Having a share price that trades at a big discount to the underlying value can be a real boon for investors. In the best case, it can make for a cheap way to buy in to a company and, if the performance gap narrows over time, can seriously enhance returns.
Unfortunately, in the case of Caledonia Investments the discount to its net asset value, which is sizeable, stubbornly refuses to budge. It has barely tightened in the more than two years since this column last visited this investment trust and remains at more than 18 per cent.
That wasn’t the only reason that the shares were avoided at the last look. Although its performance over time has been strong, its preponderance of private investments that
