I own shares in a few companies that buy back their own shares, notably Personal Assets Trust, RIT and MP Evans. Personal Assets Trust, unusually for an investment trust, trades at close to its Net Asset Value, currently at a discount of less than half a percent. PAT buy in their shares when they go to a discount, hold them in treasury and re-issue them if the share price goes to a premium. This is beneficial for shareholders, generating small profits and keeping the share price and the NAV aligned. RIT is very different. There has been an aggressive programme of share buy backs without any narrowing of the discount to NAV, in fact the reverse. Having bought back 9.8 % of their shares the discount has widened to 29%. The main problem is that investors are disenchanted with RIT – once a favourite. Investors forget there is a new more competent manager who honed her skills at Ontario Teachers’ Pension Plan ($266 billion). She has reduced RIT’s exposure to private equity. But with PE it takes a while to crystallise gains. I am waiting. Manchester and London, another investment trust I hold, making modest buy backs, said earlier this year about the setback in AI caused by China playing catch up:
“Sadly, it has shaken out a lot of investors in the US Ai, names who, we guess, will repent at leisure on their decision to exit. We also saw a lot of our own shareholders throw in the towel which allowed us to buy back some shares into Treasury. We reiterate that we expect the costs of Ai to continue to fall materially which will allow better Returns on Investment and wider diffusion. If costs do not fall, then Ai will almost certainly fail. We continue to focus on the development of functional Ai agents which we see as the most important required development that the “show me the money” crowd needs.” (Manchester and London Fact Sheet, January 2025)
Often glib statements like this are whistling in the wind but I am comforted that the fund manager, Mark Sheppard, owns 58% of the shares. The Rothschilds too own a good chunk of RIT. I like it when my and the owners’ interests are aligned which brings me to MP Evans. They, now, have plenty of cash and they spend it on share buy backs, dividends and buying plantations near their existing holdings. I am, I suppose, pleased they buy back their shares because so many companies go bonkers and diversify. MPE sticks to its knitting.