Discounts, Directors, and NAVs: Dr. John's PE Portfolio Update
Turning the Corner ...
Dominic here - it’s Dr John for you today with an update on the private equity (PE) rollercoaster. Private Equity makes up quite a decent chunk of the Dolce Far Niente portfolio. Dr John thinks, with discounts to NAV of 30-40%, it is offering a great deal of value at present.
A few things to quickly catch up on:
Thanks for all the lovely feedback on The Return of Medieval Madness. Lots of you really seemed to liked that one.
Precious metals have taken a thumping the last few days. But I think I might have unearthed a hidden gem in the silver markets. Video with the CEO dropping soon.
And, if you’re in London on October 19, make sure you come to my “lecture with funny bits” about gold. Super interesting, occasionally amusing …
Right, over to you, Dr John.
We first covered private equity (PE) in November 2022 and it’s been quite a wild ride.
It very much feels as believers in PE are on a lonely journey, with repeated calls from the press and non PE managers that fees are too high and that funds perennially overvalue the underlying assets, selling them on to each other at higher and higher prices.
There was much scepticism last year as tech valuations plummeted and PE managers refused to mark down to “realistic” values, and indeed in some cases claimed that net assets were growing.
I was at the annual Ruffer shareholder meeting and was told they were “marking to myth” not market, that valuations would have to come down.
So, what’s happenened?
Remember, there are five trusts I like. Would I still buy all five? Yes. The NAV’s are flat or rising, sterling is weakening, directors are buying and the companies are buying back shares, which increases the NAV. These are long term investments and the discounts to NAV are 30%-40%. Those kinds of discounts do not come along very often.
The five trusts are:
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