Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
@NalaKapala1: "this decline is looking terminal"
I would say that most renewables funds have been hit hard over the past year and we're within a grotty bear market in-general, especially for UK shares, rather than GSF being 'terminal'. It doesn't (yet) look as bad as back in 2008.
Granted, it's looking grim here, but in my experience, that's when you can make money if luck, patience and careful stock picking are on your side.
Good luck!
Is the yield over 20% or is this a yield trap like the vast majority of shares with this level of yield? I can't make up my mind, but I'm holding (a small position) rather than increasing, while the knife continues to fall. It's baffling. This is a ridiculous yield, even by US Mortgage REIT standards.
I think I now have a basic understanding of SDV. Please feel free to correct me if you think I'm wrong. I might be wrong - do your own calculations before making any investment decisions!
In summary, Chelverton UK Dividend Trust uses leverage in order to enhance the yield. It has no bank debt, but has a £19.3m liability to the holders of 'zero-dividend preference shares' which are due to be repaid on 30 April 2025. The preference shares trade under the symbol SDVP.
As of 30 Sep 2023, the gross value of the share portfolio is £49m. The trust also has a small amount of cash and is due some dividends etc., but let's forget about those here. This gives a net figure of £30m, which roughly corresponds to the 'Net Assets' figure on the September Fact Sheet.
The key question is what happens to the SDV NAV as the value of the share portfolio drops. From what I can tell, the SDV NAV will drop to zero if the gross assets drop below £19.3m, which would require a 61% decline in the portfolio as of 30 Sep. I'm not sure what the current value of the portfolio is, but we do know that the SDV share price has dropped from 156p to 138p in that time. As a stab in the dark, my guess is that SDV shares become worthless if there is a market decline of roughly 50% from the current levels.
Though it's not an impossibility, I see a 50% decline as unlikely. But I think the more interesting question is what happens when Chelverton need to issue a new tranche of prefs in 2025. The last set of prefs yielded roughly 4% (note that all of this yield is paid at maturity, because these prefs have no coupon), but I think they'd need to yield 8-10% in the current rate environment, given the risk. I am not sure how viable this is, given the current yield available on the portfolio. If for any reason, they can't issue any more prefs or borrow on a margin-loan facility or take on bank debt, the only way forward will be to sell down the portfolio, which will obviously have a serious impact on the yield...
I'll leave people draw their own conclusions from here.
Perhaps my message was unclear. I agree, the capex might not have 'changed'. I just want to understand where the money is going and to know the complete picture re: capex. It's attractive that the company is net-cash, but we need to know how much of it is committed to capex and what the future plans are re: sales of some facilities. Maybe this info is already available?
"A Broker with only a handful of options clients can make a wonderful living"
PETER LYNCH
In my experience of working in the options industry (several decades), small-time options buyers are considered complete muppets. The statistics on the number of winners is even more grim than that with spread betting. But losers rarely talk about their losses, thus guaranteeing there will be more muppets just like them, wanting to get rich quick! In desperation, many of them jump onto the BBs, somehow thinking they can move the market, but that is the very sign of a muppet! No serious options participant is wasting his time on these BBs.
"To buy when others are despondently selling and to sell when others are greedily buying, requires the greatest fortitude and pays the greatest reward."
SIR JOHN TEMPLETON
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"Looks like these junk uk listed financials heading back to covid lows…or worse….uk economy absolutely fxcked."
"Looks like this dogshxt share making another run towards the .60’s."
"Jesus these are getting destroyed even worse than the rest of the stuff on the dog index of the world ftse 100."
"This garbage in terminal decline, like brexit basket case U.K. in general. Does anyone actually buy U.K. shares anymore."
"A mystery how this dogshxt is still above .70, would think the usual Sep/Oct melt down should fxck it up properly down to where it needs to be….sub .66 ( yes I’m shorting it with July 2024 puts )"
...all the rest of the posts are similar. None are constructive. The comment in the last is the obvious bit.
