Second Alliance buy-back as DC Thomson sells some of its stake

Published on Wednesday 10 March 2010 20:32

ALLIANCE Trust has spent £19.7 million on its own shares after publisher DC Thomson put part of its stake in the firm up for sale.

It is the second buy-back for Katherine Garrett-Cox, chief executive of Alliance Trust, after the board agreed to purchase 15.6m worth of the trust's own shares in October. The first buy-back was prompted by a sell-off of shares by Norges Bank Investment Management (NBIM), the world's second-largest sovereign wealth fund.

The trust has been under pressure to buy back its shares due to the discount between the value of its stock and that of its investments. But until recently, the trust has resisted doing so. Currently the firm's discount to net asset value (NAV) is 21 per cent, one of the largest in the market. The average for its peer group is 11 per cent.

Alan Brierley, an analyst from Collins Stewart, said: "The discount differential is reaching extreme proportions between the company and its peer group. They should be using the buy-backs more aggressively to address this."

A spokeswoman for the trust said its policy was that it "will only undertake a share buy-back if it is in the interest of the shareholder".

James Brown, an analyst with Winterflood Securities, said the buy-back was probably prompted more by the sell-off of shares by DC Thomson rather than a decision by the trust to address its discount. "They are not doing it to get greater exposure to their own portfolio at a discount. That argument is a little hollow now," Brown said.