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Let's say NAV drops a not unreasonable 10% from here and the discount moves to 10% as it falls out of favour. That puts us somewhere around 460-470 for what should be an inflation proof income stream starting above 8%. My intention is to start buying at anything below 500.
Are you currently waiting for lower prices or thinking this is very near the bottom?
I was holding the previous incarnation of Sparc, Tontine, the spac. A lot was promised but in the end we got nothing. The deal Bill put together was not approved and PSH got saddled with UMG as a result.
I am not holding PSH at present as we are near performance fee territory. I am happy to buy on pullbacks but see this as a steady rather than spectacular performer.
As an LTH I try to keep up with developments here. I have just THREE posters filtered and not only does it leave almost every message about an oil company called Pantheon, but it filters out around 60% of the posts. Just three people.
There are two main issues here as I see it:
1. They have to cut fees and this reduces the profit margin and potentially compromises their business model.
2. There is a lot of negative press covering excessive fees and this may lead to a client exodus.
As I see it sentiment will not turn around until (2) is addressed and we don't know where (1) will leave the financials hence the selling. I think the shorting opportunity has passed but I wouldn't buy here.
Long time - You may feel certain about your 13% return but it is not a certainty. At present you are sticking with a low total return and the forward looking market does not agree with your feeling.
Global markets, dominated by the US, are not at low valuations by any measure. The consensus expectation of financial analysts is a low return decade. Within this environment it is unlikely for UK shares in general to produce double digit returns.
The MM fund rate of return will drop off at some point but this is unlikely to coincide with stock markets suddenly jumping as that money will probably head to longer dated fixed income to lock in the higher rates.
Long time - MM funds are not a long term option vs stocks as they will underperform. In the short term however, they provide certainty, optionality and currently a high return. As soon as the high return drops, that would be the time to switch into either stocks and/or bonds. If there is a market pullback or crash in the meantime, money can be switched into stocks same day. This is compelling and why literally trillions are making their way into MM funds at present rather than higher divi, low growth shares like Lloyds.
While the MM fund rate stays high, you are getting paid a lot to hold an open ended option to buy the market in general or any share you choose at any time. No good long term but probably good for the next few months at least given the market outlook. You lose ground only if the market outperforms the MM rate during this time.
Against that you are betting on a share that has not achieved capital growth in decades, with a risk of further capital loss, divi cut or even divi suspension.
I had a 3% allocation bought earlier in the year but sold out again recently for a small profit. I bought because the typical SMT holdings started pumping again but that seems to be over and I just can't see much upside for the holdings in the near term. Investment trust discounts across the board show no signs of closing so I've thrown the towel in on several of these. Holding 50% in MM funds now.
Not sure why you're comparing a big 27B market bank bank with a small cap bank that nearly went bust a few days ago. Their share price movements, particularly at this time, are completely unrelated.
Re Lloyds why would anyone risk buying a bank for a non-guaranteed 6.5% divi when they can get a risk free 5.5% at the moment in money market funds?
PCT, one of the performers of the year in the most in demand sector, trades at an ever higher discount while the likes of HFEL, on its continuous journey lower, maintains a premium against NAV.
This should bottom as soon as the UK interest rate increases stop, leaving a basket of funds with a pretty good yield and that will rise in value as interest rates are eventually cut.
Seems straightforward, what am I missing?