Investment Trust Newsletter

Date: 06.07.2018

Published by: Investment Trust Newsletter

Written by: Andrew McHattie 


We’ve had an update from James Armstrong,

the managing partner of Bluefield Partners, who

manage the Bluefield Solar Income Fund (BSIF, 121.25p). We wrote

about the trust a year ago, highlighting its attractive yield of 6.3%

and strong position against its peers. Much the same applies again

now, although that yield has edged down to 6.1% as the shares have

strengthened. It is business as usual for the trust, which is quite

focused on managing its risks as well as its 46 solar assets around the

UK. James says they have not been buying many assets lately, as the

secondary market is very competitive now that no new solar projects

are being built (following the removal of subsidies). Management

has resisted the temptation to raise more capital and go ‘asset

gathering’ at the wrong moment, when prices are high. Bluefield

entered the market at the right time in 2013 and bought well for

three years, securing a strong income stream from what James says

are “non-complex” and very predictable assets. Bluefield’s technical

team, based behind a bank of monitoring screens, ensures the solar

farms work as efficiently as they can, day in, day out, during daylight

hours. James says generation has been good during May, June and

July, although the tremendous sunshine we have been enjoying does

not make a huge difference to output. Overall, James is “pleased

with how things are going”, and like Greencoat UK Wind (UKW,

125.1p), another success story in this sector, Bluefield has prospered

by sticking to what it said it would do, and not being distracted by

more exotic growth opportunities in other countries. This is a UK

business that provides “a simple way of earning sterling income”,

James says. In the future there is potential for another wave of solar

development as the costs of technology come down, and there are

signs of this happening already in southern Europe. It may take a

while to arrive in the UK, but Bluefield may be ready to participate

again in construction projects in the next couple of years. Further

initiatives could also be assisted by favourable political will or by

developments in allied technologies such as battery storage. For

now though, we think holders should remain content to pick up

an excellent yield from what we regard as a high-quality operator.