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"Poor markets" and 16% gearing not a good combination
Added a few more today at 14:41 - limited downside and a 34% discount does seem ridiculous despite the hiccough for NVDA yesterday on the NASDAQ
Added a few more on Wednesday, this time for elder son. Have a feeling that markets are going to be pretty poor for the remainder of the year. The huge discount for a mature trust under proven managers means that investors can be spoiled for entry points. I appreciate that I am probably wittering away to myself.
I have taken advantage of todays weakness to add a few more. 2022 has been a brutal year thus far, but markets are never static.
I have added some into a SIPP for my wife today. Time will determine the folly or wisdom. I'll be adding more for elder son in his LISA later this month and for myself in my SIPP as funds permit
Over 28% discount to NAV and price still dropping, has the market gone mad !
II say can take up to 10 working days
Hmmmm.....dividend has yet to be paid into my account. Bit rummy.
Shares have gone xd today so the price rise is a nice bonus.
Well, what a surpriseā¦.. a review of the mkt cap vs. NAV
Discount is narrowing but it is lightly traded so movement, I suspect wil be gradual, but sustained. A great comination IMO
Hence the sharp rise in sp this morning, no doubt. I will wait for the froth to ssubside.
Quite a long piece today in Sunday Timesā¦.the Cowie column.
The discount to NAV is getting on for 40% which is madness. Looking at the full portfolio of holdings (annual report around P. 20), nothing seems to be an obvious candidate to raise alarm. The conclusion I draw is that the manager is stale and simply appointing a replacement with the same assets might be enough to address the imbalance.
I accept that it is difficult to polish a t_rd. At least the dividends provide some return.
Time to average up, methinks.
September has seen 2.6% for me wiped off my wealth (slightly more than forecast). It would have been much more had I not made some changes in preparation for the last qtr of 2021.
Iām sure that the turbulence will be around for the next 18 months as the developed world prepares for inflation, rises in interest rates and company liquidations in the New Year once Xmas is out of the way and commercial landlords able to seek indemnity on debt.
With the collapse in June of lumber prices, I suspect that has more influence on the closing of the gap between NAV and share price.
Don't get me wrong, I am all in favour of a fast buck, but experience has determined that such events are both speculative and rare - better to accumulate wealth in every holding that is under the radar and very gradually. This IT fits the bill (for me)
I think the point that gets missed when people discuss discounts to NAV is that itās not just about closing the discount.
The 47.5% free float and the Canadian legislation around buybacks is the reason we āendureā a discount of 30ish%. But the return on equity gets magnified.
If an investment trustās investments are yielding 15% ROE and the IT has a discount of 33% then the ROE of the parent (IT) is about 22%
The above is just an illustration Iāve not looked at CGI ās specific ROE
FWIW, I have bought a few shares today for elder son as he builds his portfolio. Aside from being a lightly traded Investment Trust (IT), it has a fine line-up of holdings and at a huge discount to Net Asset Value (NAV). Over the years it has provided very good returns for its shareholders but the discount has been widening since the market correction between Feb 22 and Mar 23 last year. Prior to that, the discount was closer to 14% than its present discount of 32%. On occasion the share price and the underlying NAV were equal.
The gap is likely to close either if the underlying holding that comprise the NAV fall, the share price of the trust rises or there is a change in the management team.
I like the underlying holdings. Nvidia had spectacular results beating analyst forecast, but the shares were unchanged - perhaps there will be headwind from the proposed purchase of ARM - Amazon has just bought MGM so is likely to be a challenge to Netflix and construction timber is in desperate short supply for US housebuilders. Has all the hallmarks to me of a rising share price though in the absence of any volume, not sure it will be as immediate as many would wish to see (self included).
At first glance this IT has a lot going for - a decent and consistent NAV discount, a good track record, and comparatively cheap US exposure. But its share structure looks weird, at least to non-Canadian eyes.
It's not clear whether it's better to go for the London or Toronto shares and all the FX complications that the Canadian option would entail.
And it's not a member of the AIC, whose website says: "This company has units in issue. Each unit is made up of common stock and redeemable preference shares. The common and preferred shares are listed on Toronto Stock Exchange and, in the case of the common shares, the MAIN exchange of the LSE. Shares are not issued and redeemed by the Company like shares or units of a conventional mutual fund. ".
Am tempted, but all this is putting me off.
Hopefully will enjoy a boost as added to Simon's Bargain shares 2021.
https://www.investorschronicle.co.uk/ideas/2021/02/04/bargain-shares-for-2021/
Already going well....
My best performing share!
JR
8 years later ....
Is this any good?
..lol....
1 2 POSTS..........