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aims to provide a high level of dividend as well as capital appreciation from a diversified portfolio
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"You are now simply making things up. . Who has stated selling stock in order to purchase others about to go xd?"
What is made up about MK's answer when referring to turning over stock that is already held (NOT NEW ISSUE) that they "also top up holdings into ex-dividend dates to ensure maximum revenue generation". Where have those funds come from is they are not new issue and they are not from sale of other stock?
As for the rest of your answer, please note that I have already agreed with you that new issuance at a premium is a marginal benefit to existing shareholders and there is no dilution. SO NO NEED TO MAKE STUFF UP.
Gs
''Why do you have to be an obnoxious prat about everything?''
I am simply having to point out the facts, when people start to speculate.
I m going to have to do it again
''When referring to the turnover of already held stock (NOT new issue) he wrote: "We also top up holdings into ex-dividend dates to ensure maximum revenue generation"''
HFEL ARE AN INCOME FUND
''So if stock is sold to invest in other shares that will soon go ex-dividend, and then sold again afterwards, rinse and repeat, what would you call that?
As I said, it is close to an admission but is not an admission per se''
You are now simply making things up. . Who has stated selling stock in order to purchase others about to go xd?
Who has stated that stock is sold immediately after going xd? .
HFEL
'' tend to change the portfolio when companies are fully valued, when circumstances change or when better opportunities present themselves''
THAT IS WHEN THEY SELL AND BUY
Monies from new shares ''are invested into existing positions with a focus on companies about to go ex dividend TO ENSURE EXISTING SHAREHOLDERS REVENUE IS NOT DILUTED''
Dividend washing in selling stock immediately after going xd.
An active fund will seek out better investment opportunities when they arise, as has been stated by HFEL.
My last paragraph to lti was inadvertently chopped. Here it is in full.
A final thought for you to consider. As new shares have, we are told, been continually issued at a premium, that obviously suggests there is an appetite for them. So, if new shares had not been issued to satisfy that appetite, the would-be investors would have had to buy them in the market. Usually, when there is a demand for shares and their number is capped, the price goes up, so existing investors enjoy the boost, but when more shares are pumped into the market that doesn’t happen. Oh dear.
LTI
The directors of HFEL will be pleased to have someone as knowledgeable and forthright as you to defend and promote their strategy. This will no doubt help the sale of new shares, but please explain how we benefit from the premium at which they are sold. How much did this come to in 2022 and where does it appear in the accounts? Is the amount greater than the additional costs incurred, such as increasing audit costs to which I have previously drawn attention (up 23% in 2022).
Have a look at page 50 of the 2022 annual report. This details all ‘Other expenses’. The total increase was £196k, up 21% (the directors got 12%,). How does this compare with what might have been raised from the premium, do you suppose? Would you please do the calculation and share it with us. I have shared my research in several posts, beginning in response to monkeyman99 on 2/9/23.
Monkeyman99 wrote, “Having gone through the portfolio it is clear this portfolio should had been trimmed down and the asset manager is clearly struggling with this portfolio due to its size.” That prompted me to post this.
“It is evident to me that HFEL has been repeatedly issuing shares in order to buy additional earnings and profits with the proceeds, so that it can continually increase its dividend. One adverse consequence is that the accompanying dilution substantially reduces the effect on its EPS/DPS. Another, which is a real danger, is that in straining to acquire more dividend income HFEL is buying companies of increasingly poor quality, which will hold the capital value back when markets recover. These are the stats for the past 4 years: revenue up 33.7% and profit after tax up 37.9%, BUT EPS up only 9.9% and dividend up only 10.2%.”
Do these facts not suggest that at least some of the additional capital has been wasted?
As Napoleon found, constantly increasing the size of your empire can lead to disaster, not glory.
In my letter to Ronald Gould I wrote, “In your chairman’s statement last November you claimed that the NAV had grown by 1.9%, but that is at odds with the Janus Henderson fact sheet. That shows minus 6.7% for the 12 months to June 2022 and minus 1.6% for the full five years to June 2023.” His reply did not address that apparently deliberate misinformation. Do the directors (paid £183k in 2022) actually know what is happening?
You like to deride other posters, but you do not address the facts, nor try to justify your opinions with evidence. This is hardly helpful to others, even if it leaves you feeling smug.
A final thought for you to consider. As new shares have, we are told, been continually issued at a premium, that obviously suggests there is an appetite for them. So, if new shares had not been issued to satisfy that appetite, the would-be investors would have had to buy them in the market. Usually, when there is a demand for shares and their number is capped, the price goes up, so existing investors enj
Why do you have to be an obnoxious prat about everything? You just can't help yourself on multiple boards.
When referring to the turnover of already held stock (NOT new issue) he wrote: "We also top up holdings into ex-dividend dates to ensure maximum revenue generation". So if stock is sold to invest in other shares that will soon go ex-dividend, and then sold again afterwards, rinse and repeat, what would you call that?
As I said, it is close to an admission but is not an admission per se.
Stop the whinging
There are plenty of other investment trusts available.
Bott
''The matters which most concern me are the high turnover of the portfolio and the continuing issue of new shares. The former, which cannot be explained by the latter, needs more explanation''
I cannot believe that so called investors cannot understand the workings of a fund that they have invested in. How many times has the same thing have to be said.
