Member Info for Meconopsis

The slide deck on their site is worth a look - https://group.legalandgeneral.com/en/investors/results-reports-and-presentations

Page 6 "The CSM on transition provides a view of the stored value of our insurance business that is expected to unwind into profits...£13.7bn of value expected to emerge as future profit".

Market capitalisation is £13.46bn as of this morning, which I presume is L&G trying to tell the city that it's significantly undervalued.

There is an important note on page 10 - "Initial reduction in FY22 operating profit due to deferral of new business profits and assumption review impacts".

“Not if they’re holding long dated bonds like Phnx and L&G etc, the value of the bonds has tanked 30 pc”

Both PHNX and LGEN will have bought bonds to underpin liabilities - not as investments. They will be holding the bonds to maturity against committed cash flows. The profitability of the transaction will be baked in. It’s what they do.

The only impact the market value of the bonds will have is IFRS profitability due to the requirement to recognise potential unreleased losses.

But you know that.

Or you should do.

Https://www.ii.co.uk/analysis-commentary/income-investor-why-cash-not-king-and-three-dividend-stocks-own-ii527881

@WM2020 - thanks and apologies.

Although utterly confused by my understanding of how RNS announcements work!

Acquisition by The Capital Group Companies of 12.98% of the company.

You need to look at the difference between the Previous position and the Resulting position. In this case, the previous position was nothing. On the London Stock Exchange you need to disclose any position of 1% or more of the shares - so they could have previously held 0.75% of the company without having to disclose.

It's a big acquisition. But, there again, it's a big fund manager.

Buffet is worth a read on this. Even if you disagree with him…

https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2023/02/25/2022ar.pdf

“ The cheaper this 18p divi is going to cost the company!”

Aviva have stated their intention to keep the overall monetary value of dividend fixed - so the buyback will get fed back into the dividend.

@chid - I disagree with your point of view, but well put regardless :)

“Armageddon?”

If you get to write it.

And I get read it.

Then Armageddon it ain’t.

Avocet123
"For some reason it's very common for the sp to drop much more than the divis worth"

The dividend “drop” is only relative to what any individual paid for their shares.

Very few people who bought for the dividend would have bought at the closing price of 253. They might have paid (for example) closer to 250 or 245 in the weeks running up to the dividend.

If they are looking to exit quickly and so they will have been happy to exit at any price higher that what they paid minus the 13.93p. They might have been happy to take a small loss if it’s largely offset by the dividend payment.

“Sorry wrong share”

This is increasingly turning into dinner at my elderly relatives…

“Pass the fork please”

“We don’t have peas”…

“ the 13.93p dividend will be automatically taken from the SP tomorrow by the stock exchange”

That is not what happens.

The “stock exchange” plays no part in pricing.

“ITS NOT MY EXPLANATION”

@nicknaim - no offence intended, but you chose a poor example that is inaccurate. Wrong stock exchange and very poor language.

“The SP starts the day (ex-div date) lower by the next dividend amount, in the case LGEN 13.93p”

IN PRINCIPLE and in theory you are correct. The share price SHOULD start trading the next day 13.93p lower.

What ACTUALLY happens is more nuanced.

As an example, let’s say that LGEN closes at 253.93 tonight.

If trading operated in a theoretical vacuum then it would open at 240 tomorrow.

But:

It doesn’t operate in a vacuum.

And you can’t assume that anyone who bought for the dividend is making “a loss” if they sell for less than 240.

For example, take someone who have bought at 235 a month ago. If they sell at 236 on Friday then they’ve pocketed the 13.93p dividend and also made 1p per share profit.

ALSO, the rest of the markets are going on around us. If the Fed were to drop an unexpected rate cut then the markets will jump up - regardless of the dividend.

@nicknaim - a couple of points of accuracy in your explanation...

"Exchange reduces the price of share" - the listing exchange DOES NOT reduce the price. The price (usually) falls as a result of buyers being willing to pay less for a share that has just paid out its dividend.

Your example appears to be based on one from South Africa where the settlement period is three days.

On the London Stock Exchange, the standard settlement period is two days - so the ex-dividend date is the day before the Record date. To use your example, a trade on 6 September would be (normally) registered as settled on 8 September.

@Andymilman - I fundamentally agree with you in the short term.

Sentiment is currently outweighing fundamentals in the current market.

Rationally, the yield from LGEN, AV. and PHNX should be all be being priced out.

@Pompeyboy11 - I used to work in this area (for LGEN). But it was over 10 years ago - and my brain has had a lot more information pumped into it since - so my recollections might not be entirely accurate.

The various share classes represent different distribution deals for the unit trusts - some of the encapsulating things like trail commission, which is now banned for the advised sale of new funds, but can still be applied to existing arrangements.

The important thing to understand is that the underlying unit trust is the same. All you’re doing is paying more or less in charges. The OCF will either go to LGEN (in which case I think we can all say “thanks!”) or be split with LGEN.

The newer fund classes are called “clean” classes and don’t include any commission nasties.

All you can do is choose the lowest OCF class on YOUR platform.

I left this bit of the industry 8 years ago, so apologies for any inaccuracies.

“I see the trusts are offered in different Classes, F, C, I for example, not sure which to opt for.”

The thing to do is look at the Ongoing Charge Fee (OCF) and choose the lowest offered on your platform.

It’s important to note that not all platforms offer all of the classes; some platforms have platform-specific charges; and (IIRC) even the fund class having different charges.

This article is worth a read - https://www.morningstar.co.uk/uk/news/199902/why-fund-share-classes-matter.aspx

On iWeb, for example, the L&G Global Technology Index Trust is offered as:

I class with an OCF of 0.32% and 5 year annualised return of 19.19% or…

R class with 0.70% OCF with a 5 year annualised return of 17.75%

A final thing worth saying is that unit class types vary between fund managers - so if “Z” is the cheapest for one fund manager then it might be the most expensive for another.

Hope that helps.

I won’t be offended if someone needs to correct me!

Complete and utter mischief-making.

For anything like this you need to hit the Live RNS button and read the PDMR release…

“Shares sold to cover tax and social security”

Absolutely standard practice to cover taxes due on management incentive share options.

It’s incredibly sloppy and misleading writing. Sloppy, because if the intention was to spook retail investors the they missed that he sold an even bigger volume of shares a couple of days earlier.

“The company register record date is 1 day after ex divi date. It’s records who's on the register ( shareholders) on the closing date before ex dividend date. Hence 2 days later..”

The two days reflects the settlement period for shares on the London Stock Exchange.

This might help…

https://www.investopedia.com/articles/02/110802.asp