Hipgnosis Songs Fund discount to NAV widens as woes mount

November 23, 2023 06:41 AM PST | By Invezz

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Hipgnosis Songs Fund discount to NAV widens as woes mount — Image source: Invezz

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Hipgnosis Songs Fund (LON:SONG), the giant music rights fund, is not doing well. Its stock has crashed by over 40% from its all-time high. It was trading at 71.90p on Thursday, down from its all-time high of 120p.

Its estimated Net Asset Value (NAV) stands at 150.51p, meaning that it is trading at a 52.4% discount. This discount is worse than the 12-month average of 47.35%.

The performance of Hipgnosis Songs Fund is in line with other UK-listed trust funds, which are trading at discount to their NAV. For example, Bill Ackman’s Pershing Square Holdings (PSH) discount to NAV stands at 34.4%, according to Hargreaves Lansdown.

As I wrote recently, Scottish Mortgage Trust’s discount has moved to -14.16% while Greencoat UK Wind (UKW) sits at -12.27%.

Hipgnosis Songs Fund Management’s discount is one of the steepest in London as the company has gone through numerous woes. The most recent news was that PwC, a Big Four audit firm, announced that it would not continue as the auditor.

This means that the company will now need to bid for a new auditor, a process that could take months. In some cases when an auditor leaves, it is usually a sign that a company is not doing well.

The other bad news was that Merck Mercuriadis, the trust’s co-founder, was sued by a company that he previously ran. He denies the claims and has vowed to defend himself in court. Mercuriadis was the former music manager to superstars like Beyonce and Elton John.

Hipgnosis has gone through other challenges recently, which forced it to cut its dividend. It failed to sell part of its catalogue to Blackstone failed as its investors blocked it. It has now appointed advisors to do due diligence of its assets as it decides on its future.

Hipgnosis Songs did well in an era of low-interest rates as investors looked for alternative assets. It now owns over 65,000 songs, including those of musicians like Dua Lipa, Khalid, and Harry Styles.

The post Hipgnosis Songs Fund discount to NAV widens as woes mount appeared first on Invezz

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