The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
MattTheBrave, they don't sell the bonds, they hold them to maturity then buy new ones. The problem is the new ones will yield less.
You can map the LGEN share price against the US 10-y treasury rate, the graphs look very similar. Not exactly the same because there's an underlying business here as well, but they track pretty closely.
eccles, you want part 2 or the announcement, search for "3.05 Consolidated Statement of Cash Flows"
Mattthebrave, LGEN is highly sensitive to government bond yields. The lower the yields, the lower the expected return on investments made with life insurance premiums.
"Profit before tax was predominantly impacted by the formulaic change in LGI's discount rates. LGI's negative investment variance of £483m was primarily driven by falls in UK and US government bond yields which have resulted in a reduction in the discount rate used to calculate the reserves"
The problem if the company is dominated by its pension funds. Management is very sensibly trying to get rid of them to a specialist provider but until they're gone movements in bond markets will affect the company's share price in the short term as much as its trading performance.
Yep, best company on the FTSE.
Fantastic update I thought, given the circumstances.
Games Workshop actually makes money. Lots of it. Rolls Royce doesn't.
In a couple of years GAW will have a higher market cap IMO.
Yes and in every case each trade is both a buy and a sell. The idea of labelling trades as one or the other is fairly silly in a highly liquid stock like LGEN. It makes a little more sense for small illiquid companies with a large spread, where you can easily see which side of the spread a trade sits on. But even then i'm not sure there's any point trying to use the information for trading, people like come up with wacky conspiracies involving "the MMs" but it's mostly nonsense.
Honestly the update didn't seem that bad. Yes it was strangely worded and strangely timed, and they need to work on their investor relations, but within all that they did say that performance remains "on-track" despite the various challenges. It's not like we're trading at a particularly aggressive multiple.
The strategy of selling shares to fund retirement works best with funds (particularly index funds). Look up the 4% rule.
If you're holding individual shares it requires a lot more thought, and carries more risk. Of course taking dividends carries risk as well, as we're seeing at the moment.
The last update said "The Group currently expects to announce final results for the year ended 30 April 2020 in July 2020."
So any time in the next month.
The majority of our stores remain closed, however, a small number have re-opened in China, the Netherlands and Scandinavia in line with local guidance and subject to their local social distancing measures. Our stores will continue to re-open across the world as local restrictions are lifted and all required health and safety measures are met.
Financial update
As stated previously, trading for the Group in the nine months to the end of February was in line with expectations. However, since the outbreak of COVID-19 and the subsequent closure of our operations globally, our performance has been impacted. As we are now re-opening our sales channels as discussed above, we estimate our profit before tax for the year ended 31 May 2020 to be no less than £70 million.
We have also agreed in principle with our bank, Santander, to secure an overdraft facility of £25 million for a six month period with a potential six month extension, if required. This will be drawn, as needed, to meet operational cash flow requirements.
Hullaballoola, have you ever considered watching the news?
£116bn is a mid-cap?
Paul Baay runs a tight ship, there's never been any leaking before that i'm aware of.
The MM's this, the MM's that... have you any idea how daft you all sound?
Seems like an interesting arbitrage opportunity on the face of it, although i'm guessing that TXP is too small for it to pay off given the spread & exchange fees.
Today's fall is due to the weak inflation data leading to a drop in gilt yields. The relationship between government bond yields and the insurance industry is fairly important.
Nice positive interim report today.
I can't get over those sub-3% margins, no matter how cheap it looks.