Hipgnosis Songs Fund has seen the valuation of its portfolio fall further following an error in the calculation of its operative net asset value (NAV) by investment adviser Hipgnosis Songs Management (HSM).
In a regulatory filing this morning (18 March), the trust’s board said an error in the double counting of accrued revenue has resulted in a further 7.6% reduction to its operative NAV, which now stands at 85.02p per share.
The previous revised total, announced on 4 March, had been 92.08p.
The board said it had raised concerns with its investment adviser over the double counting of accrued revenue in the calculation of operative NAV, which it said resulted in an overstatement of the figure.
The filing noted that HSM agrees with the board’s view on the error, which the trust’s board said was “contrary to previous advice”.
At the start of March, Hipgnosis had suffered a 26.3% reduction to its portfolio valuation following an independent evaluation from Shot Tower Capital.
Responding to the announcement, an HSM spokesperson said that operative NAV is an alternate performance measure adopted at IPO by the company’s board and published in its audited accounts ever since, and was not defined by the investment adviser.
“Prior to the financial year ending 31 March 2022, operative NAV was calculated by the company’s administrator. Since then HSM has made the calculation using the same methodology, consistent with the APM’s definition,” they said.
“It is understandable that the company’s board wish to improve its reporting and alternative performance measures and HSM is fully supportive of this. However, it is disappointing that the board has sought to incorrectly place blame in the process.
“We continue to believe that it is in the interest of the company’s shareholders for the company and the investment adviser to work constructively together.”
