 

The other advantage is that investment trusts can reserve income, saving it up during buoyant years and using that money to support the dividends they pay out out during lean years. This can help ensure a smoother income stream to investors. It was particularly noticeable during the pandemic, when many open-ended funds needed to cut their dividends as their underlying investments cut payouts, while some investment trusts could call on their reserves to keep paying dividends to their shareholders.  

Investment trusts can also borrow to invest, known as gearing. This can magnify the returns to shareholders but will also magnify losses on the downside if markets go down. Most conventional trusts run with 5-20% gearing.  

Discounts and premiums 

Investment trusts are traded on a stock exchange, which means the price is determined by the balance of buyers and sellers. The price may not match the value of the underlying holdings in the trust (the ‘net asset value’ – NAV). This leads to discounts – where the shares trade below NAV – and premiums – when the shares trade above NAV. If a trust’s share price is £80 and its NAV per share is £100, it’s trading at a discount of 20%. Investors are effectively getting £100-worth of assets for £80, which has some appeal for investors that like a bargain. 

Selecting investment trusts 

There are currently 365 investment trusts including Venture Capital Trusts (or VCTs, which invest in small companies). There is huge choice, split between equities (54%) and alternatives (46%), including significant allocations to private equity, infrastructure and property. There is something to suit every taste.  

The right option will depend on whether you are looking for long-term capital growth, income, or for exposure to a specific region or sector. For example, there are Asian, European and North American trusts, others that invest in smaller companies or technology, not to mention those that invest in renewable energy or student accommodation. Each trust has its own specific investment flavour. The AIC has a screening tool that allows investors to find trusts by characteristics such as yield, performance, charges or size.  

Why now for investment trusts? 

Investment trusts can play a role in portfolios whatever the economic weather. However, there are a number of reasons to look more closely at investment trusts today. The first is income. As interest rates fall, dividend income may become more valuable to investors. Data from the AIC shows that there are 26 investment trusts currently offering a yield of at least 4.5% a year. Many trusts yield more than 5% – and some offer significantly more. However, it is worth noting that the yields from investment trusts are not guaranteed and may vary over time. 

After a period of volatile markets, investment trust discounts are higher than normal, particularly in some areas, such as infrastructure and private equity. Currently, more than 90% of investment trusts are trading at a discount, with a fifth trading on a discount of more than 30%. If sentiment improves, discounts could narrow, boosting returns for investors.  

Charges may be lower than for their open-ended equivalents. Boards will often exert pressure on the investment adviser to keep costs low. In the first half of 2024 alone, a total of 18 trusts made fee changes to benefit shareholders. 

Investment trusts remain a compelling choice for a range of investors, with options for income, growth, or a blend of both. They may have been around for 150 years but remain as relevant as ever for the modern investor. 

Important information 

Risk factors you should consider prior to investing: 

  • The value of investments and the income from them can fall and investors may get back less than the amount invested. 
  • Past performance is not a guide to future results. 

Other important information: 

Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG, authorised and regulated by the Financial Conduct Authority in the UK. 

Find out more at www.abrdn.com/Trusts or by registering for updates. You can also follow us on X and LinkedIn.

Aquis shares soar as takeover announced

UK Investor Magazine
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Aquis shares soar as takeover announced

Aquis shares soared on Monday after the trading venue and stock exchange announced a takeover by a Swiss counterpart.

Swiss exchange operator SIX Exchange Group AG has announced a recommended cash offer to acquire Aquis Exchange PLC in a deal valuing the London-based exchange at approximately £207 million, or £225 million on a fully diluted basis.

Under the terms of the agreement, Aquis shareholders will receive 727p in cash for each share, representing a substantial premium of 120 percent over the closing price of 330 pence on November 8, 2024.

Aquis shares were 114% higher at 707p at the time of writing.

The acquisition represents a strategic move by SIX to strengthen its pan-European presence and address market fragmentation.

SIX, which operates a fully integrated exchange value chain, views the acquisition as an opportunity to enhance its service offerings across Switzerland, Spain, and international markets.

The Swiss exchange operator particularly values Aquis’ next-generation proprietary exchange technology and sees potential in combining it with SIX’s existing financial market infrastructure and industry experience.

