Questor Column: Symphony International

Last week’s Questor Column outlined the investment case for Symphony International, a company we have previously covered on this website. Their thesis is supported by the work of Tom Treanor of Asset Value Investors. I don’t currently own any shares in Symphony, but it is a company I track from time to time – partly for their regional market commentary and partly because closed-end funds are an interesting part of the market to find investment ideas.

You can find the full write-up here, but I am including some highlights below (please note that I have not verified the analysis):

  • Symphony’s shares currently trade at a ~32% discount to its net asset value (that is, at the time of the column’s publication):
    • Their three largest listed holdings alone (Minor International, IHH Healthcare and Parkway Life REIT) account for ~110% of the market capitalisation, but Symphony also has a sizeable unlisted portfolio.
  • The current management team already owns ~17% of the shares outstanding in addition to a set of currently “out of the money” options that expire in August next year.
    • According to Treanor’s analysis, if they are able to eliminate the discount, they could expect to make up to US$16m by exercising their options.
  • Symphony have already taken steps to narrow the discount, including:
    • The introduction of a dividend policy in early 2014 (cumulative payments have totalled US$0.1835 per share vs. the current share price of US$0.84 per share).
    • A share buy-back policy to repurchase at least 10% of its shares over the next three years (so far, it has bought back 3 percent).
  • As per Treanor: “The continued buy-back should help improve the rating on the shares and provide material accretion to NAV per share given the wide discount at which buy-backs are taking place.”