With the discount of 18% in recent weeks it has been a snail pace buyback of late, circa 50k shares a day.
After a flurry earlier in the year when the buyback seems to have pushed the discount to circa 14-15% there is now a lack of interest.
The exception was in mid-March when via the buyback one day they purchased a large block of shares. Even the motive here was questionable, as media reports have suggested certain brokers have been told by certain fund managers to make sure block trades like this do not go to Saba Capital. This buyback trade was at only a 13% discount to NTA.
With the discount pushing to recent wides, why the lack of buyback?
At this pace circa 50k shares a day, the program would finish in December with about 8% of the company bought back in the 12 months.
The company approved the capacity to buy back 25% of all shares.
In late March media reported VG1 were listening to suggestions and considering if the LIC should be “merged” into PGF.
If that was the case, it stands to reason Regal would not want to buy back as many units in VG1 now. Better off the AUMs do not shrink if later they can flow through to PM Capital and the Regal gravy train at a later stage. The exception to not wanting to buy back shares might arguably be there though if it happens to stop a buyer such as Saba Capital who might propose different solutions.
Since all this in March, the communications continue to point more towards VG1 liking to borrow Paul Moore’s ideas at certain times.
It is time for the board to be upfront with shareholders and come clean on what the strategy is:
- With the publicity of a tie up between VG1 and PGF gaining traction, they should admit if active talks are being pursued. This may offer explanation as to why VG1 has seemingly changed the strategy on the buyback.
- If not the above, what was the point of the 25% buyback limit in the first place if so few shares are being bought back in recent weeks?
- With the lack of buy back volumes at an 18% discount, why was the big line of stock bought back on the day of March 19thgiven the discount was a lot tighter than now? Regal after all has a “colorful” reputation with block trades in the past.
Not sure how HC deals with links but for some more background google - Trading frenzy in VGI Partners LIC
AFR article on the day of large trade there, so might be paywalled.
(20min delay)