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Results look good to me; revenue/PBT up; plenty of room left in the RCF. New revenue streams coming online. I was expecting a technical pullback after RSI spiked, though granted it was a bit bigger than I thought. There's lots of upside remaining.
I remember big buys all the way down with Boohoo that people said were a 'vote of confidence' - but the fact is that these funds had no more information than any small PI and their timing and execution is usually much worse. I'll wait to see how the situation unfolds first. If you're in it for 5y it will make no difference of course... but it makes a huge difference if you're not.
Whether or not it is 'worth the risk' for an insurer to be building houses is irrelevant to me. e.g. M&G farm out the management of several business parks, because it would otherwise muddy the waters of the nature of their core business.
The fact of the matter is that LGEN is no longer just an insurer, which is a very low risk business. I have just noted the comments on their heavy exposure to the housing/constuction industry in the most recent broker note:
9-Mar-2023 (Independent Equity Research): 'We remain positive but concede that :&G embeds more risk than we had assumed'
I'll now want to see how this develops before adding anything here as could be a material development.
I'm quite surprised that they developed the modular housing division themselves (if I understand it correctly) - i.e. they are basically running a house building business within LGEN....
That is a significantly riskier activity than life insurance/investment management.
One more comment regarding the 'incredible 10% dividend' here is that with a 10% bid/ask spread (Bid: 180/Ask: 200), *you can expect to take a full year* to earn back your capital loss... Why is anybody going to be tempted by that? It's a ridiculous situation.
Looks like bigger punters are coming in - Brilliant run-up so far.
"It’s now yielding 10%! Even if we all agree that the directors are selfish with terrible PR, this isn’t looking expensive."
I absolutely agree that it is very cheap and that it has an attractive dividend. The problem is that 'on-the-nose' shares like this, with 'on-the-nose' directors, can drift much lower on investor sentiment alone. With such illiquidity (wide bid/ask spread) and blatant disregard for other investors, I'm not yet attracted to buying any more as the capital loss in just a few bad days could wipe out any gain from the dividend.
I might be attracted back if I see them investing a big chunk of the profits into something tangible, that allows a reliable NAV re-evaluation, rather than gifting themselves the money straight out of my pocket as they've done in the past. A reasonable step would be for them to get some broker coverage, but it seems they just don't care about attracting new investors at the moment - why would they, when they're so busy milking the existing ones for everything they're worth?
A freight train maybe? That IC article is clueless. This is a problem at the biggest operator, but half of the SOHO operators have been deemed 'non-compliant' by the regulator and I expect it's similar at CSH. The shi*t has only started to hit the fan, with problems now gradually surfacing and operators facing financial problems which are reminiscent of HOME.
If I remember correctly, the valuer will write down NAV losses by 34.5% for each operator that leaves them in the lurch. I'm watching to see how it develops first. Good companies do not delay accounts by 6m - it's a clear sign of stress.
June 2018: 'Heller junior was paid just under £900,000 last year – nearly 10 per cent of the firm’s entire £11 million stock market value. If Apple boss Tim Cook was paid the same proportion of the US company’s value, he would pocket about $90 billion a year.
At Bisichi’s annual meeting on Wednesday, investors accounting for nearly 30 per cent of the shares voted against the pay report.'
Why would be now be different? I fume at how these crooks have nicked my money, but nothing was done last time and I very much doubt anything will happen this time.
BUYER BEWARE, there are rampers here, that I suspect are not completely independent...
As I tried to explain some time back, yes, the company makes a lot of money, but investors will not see any of it and that's all that matters. Investors are just a pain for this company as the Directors run it as a personal piggy bank.
Momentum has definitely improved for this share, with positive 1m Relative Strength. That alone should see some technical traders coming in soon.
Regarding the comments on the 'rental income increasing': that will not be the case if Auckland encounters financial problems - which is now a distinct possibility, given that they are 6m behind in submitting their financial results.
"The regulator added that Auckland has not demonstrated that it is appropriately managing actual or potential conflicts of interest, while failing to submit its statutory accounts, which are now more than six months overdue. "
I am also a bit annoyed about the timing of the announcement. SOHO maneged to get theirs out by 8am. Releasing it at the time they did is usually done by companies wishing to conceal something. In my experience, it usually results in another drop the following day.
@wishIhadnt: Rather than give advice to other investors (which is illegal), perhaps you should offer something useful, such as the nature of the relationship between Civitas and the CIC?
https://www.investmentweek.co.uk/news/4112517/civitas-reits-largest-tenant-enforcement-action-regulator
Excerpt:
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According to Companies House, Auckland's principal shareholder is The Social Housing Family CIC - the community interest company set up by Civitas, of which Auckland became the first member.
Civitas' website states that the CIC is "operationally independent" with a stated aim to "enable housing associations holding Civitas leases to increase skills and experience and to provide funding if required to promote enhanced performance".
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I am concerned that Auckland are responsible for 15.9% of the rent roll and the opacity of their relationship with Civitas.