He’s picked up over £100,000 of shares on the cheap and locked in a generous dividend yield, points out our City writer. There are big trades at high-flying JD Wetherspoon, too.
A director of top performing FTSE 250-listed Foresight Solar Fund (LSE:FSFL) has spent £110,000 topping up his exposure before the sun sets on his decade of board service.
Peter Dicks bought shares in the largest UK-listed dedicated solar energy investment company at 110.8p, representing a 12% discount on the March-end net asset value (NAV) of 124.2p.
Foresight ranked among the best performing investment trusts of 2022 thanks to a total shareholder return of 24.8%, aided by elevated short-term power prices and a good performance from its portfolio comprising 61 solar assets in the UK, Spain and Australia.
The result took the annualised return since its 2013 IPO to 7.8%. Quarterly dividends totalled 7.12p a share in 2022, with Foresight targeting 7.55p for 2023 covered 1.5 times.
The going has been much tougher this year, with first-quarter results showing revenues below budget due to considerably lower merchant power prices than forecast.
Electricity generated by the global portfolio was also 3.8% below base case, predominantly caused by inclement weather in March. The portfolio includes the UK’s largest solar park at Shotwick in Flintshire, which has 72 megawatt (MW) peak capacity and meets about 60% of the energy needs for the nearby Shotton Paper Mill.
Production in Australia was marginally below hopes, but four sites in Spain highlighted the benefits of diversification with a favourable start to their first full year of operation.
The developments have reduced the NAV from December’s 126.5p, despite an upward contribution of 2p a share from reduced payments under the Electricity Generator Levy caused by lower UK power prices.
Foresight also pointed out this month that the forward-fixing of electricity sales under power purchase agreements insulated it against the fall in merchant prices, meaning stability in revenues and confidence in the targeted 1.5x dividend cover for the full year. It currently trades with a forward dividend yield of around 6.8%.
Shares have fallen 8% this year and closed last week at 110.8p, a level of discount that has prompted the board to begin a buyback of shares worth up to £10 million.
While the first-quarter update was below expectations, Liberum this month retained its “buy” recommendation with a target price of 125p. Barclays sees an upside to 121p.
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Liberum pointed to the potential 6.5% dividend growth for 2023, opportunity for NAV growth from development and construction stage projects and the increasing geographic and technological diversification in the portfolio.
Analyst Joseph Pepper added: “The current discount to NAV is unjustified given the low-risk nature of the portfolio, prudent discount rate and levers for growth.
“We continue to view Foresight Solar as an attractive proposition despite the competitive yield environment in its core UK solar market.”
Thursday’s acquisition of 100,000 shares by Dicks took his total holding to 283,105. He has been a non‐executive director since the IPO in 2013 and is due to step down from the board during the first half of this year.
CEO calls time on Wetherspoons stake
JD Wetherspoon (LSE:JDW) chief executive John Hutson raised £140,000 on Friday after selling shares on the back of a big surge in value for the FTSE 250-listed pub chain.
Shares have rebounded by more than 60% this year, with the renewed confidence of investors backed up by Wednesday’s stronger-than-expected third quarter trading update.
This recent performance has repaid the faith of chairman Tim Martin after he spent about £11.9 million on shares when the price stood at 457.25p on 1 February. That investment has grown in value by about £8 million after shares closed last week at 758p.
Martin, who founded the company in 1979, has more than 30 million shares representing a stake of about 24%.
In last week’s update he told investors that sales in the last quarter have continued their positive momentum, but that labour, energy and food costs remained a headache.
Profits for the year to 30 July are on track for the top end of City expectations, buoyed by like-for-like sales in the quarter to 30 April being 9.1% higher than before the pandemic.
Sales in the current financial year are likely to be a record, with trading highlights including a particularly strong Easter week and the busiest ever Saturday over the May Day weekend.
Analysts at Deutsche Bank believe there’s further to go for shares after raising their price target to 900p from 750p previously. Peel Hunt, which sits at 825p, upgraded its profits forecast for 2023 by 31% on the back of higher price-driven sales.
It expects the City consensus to settle at £34.4 million but notes the aspiration of JD Wetherspoon to get to £100 million before it resumes dividend payments.
The broker said: “We currently forecast such an outcome, worthy of a £10-£12 share price, occurring in the 2026 financial year. Given that there is upgrade momentum, this outcome could happen sooner.”
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