Aquis revenue has grown by 495% since its IPO and achieved a profit of £5.2 million in 2023. However, the Aquis board recognises that the European exchange market remains highly competitive, requiring substantial ongoing investment in technology and distribution to compete with well-resourced peers.

The merger is expected to create a more competitive pan-European listing venue, particularly benefiting small and medium-sized enterprises seeking access to capital markets.

The deal is also expected to enhance execution quality for retail liquidity across Europe and create a more attractive offering for retail brokers by expanding SIX’s universe of tradable securities.

Smith News cash generation enables special dividend

Andrew Hore
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Smith News cash generation enables special dividend

A better than expected full year outcome and a special dividend have boosted the share price of Swindon-based newspaper and magazines distributor Smiths News (LON: SNWS). The updated bank facilities no longer cap the dividend payment at £10m. The share price rose 8% to 61.06p last week. Management will be making a presentation on MelloMonday on 11 November at 5pm (MelloMonday 11th November 2024 – Mello Events).
In the year to August 2024, there were annual operational savings of £5.6m and £2m of additional profitability from organic growth. That helped to offset declines elsewhere and underlyi...

Director deals: Mears buying

Andrew Hore
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Director deals: Mears buying

A positive trading statement by Mears (LON:MER) sparked director buying. The share price has risen nearly 10% to 374p since the report that trading was better than expected.
Chief executive Lucas Critchley bought 9,986 shares at 362.7p/share and finance director Andrew Smith bought 25,000 shares at 363.67p/share.  
Business
The social housing building maintenance services provider has a good long-term record of winning contracts with local authorities and social housing organisations. Mears maintains, upgrades and repairs homes for local authorities and social housing owners across the UK...

Aquis weekly movers: Chairman buys shares after Hybridan research published

Andrew Hore
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Aquis weekly movers: Chairman buys shares after Hybridan research published

DXS International (LON: DXSP) chairman Bob Sutcliffe bought 35,000 shares at 1.3p each and he owns 1.8% of the healthcare IT developer. Earlier in the week, Hybridan published updated research and said that “management is focused on cashflow control until new NHS sales resume, when there could be significant revenue growth”. It argues that this is not reflected in the current share price. The share price increased 55% to 1.55p.

Substrate Artificial Intelligence (LON: SAI) says the general meeting agreed the distribution of the reserve for share premium and 93.9% of A shareholders have opted to take Subgen AI shares rather than cash. The B shareholders are all taking Subgen AI shares. The A share price rose 31% to 27.5p.

Mendell Helium (LON: MDH) has an option to acquire M3 Helium, which has acquired 85% interests in three further wells on the western side of the Hugoton gas field in Kansas. Two of the wells are in production and the third could be used as a water disposal well, which will reduce costs. No consideration is payable. The wells are breaking even. The share price improved 23.1% to 4p.

Supernova Digital Assets (LON: SOL) says the share capital reduction is effective. A share buyback is planned. The share price is 12.8% higher at 0.265p.

Fuel additives supplier SulNOx (LON: SNOX) has generated revenues of £440,000 in the first half, up from £136,000 last time. There were record volumes sold. Cash was £804,000 at the end of September. The share price rose 7.69% to 49p.

FALLERS

Jack Keyes has decided not to join the board of Oscillate (LON: MUSH) as technical director. He is still undertaking hydrogen exploration work for the company. The share price slumped 22.7% to 0.85p. The recent fundraising was at 1p.

Ormonde Mining (LON: ORM) investee company TRU Precious Metals, where it owns 36.3%, has announced results of copper exploration at the Golden Rose project in Newfoundland. Copper grades were up to 3.7% and some samples included zinc. The Ormonde Mining share price dived 20.8% to 0.19p.

In the year to February 2024, Asia Wealth Group (LON: AWLP) reduced its loss from $188,000 to $108,000. The board is seeking acquisitions in wealth management and clean energy sectors. The share price fell 12.5p to 17.5p.  

Wind-based hydrogen production technology developer Hydrogen Future Industries (LON: HFI) says turbine testing has been delayed because of a fault in the control unit. Replacement parts should arrive by the end of the month. Schneider Electric is providing software to help analyse data for the feasibility study at Whitehall in Montana. Concept testing of the electrolyser continues, and efficiency is more than 97%. Neil Ritson has become executive chairman. The share price declined 7.69% to 1.5p.