HFEL is an income fund.
New shares that have been issued have been at a PREMIUM to NAV and so therefore of benefit to shareholders.
HFEL are NOT a buy and hold fund. They are active to achieve the objectives of the fund.
Simple enough for most to understand. If any investor doesn't like HFEL or as it appears have no understanding, there is a sell button.
To GS
I am not inclined to pursue matters with Mike Kerley myself, at least at this time. Others are welcome to, in which case I would hope that the Q&A are posted here, for all to see.
The matters which most concern me are the high turnover of the portfolio and the continuing issue of new shares. The former, which cannot be explained by the latter, needs more explanation than has so far been offered, to satisfy those who suspect that, while it may assist dividend aggregation, it may also be contributing to a falling NAV. As to the latter, I fail to see how it can ever – in an investment trust – benefit those who are already invested in the trust: that idea is nonsense.
Hfel
'' to ensure existing shareholders revenue is not diluted.''
GS/others
What is it that you do not understand from this
Hfel
'We are not buy and hold investors''
absolutely nothing wrong with that
Many investors simply buy and hold for an eternity.
Personally I am a frequent trader of shares - it has served me well
Gs
I had already read what he said carefully.
'' it is why I say it is close to an admission, not an admission.''
once again - nonsense.
Dividend washing is selling stock immediately after going xd.
New money coming in for new shares was being invested in existing holdings.
Issuance of new shares have been made when at a premium to NAV. The shares have been at a discount for quite a while now, so no topping up of holdings.
Dividend washing is selling stock after going xd
Gs
'' uses funds from new issuance to invest in existing holdings.''
hfel
''the investment of monies received from share issuance is included in these turnover numbers. These are invested into existing positions with a focus on companies about to go ex dividend''
just as I said - new money invested for income - that is the point of HFEL.
I see you still can't help yourself, can you LTI? Read the full answer from Mike Kerley:
"We are not buy and hold investors......We also top up holdings into ex-dividend dates to ensure maximum revenue generation...... Finally, the investment of monies received from share issuance is included in these turnover numbers. These are invested into existing positions with a focus on companies about to go ex dividend to ensure existing shareholders revenue is not diluted. This combination of style, revenue maximisation and share issuance is responsible for the relatively high turnover."
So the fund tops up going into ex-dividend dates, and then uses funds from new issuance to invest in existing holdings. MK has specifically split the two actions. If it was just the funds from new issue looking for stock about to go ex-dividend why refer to the same practice when discussing the 100% turnover of stock? I expect MK is choosing his words carefully and it is why I say it is close to an admission, not an admission.
But if Bott is prepared to follow up with MK there is a chance to pin him down about it.
Gs
'' this is close to an admission of what some will call dividend washing''
?, what nonsense.
New money coming in for new shares - it is an income fund - money is invested to get income.
Nothing to do with selling stock immediately after going xd.
Mr Guitarsolo
Before you get all excited other income funds also engage in some of the same tactics but perhaps not to the same extent.
Mr Guitarsolo
"So my follow up question would be to ask how much that practice contributes to the falling NAV (and therefore share price".
This is easy yield 12% - estimated yield on holdings around 5% = 7% all things being equal. You can possibly add another 1% for the annual management charge.
Some is generated from options writing which muddies the numbers a little.
If I can count.
You think the managers will ever quote those numbers?
Bott,
The part of Mike Kerley’s response that jumped out to me was; “We also top up holdings into ex-dividend dates to ensure maximum revenue generation”.
Combined with an acceptance that stock is rotated continuously (100% turnover) this is close to an admission of what some will call dividend washing. So my follow up question would be to ask how much that practice contributes to the falling NAV (and therefore share price).
Also, if HFEL intends to continue with this practice, how does MK think the fund will not continue to fall in value?
GS
Ade2a
Yes, if those who ask questions share them and the answers on this chat board, that should be of benefit all round. Small issues should be avoided, I suggest, as Kerley is not going to spend his time dealing with trivia, but significant matters such as how will the trust deal with an invasion of Taiwan would be good to know.
LTI
You are right the share price peaked at around 380 roughly in 2018.
Bott
Many thanks.
I myself will not be contacting the company. I feel I have all the information I need about HFEL but many on this board see value in getting a response from the company representatives hopefully they can use this information.
LTI
You are a pathetic attention seeker can only reply to anyone with an insult.
Ade2a
No, but you could do this, to Colleen Sutcliffe, she being the conduit for Gould's and Kerley's responses to me. The address is Colleen.Sutcliffe@janushenderson.com.
Dam
''are destroying our capital''
NAV per share increased by about 70% from Jan 2006 to peak price.
Stock markets and the businesses on them go up and down in asset valuations.
A Morningstar article from 4th May 2006:
https://www.morningstar.co.uk/uk/news/59764/henderson-far-eastern-promise.aspx
Can you believe that at the time of writing the article in 2006, the NAV of this trust was 231.3p. The NAV was 14% higher, 17 years ago!
Michael Watt, if you are dead, I hope you are not rolling in your grave. The fund managers who succeeded you are total clowns and are destroying our capital !! They think it's okay to have weak conviction, with 100% portfolio turnover creating large transaction costs, and believe that by trading in to cum-dividend companies they are getting something for nothing. But apparently according to them, this is okay. It's "style".