Why is the Bluefield Solar Income Fund so far under NAV?

The fund continues to benefit from its strategy of fixing prices 3 years in advance which has enabled it to grow its revenue to £91.6 million, up from £78.6 million in the same period last year. The dividend guidance, against the current share price, gives a yield of around 8.5%. The fund advisors have also set aside £20 million as a share buyback.

James Armstrong is managing partner at Bluefield Partners and is the investment adviser of Bluefield Solar Income Fund. IGTV had a opportunity to ask him about the underperformance of the share price against net asset value (NAV).

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Bluefield Solar Income Fund share price lower despite strong H1

The Bluefield Solar Income Fund had a successful first half of the year, with revenue increasing to £91.6 million from £78.6 million. Despite these positive results, the company's share price is lower than what it should be according to its net asset value. The managing partner, James Armstrong, believes that the company's strong performance should be reflected in the share price. He is confident in the company's strategy of fixing prices in advance and its ability to generate cash, even after accounting for debt and levies.

How are they addressing this?

There was a temporary disruption at one of the company's plants, but Armstrong says it did not have a significant impact on the share price drop. He also mentions that the wider renewable energy sector has also been facing discounts to net asset value. To address this, the company has started a share buyback program and partnered with the GLIL pension fund to sell certain assets and manage the development pipeline.

Armstrong highlights that the company has received planning approval for solar and battery projects, which will contribute to its future growth. It also has the option to sell these assets to third parties if the market remains closed. Despite all of this, Armstrong believes that the company's share price should be closer to its net asset value rather than at a discount. He points to a recent solar transaction that supported the company's net asset value, showing that the current share price is lower than it should be.

In simpler terms

In conclusion, the Bluefields Solar Income Fund had a strong first half of the year, but its share price does not reflect the company's performance. It has taken steps to address this by initiating a share buyback program and forming a strategic partnership. The company also has a solid pipeline of projects and a strong business foundation. Armstrong believes that the company's share price should be higher, offering a greater return for shareholders.