ProBiotix Health (LON: PBX) company secretary Mark Collingbourne has acquired 80,000 shares at 5.5p each. The share price dipped 6.9% to 6.75p.

AIM weekly movers: Offer for Bigblu Broadband subsidiary

Andrew Hore
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AIM weekly movers: Offer for Bigblu Broadband subsidiary

Broadband services provider Bigblu Broadband (LON: BBB) admits that it is in discussions with alternative investment manager Salter Brothers on a possible sale of the SkyMesh subsidiary. The transaction is subject to final terms and financing. This would be the latest asset disposal for Bigblu Broadband. The share price jumped 67.8% to 42.8p.

Video streaming technology supplier Aferian (LON: AFRN) says second half revenues should be one-fifth higher than those of the first half. Combined with cost reductions, this should mean that second half adjusted EBITDA of $2m. Net debt is reducing. The share price recovered 58.3% to 4.75p.

This week there was good news from professional services firm DSW Capital (LON: DSW) with its trading statement following the acquisition earlier this week of DR Solicitors for £6.1m in cash and shares, which will reduce dependence on M&A. DR Solicitors has a client base of doctors, consultants and primary care providers. The latest annual pre-tax profit was £1.2m. The deal should be hugely earnings enhancing. Trading has been gradually improving in the first half. First half profit will be slightly lower at £100,000, but the full year pre-tax profit is expected to recover from £500,000 to £1.4m. A further jump to £2.5m is forecast for 2025-26. The interims will be published on 27 November. The share price rose 33.6% to 73.5p.

Corcel (LON: CRCL) non-exec Antoine Karam has resigned from the board of the Brazil-focused energy company. Extraction SRL, where Antoine Karam has a 45% shareholding, cut its stake from 18.9% to 4%. The share price improved 23.9% to 0.22p.

FALLERS

Hummingbird Resources (LON: HUM) has announced a debt restructuring and possible bid. Delays in ramping up production at Kouroussa have strained the balance sheet and $30m of debt repayments have been deferred. Net debt was $155m at the end of September 2024, while trade and other payables were $152m. Nioko Resources, which owns 41% of the gold miner, is proposing a partial debt-to-equity conversion at 2.6777p/share, which would take its stake to 71.8%, and potential bid and cancelation of the AIM quotation. Geoff Eyre has been appointed interim chief executive. The share price slumped 65.6% to 2.2p.

Feedback (LON: FDBK) raised £6.1m at 20p/share, which was a massive discount to the previous market price, and it slid 56.2% to 19.5p. This includes £530,000 raised via a WRAP retail offer of up to £1m. The cash will finance the rolling out of the Bleepa medical imaging communications product and take advantage of a collaboration with a provider of primary care IT services that will use Bleepa to streamline referrals between primary care, Community Diagnostic Centres and community care. The nominal value of shares will be reduced to 1p.

Content management technology provider Fadel Partners (LON: FADL) is not going to sign up a large potential client before the end of the year and there are other delays to projects. This means that the 2024 pre-tax loss will be more than $4m. Costs ar4e being reduced. Net cash should be $1.3m and management believes it has enough cash for its current requirements. New business likely in 2025 should help to reduce the loss. The share price dived 44.2% to 60p.

Empyrean Energy (LON: EME) has raised £1.12m at 0.1p/share and a retail offer could raise £250,000 more. Empyrean Energy is in discussions with Apnea to participate in the Wilson conventional oil project in Queensland. The company will have the right to earn a 40% working interest by paying $2.8m to cover two-thirds of the drilling costs of an exploration well. As part of the deal Apnea would receive 5% of the enlarged share capital of Empyrean Energy. The share price fell 42.9% to 0.12p.

FTSE 100 falls as miners sink and Vistry tumbles

UK Investor Magazine
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FTSE 100 falls as miners sink and Vistry tumbles

The FTSE 100 was on the back foot again on Friday as the pressures of a revised interest rate outlook, Donald Trump’s second term as president and disappointment at measures to stimulate China weighed on the index.

Miners were among the top losers and accounted for a large proportion of the points wiped off the FTSE 100 on Friday as the latest news from China failed to inspire confidence in a recovery in economic growth.

“The FTSE 100 was dragged lower by resources stocks on Friday morning,” says AJ Bell investment director Russ Mould.

