Analysts at Stifel remain optimistic about Hipgnosis Songs Fund Limited (LSE:SONG)’s prospects despite a messy interim earnings report and ongoing spat with its own investment adviser over the true worth of the company’s assets.
“While there has been a clear breakdown in communication between the board and manager, the most important aspect from a shareholder perspective is whether the assets are broadly performing,” said Hipgnosis.
Stifel noted that pro-forma annual revenues were up marginally in the 12 months (as of 30 September) to US$133 million (£105 million) “and we expect this may increase further given the seasonality of revenues”.
Expenses, where they can be controlled, “are lower than expected and the board will now have to sign off on any cost above £25 million”.
Stifel continued: “There are some minor other gremlins in the report but, broadly assuming there are no others, these should be fixable in time.
“There is a notable step change in transparency and reporting, which is refreshing given the new board have been in place only a short while. At a high level, we think it's clear they are getting a grip of the situation.
“Cutting through the noise, these results should at least be reassuring to investors especially as sector and macro tailwinds (lower interest rates) should provide some support.
“It is likely to become noisier in the months ahead, but the results are broadly in line with our expectations.
“We think shareholders wanted a board with more teeth and it appears this is what they are getting.”