Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Challenging 6 months, and the 6 before that.. and the 6 before that. But that said I think there is probably more room here now for upside than downside. Weakness still seems largely due to the electricity price outlook. They seem keen to suggest they are erring on the side of caution in a lot of their assumptions, though the hit here does seem to have been a fair bit worse than some more dedicated renewables companies. The moves in share price has been a fair bit more exaggerated than the moves in NAV.. so let's hope they can give us a bit of good news as regards the latter next month. Natural gas prices seem to be slowly improving.. I was in here at c£1.05, but know others who bought at £1.20-1.30 who are barely breaking even with dividends accounted for over several years.
I wonder what happens to those who got 2 shares through the watershare thingy. Do they now get consolidated down to one? or rounded back up to 2..?
Thanks for the reply Starknight.. and yes my point is invalid really anyway as the money(355p) is being paid out so no longer sitting behind the share value.
Though the other things to weight are the acquisition value(is it a good deal?) and the potential share buyback. But the special div/consolidation does seem a bit like giving with one hand and taking with the other. Though possibly arguable that a bigger company, with a reduced dividend burden will have more scope/reliability for continuing increases to the dividend over time. at inflation+ rates.
" and the lower number of shares means the total value of your investment reduces from £10,685 to £7,135"
Is this likely to be the case? Surely if the consolidation will result in a higher value for the reduced number of shares in issue? What they represent will not be changing, other than growing a bit through the acquisition.
I take your point on dividends though.
Several reasons.. changing views toward this type of investment, last year's dividend cut(particularly when compared to other majors who did not cut), the fact that despite earnings having recently improved they are prioritising paying down debt over increasing returns to shareholders, questions over the fact reserves are not being replaced as quickly as existing ones are produced. Shell has been possibly the slowest of the big western companies to recover, questionable given hindsight whether the div cut was actually needed. However, in the end.. so long as they are making money and they definitely are atm(unlike last year).. shareholder are gaining whether that money is used to pay a dividend, buy back shares, or pay down debt. I'm reasonably happy for them to get on top of the debt first, while gradually increasing the dividend. Other majors have recovered quicker, but if prices stay where they are - this'll recover some more too given time.
I agree, also not helped by dividend cut. However in the long run this may prove to have been the prudent thing to do. Every reason to expect in the mid term energy prices will get back to where they were, which should see a reversal in the fortunes here. Indeed other energy related companies have already started pegging back pandemic related losses. Will this quickly get back to where it was at the end of 2019, maybe not.. but I don't think £1.15-£1.20 is unrealistic. Worth hanging around for the recovery I reckon.
Cobalt prices have slipped a bit.
Hi Krustysmegma, thanks for the response.. I did email EAT and got a reply from the company secretary 'the Distributable Reserve is composed of readily realisable assets. This reserve is disclosed to provide shareholders with comfort regarding the sustainability of the Company’s dividend.'
It didn't fully answer my question as to exactly what this reserve entails. There is also some reference to it's composition in the full year report. I suspect it includes liquid assets that are part of the trust. For them to have a reserve this size completely independent of the trust would indeed be awesome, but sadly I think that is hard to believe(I would welcome being proved wrong). That said, and regardless - I am very pleased with performance here in the time I've been a holder. Seems they have made some good decisions at a turbulent time.
Hi silverknight. Yes, I was trying to clearly indicate I did not believe this to be the case, it was the reason for my question. I will try contacting the company and asking.
There's been a fair number of quarters showing a drop in NAV here now. Which has more than once been attributed to the energy price outlook/forecasts and that predicted impact on future revenue. Am hopeful this trend might come to an end in a few weeks when we are updated on NAV again, yes we've had another lockdown which is not great.. but with any luck from here on in things might improve generally, wrt covid at least. Also price cap increase based on wholesale costs might be a good sign(though I am absolutely no expert on the energy market).
"The energy regulator Ofgem has announced that the energy price cap will increase to pre-pandemic levels due to rising wholesale energy prices"
Turning the light back on temporarily.. I bought in here last year - seemed like quite a bargain and and has performed fairly well, decent regular income.
If there is anyone out there, I have a question. In the RNS on 30th of March there is the following statement 'and a Distributable Reserve of £339 million.' Can anyone shed any light on what this is? As I understand it a distributable reserve is accumulated profits, used by trusts to cover dividends in hard times? Which is great, but this seems like a big number relative to the market cap.. and what form does it take? Surely this can't be a cash reserve of this size? By my maths this could cover the dividend in full for more than a decade.. which surely can't be the case? Ok so that's quite a lot of questions.. can anyone shed any light?
Switching off light, closing door, will come back in a year see if anyone's passed through..
Agree the increase in corporation tax will have some negative impact, though arguably most of the performance issues relative to current investments last year may well become less of an issue this year(energy prices). But yes going forward the question is what can they do to find sensibly yielding new investments that don't lead to higher overall risk. On balance I reckon this might have fallen a bit too far now, but we'll see!
https://quoteddata.com/research/gcp-infrastructure-fund-compelling-yield-qd/
Disappointing how the share price had performed here, though seems to have been blamed on electricity prices which weren't great through 2020, but possibly look to be recovering now.
This seems to have been harder hit that for example dedicated wind or solar funds which seems a bit concerning as on the face of things you'd expect it to be more diversified. I bought after most of the fall, but has fallen a bit further since I bought. Have watched this for years and held before and it's always been fairly stable/resilient.
Thanks FRTEB, really appreciate the response. No desire to sell at the moment, but good to know this might be a second option vs the open market if it does come to time to sell.
I'm about. I know someone who holds shares here.. I used to but don't currently. They received a letter about a 'tender offer', does anyone know what this is about? Is it the fund buying some of it's own shares? Anyone have any insight into what this letter is about and if anything needs to be done?
So what happens now?(sorry for my ignorance) I only have a few shares here, but will have done alright out of this. When is the deal likely to complete? Is it fairly likely it will complete? What do I need to do, just wait and at some point the ehg shares will disappear from my account and cash will be there instead?
Apologies if already posted:
https://www.bloomberg.com/news/articles/2019-08-15/africa-s-largest-fund-manager-sees-next-gold-boom-in-west-africa?srnd=premium-europe
That is to say stuck with or to take a loss on.
I never called it a 'trading or investment strategy', rather I try to go into things with my eyes open, what ever I buy I try to accept that over any time scale, it could go up or down. As it happens I have bought and sold kie many times over the last few years and sold at a profit every time, but I like almost all others have taken a loss sometimes, or ended up holding a share longer than I initially hoped.
My advice dave would be never buy a share you're not prepared to end up stuck with. Literally no one, on here or anywhere else knows which way something will go in the short term.. or it wouldn't be called speculating. The best anyone can do is look at the facts that are available, factor in the lessons of history, past mistakes etc and base a decision on that. But it's not wise to buy a share today and expect to be in profit tomorrow so to speak.
I bought fairly low and could sell now, but what would be nice is some news on the housing arm sale. At that point I may sell some. Though that is assuming they can find a reasonable buyer in the current climate. Nothing is certain. Hopefully this pause is just consolidation, and if you look at the chart for the last week rather than just the last day, things look pretty good. Longer term, who knows, there could be a decent recovery.. or they still could go under.