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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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Then this will presumably tank short term (Im a holder unfortunately) ...so whats the chance of the Board going after the Investment Mgr for negligence? Wait...I think I know the answer...
It is now inevitable that the dividend will be cut.
Portfolio turnover may have to be reduced and this will reduce the income earning power of HFEL.
The current earnings of HFEL 20.92p is 85.75% of the proposed annualized dividend of 24.4p. The future earnings are more likely to decrease than increase.
As the turnover is reduced HFEL yield must approach the yield of the assets held currently about 5%.
The good news is that a dividend cut will actually be healthy for HFEL in the longer term. The sister fund an OEIC has indeed performed better in total returns than HFEL. Janus Henderson Asian Dividend Income is down -4.9% and -7% over 1 and 3 years compared to -12.7% and
-13.7% respectively for HFEL. Both funds have the same management team but the OEIC has a lower yield.
Simply put regardless of opinions on management style the underlying shares must produce a return of 13% + to simply maintain capital and dividends let alone increase either.
The risk is the dividend cut may not be severe enough to put HFEL on a solid footing going forward.
AL
it is a 'fat dividend' due to fall in asset values, just as Vodafones 10% dividend is fat due to its asset value.
Not so long ago the shares would have been trading at a premium to NAV - currently got an attractive discount.
AL
''The fat dividend needs to be cut. What's wrong with cutting it by a third immediately?''
??
HFEL IS AN INCOME FUND - there would be no need to cut the current level unless the dividend reserve is depleted and the normal income stream does not cover the dividend.
Good afternoon all. I've been looking at the a/cs this afternoon. The assets should have been managed more prudently in my opinion. The fat dividend needs to be cut. What's wrong with cutting it by a third immediately? If the share price dropped you'd be looking at a share yielding, a presumably sustainable and hopefully growing, c7% plus at a discount to NAV with an amended and hopefully successful new investment strategy (though a bit more detail on that would have been useful to have). Not ideal for present holders, that's for sure (I am one)! Is there an alternative though?
I see some directors are receiving salary increases which seems inappropriate. I will be voting against them! ALg.
China PMI just accelerated to a 3 month high at 51.5
Sk1
back again i see .
what happened to Tesco when I purchased at 207p and you predicted disaster for them?
HFEL current NAV 214p per share
Skier1, yes, that's about it in a nutshell. The share price is fairly close to the estimated NAV (about 3%). In fact it is at a level that funds such as Scottish Mortgage could only dream of. So, does this mean it is purely down to bad stock picking?
As predicted, on here, 1-2 years ago...
Over-reliance on China is dragging down the fund.
HFEL jumped in... just as the rest of the world jumped out.
Rookie error.
Keep an eye on that sub-200p level. Sentiment here remains very bearish.
Realist1, were you asleep when you read the report?
"Our Fund Managers had sought to enhance income and offset sterling strength through portfolio rebalancing but this had a negative impact on capital growth. Our analysis has now led us to revise the way in which we capture dividends, an approach that has too often led to diminished capital growth."
The "rebalancing" referred to is, at least in part, the recycling capital in to cum dividend stocks. You might not understand the nuances of the wording but it is a fact that Mike Kerley churned the portfolio to this end. He has now been discharged of his portfolio selection duties, and I take this as the board's acknowledgement that Kerley's approach and techniques were not working. Apparently he is retiring from asset management in 2024, and I hope he stays retired. Probably best he takes up his motor racing hobby full time.
In the report, they mention one of the reasons for the poor results was the low combined weighting in India. The Indian 'Nifty 50' has risen almost 94% in the past 5 years so there was a missed opportunity there. As this occurred over 5 years, it was not difficult to figure out what was happening. Considering they regard themslves as professionals, it looks like they have been asleep at the switch. At least all of this puts to bed the past rumours of dividend washing, etc. and it was just plain, old-fashioned bad management.
Appreciated
A positive reaction when the markets opened this morning to the changes so let us hope we have seen the worst. At least no major sell-offs.
Well, yes, at least they have come clean, better late than never. But, I reckon the acid test is 200.00, and if it falls below that then I will be jumping ship.
Same message on income and surprisingly honest transparency about βhow it isβ.
Recovery on the constituent holdings values,get paid to wait. Nothing more to say really, good luck all.
Very disappointing, you would expect a managed fund to be more proactive and to have moved out of underperforming assets sooner
One problem with these funds is that the management get paid regardless of if they deliver or not
Its taken them 3 years to reduce the share price from 340p to 207p today, which is pretty impressive and about where we were 10 years ago.
It must be run in the same vein as UK Work Pension Funds - luckily I have my own SIPP!!
Will watch with interest - below 200p and its gone, but just perhaps we have bottomed out and may crawl back to 220p
Yes they don't seem to be under any illusion that they've underperformed and not made the best decisions. Actually fairly refreshing to read rather than blaming everything else.
They have been pretty much up front with the current position accepting it `s been a bad year capital wise .I bought into this share for income which has increased .They have analysed where things have gone wrong and the reasons why and now feel this coming year will enable them to get a more balanced income/growth portfolio taking money from reserves to support the dividend if necessary as I read it. I`m sticking with them.
Agree.
Had sold up and was waiting for the drop to consolidate. Iβve recently started to rebuild a position here. The report today would seem to acknowledge their over reliance on China and pure value plays. Hopefully the SP will see a bit of a recovery through the year. Not expecting any increase in the dividend this year beyond a token rise to maintain the illusion of increasing yearly dividends, plus keeping in the AIC records for dividend growing Investment Trusts.
Pretty ghastly set of results but thankfully the managers now seem to be taking action to address this. Albeit a little late in the day. Appear to be maintaining the dividend for now.
Sk1
good to see you back peddling doom - it did wonders when you did the same with Tesco after my purchase of them at about 207p, a little over a year ago . Hopefully the markets that HFEL invest in will now see a recovery.
Agreed on Biden. He's losing control of the world. Rogue states are popping up all over the planet, from Russia to Yemen, to exploit his frailty and worsening dementia.
Trump can be good for US stocks, returning global stability and US perceived dominance. But China stocks won't be happy when Trump turns up the heat and Western firms relocate even more to India.
TOD
OK I am filtering