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Independent directors shed more shares to rein in premium

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Independent directors shed more shares to rein in premium

Directors of Independent (IIT) have sold a further 300,000 shares in the top-performing investment trust since March in a bid to improve liquidity in the stock and narrow the persistently high premium to net asset value.

The £419 million trust currently trades nearly 16% above NAV although the premium has been as high as 20% over the past year. The rating has been kept high by the trust’s refusal to issue more shares as the board wants to keep its market value below €500 million (£435 million) to avoid further red tape from Brussels regulation and ensure the trust is small enough to make nimble investment decisions.

Managing director Max Ward, a former manager of Scottish Mortgage (SMT), kickstarted the sales after the annual report, as reported by Investment Trust Insider in March, and was followed by chairman Douglas McDougall and senior independent director James Ferguson, who held shares through Horne Settlement Trust, of which he is a trustee.

Since March, Ward has sold another 3,600 shares worth £73,500, taking the total sold by the fund manager and his wife to 107,400 at a value of £778,986. As of 30 November, Ward held 4,160,000 shares representing a 7.5% stake in the trust but the sales take his total to just below 4 million.

McDougall has sold just over £2 million of shares since March, disposing of 275,000 of the stock. He has sold over 500,000 shares for a total value of £3.8 million, including shares sold by his daughter Fiona.

Despite the volume of share sales, McDougall still has a significant holding. As of 30 November 2017, he held over 8.5 million shares - or a 15.4% stake - in the company, now reduced to over 8 million shares.

Since the annual report, Ferguson has sold 15,000 shares worth £108,000, taking the total sold to 40,000 shares with a value of £291,900.

Non-executive director Robert Laing, and his wife, have both sold 20,000 shares each for a total combined sum of £296,800.

Neither the board nor Ward has indicated how many shares will be sold or whether they are working towards a premium target.

Independent was the best performing trust of 2017 and also one of the cheapest after cutting annual costs to just 0.25%, making it popular with investors. It beat the other 400 or so investment trust to best performance in 2017 with total returns including dividends of 71.3% powered by tech stocks and a recovery in house builders.

The trust is currently weighted to the technology sector, with over a quarter of the portfolio invested in this sector. One of the most rewarding stocks last year was Blue Prism (PRSM), which provides software robots that enable companies to automate parts of the business. It was the second biggest holding in the trust at 8.1% at the end of 2017.

The biggest holding is in premium tonics maker Fever-Tree (FEVR), which doubled in price last year. It made up 8.6% of the portfolio at the end of last year.


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