Page 47 - DIY Investor Magazine | Issue 31

MY TRADING Another quiet quarter for me on the trading front; I took part in an open offer for Bluefield Solar Income, topped up International Biotechnology Trust after its discount widened, and added some non-ISA dividends to my Vanguard All-World ETF. I’ve still got a few non-ISA positions to tidy up over the next few years and the introduction of the extra 1.25% dividend tax last month serves as another good reason for doing so. Acorn Income, one of my UK small-cap holdings, decided to fall on its sword after initially proposing a complete mandate change to a global sustainable equity income strategy; I think it’s a sensible decision, given the trust’s size and overly complicated structure. My options are to either roll my holding into Unicorn UK Income, an open-ended fund run by the same managers, or cash out close to net asset value; I’ll probably choose the latter and decide where to put it when the distribution is made in mid-November. Currently, I’m thinking of topping up my three biotech/healthcare trusts, Gresham House Energy Storage, and Keystone Positive Change. CRYPT-OH! I’ve casually observed cryptocurrencies for a few years, alternatively shaking and scratching my head; but along with a number of other financial bloggers, I finally took the plunge, albeit in a very limited way. I have a small position in a crypto company called KR1; it’s been around since 2016 and is invested in several dozen crypto assets, getting into some very early-stage projects. Its management team own a significant number of its shares and have a long-term incentive deal that could see their stake increase. This blog post by Wexboy from November 2020 covers the company in some detail, although the figures are dated. KR1 trades on the Aquis Stock Exchange, so although you can put it into an ISA, the level of regulation and disclosure is much lower than the main London market. There’s no up-to- date portfolio leaving you to piece together what it owns from its individual announcements; it publishes its half and year-end results late - it’s very much buyer beware. Last night its portfolio of crypto assets was worth in the region of £275m with a market cap of about £223m, but a significant number of shares - about 30% if my back of the envelope maths is correct – are yet to be issued in respect of performance fees for 2020 and 2021 and for options yet to be exercised. ‘CRYPTO PRICE FALLS CAN BE SAVAGE, WITH 25% DAILY OR OVERNIGHT DROPS A REGULAR OCCURRENCE’ So KR1 is probably trading at a premium of around 10% to its NAV, although this figure shifts around, as you might imagine. This morning, the portfolio value had dropped to £260m; it’s been as high as £320m and as low as £100m even in the short time that I have owned it. Under its new management arrangements, fees of 1.9% are payable up to £250m of net assets and 1.7% above that level with 20% of any gains paid out as a performance fee entirely in new shares. That’s very expensive compared to most funds, being more in line with fee structures for private equity or hedge funds. I’ve only been invested for a few months and see this as a learning position (I’m working my way through The Basics Of Bitcoins and Blockchains) combined with an experiment as to how much volatility I can live with. Crypto price falls can be savage, with 25% daily or overnight drops a regular occurrence and numerous 80-90% drawdowns over the last decade; KR1 has been less volatile than crypto prices and the value of its own portfolio in recent months but it’s the most speculative position I hold. It’s included in my overall portfolio returns, hence the reason I’ve mentioned it here, although it’s my smallest position by some distance. 47 Diy Investor Magazine · Nov 2021