Member Info for NoloServileCapis

Fair point.

Though they could dramatically reduce the debt by selling less than 50% of their estate.

Is there an expiry date on that term btw.

In any case I am quite relaxed about it and am sure that in the course of the next decade the discount to NAV will narrow substantially.

I’m not going to discount the possibility of a takeover but I am happy to let inflation and profitable trading reduce the debt over time.

Surely, it is an allowable expense here too?

I would have thought that what would be attractive was buying a large amount of real estate at a discount and getting a business that generates £150m profit as a bonus.

Alternatively, someone could sell enough assets to significantly reduce the debt (the holding in Carlsberg Marstons as well as parts of the pub estate) to leave a cleaner, if smaller, pure pub co that could be rerated as such.

Or the board could do that now and give shareholders the benefit.

Just sayin’….

Of course, you have touched upon LGEN’s Achilles heel. Not AI as such but if AI helps find cures for diseases and as a result life expectancy increases then LGEN will have to pay out for longer. However, i rather hope they have factored those risks into their pricing already.

On the one hand that would be wonderful but on the other hand it could be offset by the waning effectiveness of antibiotics.

Either way, I like the fact that LGEN already has the next few years profits booked.

I also like the fact that it’s core business is based upon big, once in a life time decisions rather than passing fads.

But, I’ll happily swerve their Xmas party….

Robleo,

Sounds very similar to my plans. The question is which funds?

I have been reducing the spread of my portfolio from circa 40 holdings to 20. In the process I have been upping my LGEN holding as very little that I look at has anywhere near as good an investment case. When I look at a 15 year record some of my funds have shown 15% ave growth pa though few have managed more than 4% over the last two years.

At least I know that anything I put into LGEN at a price below 235p is likely to double over the next decade.

Fwiw, to partly balance that I have also been buying MARS as a recovery play. It currently trades at circa 30% of of its NAV and its market cap is approx 1.5 times it profit. It is really a property play as it has a massive pub estate. They recently sold some pubs and realised a price 45% above book value and I suspect that the NAV is more likely to be understated than overstated. It has a sizeable debt secured on its properties but is paying it down. At some point over the next decade its debt levels will have fallen sufficiently for the shares to be rerated or it will be subject to another takeover bid (more probable). Either way I expect the price to be closer to NAV in that period. It is a company and a sector that I know well and my business operates in. They have a good management team, a sound business plan and the directors buy when they are allowed to. I plan to sit and wait. DYOR and all the usual caveats.

On a similar tack I bought Schroeder recovery fund during the pandemic and that has had a good 3 years.

I am too exposed to the UK though and plan to move more into Global funds.

Pat,

Let’s be clear about this.

They are all bad. I don’t hold a brief for the current lot.

There is nothing new about this.

I think it was the ancient Greeks who first cracked the joke “how can you tell when a politician is lying?”…..

My sole interest here is the impact on LGEN.

Cheerio

Nolo

Robleo, apologies.

I completely agree with you. The last thing I want to see is politics on these boards. I just couldn’t Pat’s comment pass without pointing out that I think that things are going to get a lot worse.

It is one of the reasons I am so keen on LGEN.

1). I expect cap gains to end up being taxed at the same rates as income thus eroding one of the core advantages of cap growth over income and making relatively secure dividends more attractive.

2) As you pointed out earlier fund performance has been poor over the past 18 or so months and I think the balance of risk is increasingly on the downside over the next few years. I’d prefer to let dividends reward my patience.

3) what LGEN does is so fiendishly complicated that few politicians will understand it. They will also want to avoid tampering with voters pensions (an unnecessary risk) and so I think that risk of windfall taxes on LGEN profits is low. We can’t completely rule out the risk of political meddling but it is much lower than most other sectors.

Whilst I don’t think we are going to see market collapse I think the key market indices are more likely to slip than than grow so I am happy to bank my 8.5% yield for now.

Pat,

You are right when you say that things are bad.

I’m just not sure that a Labour government is going to be able (or even want) to solve any or all of them. Robleo’s warning on the impending carnage is sobering and sound.

Wealth taxes, anyone?

Zac, is that the L&G global tech index trust? I’ve cashed in activision blizzard and am a bit low on tech so had been meaning to look at tech funds and your post has prompted me to crack on.

Thx

Nolo

Having substantially topped up recently at 220p LGEN is now my largest holding. It’s role in my portfolio is to generate dividends and given the security of LGEN dividends I think there is a real chance that over the next 10 years it will generate as much in dividends as the shares have cost me.

I suspect the shares will still be in my SIPP for my kids in a couple of decades and so I don’t really worry about the SP except in as far I like it to dip occasionally so I can top up.

For what it’s worth the average yield over the past decade has been circa 6.5% and I see no reason why it should not in due course revert to the mean. Whilst I am doubtful that they will be able to maintain a dividend growth rate of 5% for ever I don’t expect it to shrink. So, I expect to see capital growth too though as I intend to keep buying and holding I am less concerned.

It is all about the yield and balancing the growth elements of the portfolio. But then, I am just a simple peasant and know nothing….

The debt reduction alone over 23/24 would represent circa 50% of current market cap.

However at this rate it will take 25 years plus to clear the debt so it may take a few years before the discount to nav significantly narrows; barring a bid scenario, of course.

Personally, I am happy to be patient and will continue to top up.

Https://youtu.be/sgOEGKDVvsg

This is worth a watch regarding the viability of EV. In essence there is not a chance that we can mine enough materials to meet the EV targets. But, before you decry that those pesky mining analysts are pouring cold water on the EV dream it has struck me recently that there is a lot of confusion over the efficacy of batteries. One of my neighbours was boasting recently that his Tesla would be carbon neutral after 70k miles. There is a chance that at that point its carbon cost will be lower than the diesel equivalent but it won’t ever be carbon neutral; assuming his battery even gets to 70k mikes of course.

Mine arrived by post out of the blue

They do still give shareholder discounts.

I wish I’d sold when they were 60p but I thought they were undervalued then and even more so now. I have more than doubled my stake in the past month and am confident that at some point in the next few years they will be re-evaluated and start to trade close to NAV.

They are well run and their back to a billion plan is sound and achievable.

I am happy to hold and wait.