Afternoon all,
"The Board continues to believe that a facility to reduce discount volatility is important to have in place, and is therefore seeking approval from shareholders to renew the authority at the forthcoming Annual General Meeting."
Last year, they bought back 80 000 shares at a discount of 11.6%. The trust is currently at a discount of 6.3%. The authority they want would allow them to buy at market price, as long as that was less than the NAV.
I think i get the idea: by buying up shares, they reduce the supply, and so increase the price, so bringing it closer to the NAV, and reducing the discount.
What i don't get is why they'd want to do this. Well, maybe i do. The practical value of the trust is the amount you could get if you sold it, which is to do with the share price, not the NAV. So, boosting the share price boosts the value. Except this only helps me personally if i'm planning to sell my shares soon, which i'm not. I'm holding them until i need to sell them to buy a house, pay for my children to go to university, bribe a judge, etc. When i want to sell them, i'll want the highest possible price. But in the meantime, i think i want a *low* price, since it means i can buy into the fund more cheaply (if i want to, which to be honest i probably don't). Plus, if they're going to spend money, i'd rather it was on buying more capital, and so building me more value, rather than propping up their share price. Although by buying back shares, are they effectively redistributing the assets of those shares to shares i hold?
Anyway, if anyone has any thoughts on what all of this means, do share.
tom