Member Info for NoloServileCapis

Friends who have worked with and for him are hugely complimentary. Time will tell.

Especially as it seems she was really in the complaints department.

Ps I am rather enjoying the way Kemi, in the house, describes her as “the economist on the front bench”.

The political posts are becoming quite tedious with some verging on rants.

Can someone remind me how you block particular posters?

Many thanks

Nolo

I have topped up this morning. I will do more if it falls further.

Zac, I am grateful for your contributions here. In the summer of 2023 there was a discussion that you led about tracker funds and I decided to allocate some of my pot to a couple of the funds that were discussed.

The L&G global technology index trust

The L&G international index trust

The L&G global 100 index

Nearly 18 months on they are up 50%, 32% and 22% respectively and I am glad I decided to invest in them (which I would not have done if the arguments on this board hadn’t been persuasive (so, thank you, Zac).

Yet, I do worry about them and other companies and funds in my portfolio. I worry that tech has got too high (but I’ve had that worry for a decade and have missed out as a result). I worry about all sorts of things (wars, technology, and trends among others) that could cause prices to collapse across a range of sectors.

But, despite being massively overweight in LGEN and PHNX, I don’t lose much sleep over my investments in life insurers. Their dividends are large and, more importantly, sustainable. They have the next 6 or more years of profits already booked and sitting in their balance sheet as a liability. These profits are owed to future periods and they amount to almost as much as the NAV. As the market cap is close to NAV I look upon the SP as being at nearly 50% discount to the “real” NAV. This may be a simplistic way of looking at things but over my final decades I intend to live off the dividends and am quite happy if the SP remains low and the shares undervalued whilst I continue to accumulate.

GLA

Fair point, Riskingit.

I have at times paid nearly £6 and under £5 and plenty in between. My current average cost is £5.25 so I am a little out of the money at the moment.

But I am relaxed about it and will continue to add. The dividend is secure, it trades at a significant discount to its real NAV and so long as I am buying I am happy with the price being low.

The market will eventually recognise and revalue it.

Rather depends how you work out the impact of inflation. Nominally, you are right. Your £1 is still £1 a year later. However, the purchasing power of that £ might be rather lower.

I you don’t intend to use that £1 it is guaranteed to lose value in a bank. The same £1 in LGEN shares may fluctuate from day to day but over time should beat inflation.

And that is before considering that the current SP represents a 40-50% discount to the real NAV of the business. Seems like a no brainer to me…

Why be pee’d off? The insurance sector is unloved by Mr Market in an unloved market. The company itself is well run and turning out good results. The market will come to appreciate its charms eventually. In the meantime the dividends repay patience and we can buy more at reasonable prices.

Has anyone got a view on the impact of Cowdery’s sale this week on valuations of companies in this sector?

Trading considerably below its intrinsic value.

See Meconopsis post containing the second hand car analogy.

Interesting piece in the business section of the Times today about GE Hitachi readiness to meet the stretch target challenge issued by Great British Nuclear.

It is beyond my technical ability on my phone to copy and paste the article.

But, more interesting were some of the comments. Particularly someone called Andy Dawson. I will try and copy his comment later but in essence he says that RR SMR’s are using old technology that is inferior to the competition and likely to be uncompetitive and less secure. The GE Hitachi version being underground vs the RR SMR’s which are above ground and need much more by way of protection.

So, the question is: how much is built into the SP for RR winning the UK SMR contract?

I always get nervous when the talk turns to buying classic Ferrari’s, especially before the event, but having blithely assumed that GBN would buy RR because it was British (for political reasons) but also because it was best. I am now not so sure.

GLA

How do you filter someone on here?

Courdelion, you are spot on re the market undervaluing the ability of the insurers to generate cash or indeed their “own funds”. Companies like PHNX and LGEN trade at a massive discount to their “Own funds” and have the future revenue streams thrown in for free.

Meconopsis summed it up recently on this (or was it LGEN’s) board in saying that it was like buying a car worth £16k for ££13k and then finding that there was £14k in cash in the boot. Change the K for Bn and you have the picture.

Unlike the general insurers whose customers make annual decisions as to whether to buy or not, the life insurers customers tend to make generational buying decisions and so the future revenue streams are far more reliable and predictable.

Whilst these insurers are currently out of fashion and misunderstood it is inevitable that will change in time and those who have the patience to sit and hold will reap the rewards. It will happen I am sure. Quite when is anyone’s guess but in the meantime we are paid handsomely to wait.

GLA

Would you care to explain your rationale for a haircut in the dividend?

Or should we just assume you are deramping?

Driftking,

Would you care to set out your reasons for the need to rebase the dividend?

I am curious as to the argument for doing so.

Thx

Nolo

So you keep saying. Yet, I gather from city friends (some of whom have worked closely with him in the past) that he is actually very well regarded.

You do seem to have it in for him. Is it personal by any chance?

Ordinarily I would agree with you but it did occur to me that it might encourage US investors (who really do prefer buy backs to dividends due to the different tax treatments). LGEN is often touted as a good buy in the US press and if this encourages more US investors it could help push up the SP.

Eckie, he hasn’t cut the dividend, merely the rate at which it will grow. The saving will be used for share buybacks so I suspect we shareholders will get the same cash return.

Whilst the review didn’t seem to set the world alight (and I’m not sure what investors were really expecting) I took comfort from that fact that it showed there wasn’t much wrong with the company. Minor tweaks required but nothing major. It really is a solid cash generating machine and will be paying out to its shareholders for decades to come.

It is also plainly undervalued and that is unlikely to change unless there is a bid. Whilst we can expect an uptick in the sp when interest rates finally fall the fact is that LGEN sits in the least loved corner of an out of favour market.

In time that will change but in the meantime, as I intend to hold for the long term, I am happy collecting the cash thrown off whether by divi or share buyback.

GLA

You might want to compare the spreads on Trading 212 with HL.

If you can’t see the charges you have no idea how large they might be.

Thanks Mardler and George. I get it now.

What do you mean by the gap? I saw the earlier post and was puzzled by that too.

Apologies if this is a stupid question.