Ah, thanks for that. Missed that and it didn’t come up in any of my searchings.
Third article in the last few days i’ve seen putting down Hipgnosis, not sure if they are biased and just trying to rock the boat before the upcoming AGM.
First one i saw was from the Financial Times which i’ve always been a bit dubious of.
That’s me out of this one, in theory it sounds great and i hope it works out. Probably going to be kicking myself next week after the AGM as i really liked it as a quarterly dividend play and was trying to diversify,
But i think i’ll stick to mining stocks, i can understand them better.
A lot of investors are probably spooked by subscription entertainment after Netflix wet the bed this year (actually Hipgnosis’ huge slump seems very closely correlated). But music streaming is so much more durable than SVOD it almost bears no resemblance. There is some concern about Massarsky’s independence but they still use a discount rate of 8.5% which isn’t exactly low. Should probably be adjusted up soon but even 10% wouldn’t make an enormous difference to NAV. It does stop dealmaking dead though which is where that headline comes from, although I’m not sure how it spells “trouble” for anyone except rightsholders looking to sell. I think it’s a good thing they’re now focusing on management rather than acquisitions.
A big part of Mercuriadis’ thesis was also regulatory change (songwriter share), which he was absolutely right about and SONG will now real the benefits of.
Anyone investing in SONG or other funds in the space should have fully expected the reaction to interest rate rises as bond proxies. My personal opinion is that this huge 40% discount is a bit of a steal…
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Note especially:
Given market movements this year, the market is currently pricing in a discount rate that is more than 2 percentage points higher than the independent valuation.
Buying SONG now you are purchasing at an effective discount rate of over 10.5% (dependent on FX rate).
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Interim Results highlights:
- Revenue growth of 7.5%
- EBITDA up 16.9%
- <10 year catalogue pro-forma revenue flat YoY, signalling softening of decay
Management comments:
“An increase in the discount rate from 8.5% to 9.0% would reduce the Operative NAV by $212 million. Our current share price is trading at a discount to the Operative NAV of over 45%, which implies a discount rate of nearly 12%.”
“Data from the US, shows that vintage music is an ever increasing proportion of consumed music - now making up three quarters of Songs enjoyed, up from a little over a half in 2017.”
“CRB III provided for a 44% increase in the headline rate of DSP revenues paid to songwriters and Publishers, reaching 15.1% in 2022. The joint industry proposals for CRB IV would see that proportion rising incrementally to 15.35% in 2027”
“We anticipate continued strong growth in the global music market.”
Shares were up 3.25% to 82.6 pence.
Absolutely enormous deal.
Edit: I’ve noticed this is a deal with Hipgnosis Songs Capital, the Blackstone vehicle. Still, this is groundbreaking news and relevant to HSF given the close ties between the two.
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Highly interesting development.
I don’t believe the dividend is high enough to cover the discount rate. Specially when you take into account the valuation of the assets. No one can quite agree on how they should be valued. Pity as the discount would tempt me IF I believed it would narrow at least close to par. I don’t believe it will at least not any time soon.
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Anyone else not get their 28th April dividend paid via Freetrade?
There hasn’t been a single full working day since then. A tiny amount of patience please 
Patience is done! 5th working day! 
No reports in press of non payment by company, maybe Freetrade lost it! Like they’ll lose custom (took two and a half days to answer query). They said not received
Hello same here! Maybe only £2 but frustrating all the same.
And today it arrived yippeee panic over😃now what to use it on ?
Hmmm! Shows on mine as paid 28th but I got 9th may so what did FT do with my funds for 11days. Less and less impressed with this platform…
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Dividends can take up to 5 working days to get paid.
Today (9th) was technically the 5th working day after 28th April (accounting for the weekends and 2 bank holidays in between).
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SONG getting a nice 11% boost this morning.
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Closed at a healthy 12.5% up
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Times coverage very critical on the proposed catalogue sale, and while I don’t quite agree $14m in transaction fees is abnormal, a discount way higher than the Round Hill deal does smack the wrong way. Hipgnosis seem to want to have their cake and eat it (offload for cheap to their cushy Blackstone pile whilst turning round and telling investors that SONG really is worth 100% of NAV actually!)
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