“After a hectic week investors had more to digest in the form of further Chinese stimulus but what has been announced so far doesn’t seem to be moving the needle and the risks to China from a second Trump presidency are now overshadowing efforts to get the economy moving. The question on investors’ lips will be whether this encourages Beijing to unveil a bolder package of measures.

“Asian stocks sputtered overnight and the UK-listed miners who are reliant on China for much of their demand were also on the back foot.”

The Bank of England’s inflation projections and the pace of interest rate cuts issued yesterday provided another reason for caution among equity bulls on Friday.

Although stocks were broadly negative on Friday, IAG investors had some reason to be optimistic after the airliner smashed estimates, sending the stock 6% higher.

“British Airways owner IAG soared past estimates in this morning’s third-quarter results, with a revenue line beat and an even bigger one on operating profit,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“In what’s been a miraculous turnaround from the troubles during the pandemic, IAG’s got its balance sheet into a strong enough position to start a €350mn buyback. There was a slight trim to capacity growth expectations for the year suggesting an easing into the fourth quarter, but broadly speaking this was a great set of results and analysts will likely be revising profit projections higher as a result.”

Vistry was the FTSE 100’s biggest casualty after further slashing costs due to cost miscalculations at its South Division. The housebuilder was rocked in early October by initial reports of cost projection musculations, and today’s drop means the housebuilder, which was doing so well after the merger of Bovis Homes, Linden Homes, and Countryside, is now down 18% year to date.

Persimmon is down only 3% YTD, while Taylor Wimpey is almost flat.

“Vistry delivered some more bad news for investors to build into their expectations. To set the scene, back in October, news broke that total build costs at nine of its housebuilding projects in the South had been underestimated. Revised estimates at the time caused a big £115mn hit to profit expectations, spread over a three-year period,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Vistry’s since carried out a deeper dive into the issues, and it’s come to light that things were worse than realised at the time. As a result of this and other challenges, this year’s profit expectations have been lowered again by £50mn to £300mn.”

AIM movers: Bushveld Minerals production decline and CyanConnode needs strong second half to achieve forecasts

Andrew Hore
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AIM movers: Bushveld Minerals production decline and CyanConnode needs strong second half to achieve forecasts

Digital marketing company Electric Guitar (LON: ELEG) has been winning business since moving to AIM, but the share price has fallen back. It has recovered 17.7% to 0.5p but is still 25.9% lower over the past week.

Synergia Energy (LON: SYN) has completed the farm out of a 50% interest in the Cambay PSC to Selan Exploration. The $20m work programme has commenced. A suitable workover rig has been contracted along with other equipment for the first two well workovers. The share price rose 8.42% to 0.0515p.

The Calnex Solutions (LON: CLX) share price rebounded 7.27% to 59p ahead of the telecoms testing equipment’s interims on 19 November. The share price has fallen by nearly two-thirds since the end of 2022, although it is only slightly down this year. Trading has been in line with expectations, but profit could remain modest this year.

Black Rock’s stake in gold miner Caledonia Mining Corporation (LON: CMCL) has reached 5%. The share price improved 4.46% to 1170p.

ITM Power (LON: ITM) has won its first contract for a NEPTUNE V unit to Guttroff Gmbh, which provides services for medical gases, welding supplies and engineering companies. NEPTUNE V is a 5MW containerised electrolyser plant. The share price increased 3.39% to 40.84p.

FALLERS

Bushveld Minerals (LON: BMN) has withdrawn its production guidance following a decline in third quarter vanadium production from 1,000mt in the same quarter last year to 855mt. Weighted average production cost is $27.5/kg. A lack of cash has forced the company to slow production until additional cash is received. The sale of the Vanchem vanadium processing plant was completed on 7 November. The share price dived 21.1% to 0.375p.

Westmount Energy (LON: WTE) is withdrawing from the US OTCQB market on 2 December. The oil and gas investment company will remain on AIM. The share price fell 8% to 1.15p.

Smart meter communications technology developer CyanConnode (LON: CYAN) interims were held back by a slowdown in installations during the Indian elections. First half revenues dipped from £5.8m to £5.6m. Increasing software sales are boosting gross margins. The second half will have to be much better to achieve full year revenues of £34.5m, which will move the company into profit. There is a strong order book, so it is possible. The final quarter will be important to the outcome. The share price slipped 7.53% to 10.75p.

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