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Watch List

Discount Watch

Alternative funds still dominating the list of investment companies trading at 52-week high discounts to net assets – seven of the 10 names on the latest Discount Watch are alternatives. But focus this week is on one of the few non-alternative trusts on the list – European Opportunities (EOT). What could be behind the European fund’s appearance on the Discount Watch?

By Frank Buhagiar

We estimate there to be 10 investment companies which saw their share prices trade at 52-week high discounts to net assets over the course of the week ended Friday 03 January 2025 – one more than the previous week’s nine. Please note, seeing as 2025 is just days old, the graph below shows the number of year-high discounters on a rolling rather than the usual year-to-date basis.

New year, same story and, to a large extent, same names on the list. Eight of last week’s nine make it onto the Discount Watch this time round and of the eight, seven belong to the alternatives camp: one from debt, two from property and four from renewables. Alternatives seemingly continue to be weighed down by concerns that higher bond yields may lead to higher discount rates which in turn could result in asset valuations taking a hit.

The above alternatives narrative, a frequent feature in the Discount Watch lately. So, in the interests of mixing it up, focus this week switches to one of the two new, non-alternative, additions to the list: European Opportunities (EOT). A look at the graph shows the share price took a turn for the worse week commencing Monday 18 December 2024, the same week (and day) activist investor Saba Capital called for the Boards of seven investment trusts to convene general meetings so that shareholders can vote on their plans to replace existing directors with their own nominees as part of their delivering value campaign. Now EOT, not among the Saba Seven. But the pair have locked horns before and, as at end of July 2024, Saba held a 4.7% stake in EOT. Question is this, is the weak share price performance down to concerns EOT could once again find itself in Saba’s sights? Or could it be down to disappointment that the fund wasn’t inSaba’s sights this time round?

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