Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Aberdeen Asian Smaller Companies
Frank Wright
Posted: 10 May 2018 07:47:24(UTC)
#1

Joined: 04/03/2013(UTC)
Posts: 14

Thanks: 6 times
Was thanked: 6 time(s) in 4 post(s)
I have a small holding in Aberdeen Asian Smaller Companies (AAS), around 1% of my portfolio. I have been given the opportunity to apply for new 2025 CULS at the rate of 0.29 for each ordinary share of AAS that I hold.

Can anyone shed on whether it's worth purchasing?

Looking at the limited information I can find, it looks like I'd be lending the company some money and receiving back 2.5% per year until 2025. Is this right?

Given my small holding, it looks like more trouble than its worth.

CULS = Convertible Unsecured Loan Stock




David 111
Posted: 10 May 2018 11:16:29(UTC)
#2

Joined: 09/07/2010(UTC)
Posts: 138

Thanks: 112 times
Was thanked: 77 time(s) in 51 post(s)
I am in a similar position. Unless someone can provide a good argument for investing, I agree it looks more trouble than it is worth given the small sums involved (£366 in my case).
1 user thanked David 111 for this post.
slow typist on 10/05/2018(UTC)
Bucky Lasted
Posted: 10 May 2018 11:52:48(UTC)
#3

Joined: 29/03/2018(UTC)
Posts: 2

Can't get excited about a reduction in the yield and a lower conversion price under the new deal for my existing 3.5% Culs.
Law Man
Posted: 10 May 2018 12:35:13(UTC)
#4

Joined: 29/04/2014(UTC)
Posts: 249

Thanks: 100 times
Was thanked: 449 time(s) in 178 post(s)
I looked briefly at the prospectus. I think the holder has the right to buy AAS ordinary shares in the future at a fixed price: something like 125% of the NAV in May 2018; that may be wrong.

I did not look further because the number of AAS ordinary shares that I could buy is low; so it seems little upside (if any) for complication e.g. How do I exercise the option when a nominee is the legal holder.

Standing back: I have held AAS shares for some 5 years, and performance has been mediocre. I am thinking of selling and buying Fidelity Asia Values IT - given that my holdings are light on 'value'.
Antony A
Posted: 10 May 2018 15:23:56(UTC)
#5

Joined: 02/09/2013(UTC)
Posts: 25

Thanks: 2 times
Was thanked: 68 time(s) in 19 post(s)
Law Man;62020 wrote:
I looked briefly at the prospectus. I think the holder has the right to buy AAS ordinary shares in the future at a fixed price: something like 125% of the NAV in May 2018; that may be wrong.

I did not look further because the number of AAS ordinary shares that I could buy is low; so it seems little upside (if any) for complication e.g. How do I exercise the option when a nominee is the legal holder.

Standing back: I have held AAS shares for some 5 years, and performance has been mediocre. I am thinking of selling and buying Fidelity Asia Values IT - given that my holdings are light on 'value'.



I've been invested in FAS but though I rate the manager, its performance has really fallen away over the last two years compared with trusts like Schroder Asia Total Return or Pacific Horizon. Nitin Bajaj freely confesses he made some excessively cautious calls in 2017, and he's been low on China and still holds a lot of cash (14%), but this may not be a bad thing if your other holdings are heavy on China and you're anticipating a correction, when presumably that cash will find a home.

So I sold up earlier this year, but ironically given the comments here, I simultaneously beefed up my small holding of the CULS options (ticker FASS), despite the fact it has a horrendous spread. I'm taking a chance that FAS will improve over the next 18 months, in time to make the FASS shares worth exercising in Nov 2018 or Nov 2019. FAS is currently at 398 to buy, and FASS shares can be converted 1:1 into FAS shares in Nov 2018 at 381.75, or in Nov 2019 at 392.75.

FASS is currently on 23p to buy (16p to sell, so market makers are making a killing), so FAS only has to grow to 404.75 by this November to break even, or 415.75 by Nov 2019. If FAS rises above 404.75, then FASS shares should really motor.
1 user thanked Antony A for this post.
Pip Giddins on 12/05/2018(UTC)
Split Cap Jim
Posted: 10 May 2018 17:29:54(UTC)
#6

Joined: 30/04/2016(UTC)
Posts: 15

Was thanked: 20 time(s) in 9 post(s)
Worth pointing out that FASS are subscription shares rather than CULS - so no annual interest, and purely a gamble on the growth in the share price of Fidelity Asian Values. If the share price is lower than the exercise price then they will be worthless. Whilst CULS will retain some value regardless of the underlying share price.

Worth checking the details of what you are buying.

I bought some of the Original AAS CULS, and exercised them last year - but looking to sell the acquired shares as performance has been very poor (holding is insignificant), and doesn't seem to be improving.

Your nominee will remind you when the exercise date(s) are close, giving you the option to convert (generally they will also provide the value of the CULS vs the value of the underlying shares - so you can assess the best option). More strangely, I own some City Natural Resources CULS (CYNC) and every exercise date, some holders convert even when they lose money doing it - so clearly some holders misunderstand the concept.

Probably better options elsewhere in Asia Pac - if you want the income, worth considering JAI or SOI.

The absolute performance of FAS is OK, just not as good as PHI, so I'm keeping mine, and also own some FASS (though fully prepared to lose the small overall investment in them).
Antony A
Posted: 11 May 2018 13:26:48(UTC)
#7

Joined: 02/09/2013(UTC)
Posts: 25

Thanks: 2 times
Was thanked: 68 time(s) in 19 post(s)
Split Cap Jim;62050 wrote:
Worth pointing out that FASS are subscription shares rather than CULS - so no annual interest, and purely a gamble on the growth in the share price of Fidelity Asian Values. If the share price is lower than the exercise price then they will be worthless. Whilst CULS will retain some value regardless of the underlying share price.


Sorry, my mistake. My main point re FASS as a play on FAS still stands though. I'm a holder of PHI as well.
+ Reply to discussion

Markets

Other markets