Rothschild caution on Alliance Trust merger that could create the world’s largest investment trust


#1

Originally published at: http://whichinvestmenttrust.com/rothschild-caution-on-alliance-trust-merger-that-could-create-the-worlds-largest-investment-trust/
The move by the RIT Capital partners is the latest in a long line of tumultuous events to affect the Dundee based giant, in what might prove a timely move, but how do they stack up? We’ve been having a look. RIT Capital Partners (LON:RCP), an investment trust created by Lord Jacob Rothschild (the RIT…


#2

Concerning shares, the term par has a quite specific meaning, and one that is substantially different to NAV. Whilst holders of Alliance Trust might be happy to exit at a price that is close to NAV, they are unlikely to be impressed by an offer of 2.5p per share - being the par value of an ATST share. But if they would like to exit at a 20% premium to par then I’d be happy to pay 3p… :smiling_imp:

Something that is missing from the tables and which might be useful are the NAV returns for each time period. This being a record of how the respective managments have performed by eliminating changes to the discount/premium that are in the share prices


#3

You’re right about par there @arkwelder but I don’t disagree with them using it in this way because there are too many financial terms that confuse people and are an obstacle to them understanding how to manage their own money. As a teacher I see this a lot.

I think there is more of an appreciation that par is getting all of your money back, like getting back the issue price of a Bond upon maturity, among investors generally. I think this is in this context in which they use it here. I understand the difficulty in trying to explain complex terms to my pupils, and I think comparing it to par probably does help a little.

Comparing NAV is always of benefit for the reasons you state, I wonder if they left it out because it would make the table too large.

I am a shareholder in Alliance Trust and like the article states I do use the ATS platform. I am very unlikely to vote for a merger with RIT, even if it is at par or NAV. Also I would be dead against Alliance trust selling ATS because I am a customer and I wouldn’t welcome the disruption of moving to a new system.