Ruffer sets out rationale for first ever buyback following 'disappointing' performance
investmentweek.co.ukDuncan MacInnes (pictured) manages the Ruffer Investment Company portfolio alongside Jasmine Yeo.
In the trust's annual results for the year ended 30 June 2023, published today (4 October), chair Christopher Russell explained that following the share price falling to a discount in the second half of the year, RIC decided to buy back 150,000 shares at an average price of £2.6325.
Ruffer makes first ever buyback in near 20-year history amid poor performance
Directors sought shareholder permission at the annual general meeting in December 2022 to do so, as they do every year. Shareholders voted 100% in favour, giving the directors the ability to repurchase up to 14.99% of the issued preference shared in the 12 months following the AGM.
Russell set out the general process leading to a decision to buy back shares.
When the trust's discount of share price to NAV falls to more than mid-single digits, RIC's broker alerts the trust. At that point, some investors may wish to trade the discount, while others might arbitrage between the trust's shares and units in the equivalent Ruffer open-ended fund.
Subsequently, the board and the broker assess the market position in the shares, including who is selling and for what reason, what volumes are moving the share price significantly relative to the average liquidity levels, who and where are potential buyers, and at what price level they are buying in.
«The investment manager is not appraised of this discussion because of potential conflict of interest should they choose to buy the company's shares for their discretionary clients,» Russell explained.
«The board makes its own independent judgement on whether it deems the discount to be a temporary aberration, offering the opportunity
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