Porsche1946
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After reading today's research from Shore Capital, they mention a net cash position of £75m as at 30 Sep. In their previous article (dated 6 Sep 2023), the cash position (effective as at 30 Jun 2023) seemed to be £99m. Unfortunately I cannot see how the capex requirement has changed during that 3m interval, but I am interested in knowing where the £24m has been spent... Annual divi cost looks like ~£36m.
@Porsche1946: What has Barclays got to do with Phoenix?
Have you thought about sharing your views via a YouTube channel? You could style it on the Victor Meldrew character!
The prospects for Phoenix, L&G etc are booming at the moment, with record business volumes - you have no idea what you're talking about. That's why foreign firms are likely to take over one or more of the UK firms.
@Agricore: you're obsessed about tiny details and miss the big picture.
The FACT is that the vast majority of REITs in the US and UK are dropping at the moment. I agree that most US REITs and especially mortgage REITs are more highly geared than UK ones. But that's a different story. For a UK REIT, RGL is highly geared and investors (Mr Market) is concerned that the leverage is too high and that has hit the share price - that's the reason why the share price was 94p at the beginning on 2022 but is now just 28p. Whether or not that price fall is justified, I'll leave for you to decide.
Since the last update, I'm not convinced that the market believes in the turnaround story from Mr Ingliss. Nor do I believe it yet. I migh change my opinion based on the next update. I had spent a few days looking at the retail bonds as well, but I think they are overpriced, given that they are secured against *nothing* and are unrated by any credit agency - meaning they are an unrated junk... the payoff is totally asymmetrical with a limited upside and 100% loss on the downside. I'll pass on those as well as on the common shares at the moment.
Good luck.
I've spent some time ploughing through the financials here and it seems very 'cheap' for such a company - but what is the attraction?
Management boast how well the company is doing, but unless you're an expert at IFRS accounting for insurance companies, it's impossible to untangle the story:
- The divi is unattractive
- The share price has done nothing but decline in a decade
- I can't find any broker research; ResearchTree has nothing at all
- It looks like a zombie/neglected company
On the other hand, if there is any truth to the recent outlook/performance spouted by management, it seems there is an opportunity here for the brave, if there's any virtue at all in the ultra-low p/e.
@Toff: regarding the performance of the FTSE - I agree. It's been shocking. I am not in any way trying to justify having everything invested in UK stocks. Nor am I suggesting that I would allocate anything but a small position to PHNX or any other single stock.
I would immediately dump PHNX or any other stock if the story changed for the negative. But I don't yet see any change in the story. What I see is a bear market and many of PHNXs peers doing equally badly in their share price. The underlying story at PHNX looks solid - *assuming that we can believe what management tell us*.
Some of the (glaringly obvious) short-sellers (@Porsche etc), try and convince others that it's easy to make money day-trading/shorting etc., but none of the evidence backs up their story. My guess is that 80-90% of them are gradually (or quickly) draining their accounts.
Regarding 'paying big dividends' - you're totally out of touch. I could name you 50 stocks in the US that pay larger dividends than PHNX. The large dividend is shared by most companies in the sector, because of share price declines. While you and @Porchy are constantly singing the praises of US stocks as though most have been rising, which is nonsense. Only a small set of US stocks have been rising, which have dragged up the index.
@Toff - please share your gbreat wisdom about the stocks you've invested in that have done so well over the past year... Please name one of the pife insurers, from the UK, US or Europe with a different share price action. My guess is you can't you'#re just a small-time shorter talking his own book. FYI: negative commentary here will have zero effect on the share price.
@SilverKnight: "This is turning from a long term investment into a marathon investment. Dividends can't keep up with sp depreciation."
Yes, that is true. It's depressing. Which stocks/funds do you know of that are consistently rising atm? I'm not aware of any, but I'm all ears... For those of us that choose to continue holding, I think it's going to be a matter of holding for a long time and hopefully collecting the juicy dividends. I guess we're screwed if the dividends stop coming, but I don't see any evidence of that happening at the moment. In my portfolio (over 100 assets) the dividends are very consistent and I'm not yet seeing many cuts. I don't see any evidence of the PHNX divi being immently cut. If anything, I'm inclined to think that it's more likely to be increased, but all investing is just a punt.