Can investors consider buying £1 for 60p with this FTSE 250 investment trust?

Harbourvest Global Private Equity’s a FTSE 250 private equity firm trading at 60% of its NAV. And investors are pushing the company to unlock that value.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Harbourvest Global Private Equity‘s (LSE:HVPE) a private markets investment firm. Having mostly gone sideways in 2024, shares in the FTSE 250 member currently trade at around £24.50. 

The firm has some impressive businesses with strong growth potential in its portfolio. But the most interesting thing might be the price at which the stock’s trading.

Harbourvest’s portfolio

Harbourvest offers a way of getting exposure to some really interesting businesses. Its portfolio includes some companies that investors have probably heard of, but aren’t able to invest in.

Should you invest £1,000 in M&G right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if M&G made the list?

See the 6 stocks

One example is Shein – the online fashion retailer that seems to be taking the world by storm. The firm’s rumoured to be exploring a potential listing on the UK stock market in 2025.

Another is Action, a European discount retailer that’s been growing impressively. Its success is one of the key reasons 3i‘s been one of the best-performing UK stocks over the last decade.

There are others, such as Discord, Databricks, and Figma. But despite having some very interesting assets, shares in Harbourvest are trading below their net value.

Buying at a discount

Harbourvest’s net asset value (NAV) is estimated to be around £40.50 a share, but the stock’s trading at around 60% of this. That means every 60p invested buys assets with a net value of £1. 

By itself, this doesn’t make the stock an opportunity. In theory, the discount to NAV can persist indefinitely, meaning investors have no way of realising the underlying value of what they own.

In practice, this might be unlikely. But without a reason for thinking the gap’s going to close any time soon, investors might have a long wait before they are able to benefit of the low valuation.

Interestingly though, it might be that the gap’s going to close. Harbourvest’s under pressure from its shareholder base to make moves to unlock the value in its shares.

Share buybacks

One way of trying to realise the underlying value is through share buybacks. And investment firm Metage Capital wants Harbourvest to do this, instead of trying to expand its portfolio. 

Metage has written to the FTSE 250 firm’s shareholders about this. And if it happens, investors could find the gap between the company’s share price and its NAV starts to close.

This makes the stock look very attractive. But while Harbourvest’s management has been taking advantage of this by repurchasing shares, they haven’t been doing so at a rate that satisfies Metage.

That means investors need to be careful. The potential for a big gain if the underlying value of the business is unlocked is there, but there’s also a genuine risk that this may not happen soon.

One to watch

There’s a very real sense in which investing in Harbourvest is like buying £1 for 60p. But the big question is when investors are going to be able to get that extra 40p. 

The value’s there, but exactly when investors will be able to get at it’s another question. If the company starts buying back shares at a significant rate, it might be just around the corner.

This however’s by no means guaranteed. So I think this is one to keep a close eye on and wait to see what happens. That’s the approach I’m taking.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »