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Not a bank - but a bank-sized dividend at LGEN - good dividend record - doesn't seem as accident-prone as BARC (I hold both)
Bond yields back up - 10 yr getting towards a 3M high - if nothing else is going on - LGEN ticks up/down with bonds
In due course it should settle down - but perhaps the doom loop discussions on UK debt are affecting LGEN a little
I don't follow the yield curve in full - but I usually have the 10 year on my daily watch list.
There is a noticeable correlation between bond prices and LGEN - e.g. LGEN got back up to 250p as the 10 year yield dropped to 3.5%
There is more to it of course, but all others things being equal (they never are) - LGEN will tick up or down with bonds
We've recently gone to over 4% on the 10 year yield, so I'd say LGEN is showing some strength.
Poor old Gordon takes a lot of flak (considering the quality of our PMs since) - perhaps the endorsement of the Telegraph is not the ultimate guarantee :)
However on the question of dividends
"Gordon Brown decided to withdraw relief from dividend tax from the pension funds because he thought that some were too rich"
The rationale at the time was to nudge firms towards more long-term investment and less for dividends. The investment issue is still regarded as an issue - so you could argue it didn't work or it needed to be more draconian - both arguments would be too simplistic.
I'm sure most long term holders are just waiting for the next banana skin. How about Shared Appreciation Mortgages - in recent articles about BofS it's been mentioned that Barclays sold them for a short period.
Personally some of the coverage seems hysterical: "Bank agrees payout over mortgages that āruined livesā".
By "ruined lives" it seems to mean "descendants received smaller than hoped-for windfall".
I trust the exposure is small and relative to recent banana skins - rather minor?
Casapinos - don't presume that I'm dumbly reading brokers' reports (or price targets!) As the CFO (Jeff) put it "Moving on to Investment Management division. Operating profit was down to Ā£142 million, primarily reflecting the impact of higher interest rates on our AUM and so revenues. Total AUM reduced by 10% to Ā£1.2 trillion, leading to revenues reducing by 11% to Ā£440 million."
Sure, they aren't a simple asset manager (so AUM isn't as important) - but as they keep saying their synergistic model is the USP and a fall in AUM is material (lots of fixed costs).
On a board, I try to avoid assuming I know how much/little someone else knows. FWIW, I appreciate your contributions very much.
Wow - "I've misunderstand the nature of LGEN's business" how very dare you!
The reduction in AUM and fee income featured in most brokers write-ups and even the 1 para summaries.
I agree with your comments, and all being well the Boots PF is very good business for LGEN. However if there was a sovereign debt crisis we'd have issues and bald eagle was asking about risks. If there was no risk at all, then the shares would be rated higher. Regarding AUM, an increasing figure creates feel good and presumably increased fees.
There will be others better qualified than me, but AFAIK one risk here would be a meltdown in the UK Gilt market since that is the main asset class paying the pensions. I think there is some truth in the notion that LGEN is a geared play on UK Gilts.
In terms of skeletons, the closing of the prefab unit was a brave decision under the outgoing CEO.
That's the kind of action that a new CEO often takes.
I hope there aren't a bunch of other expensive mistakes yet to be recognized.
Is this explained by UK yields reducing a smidge - even below Italy's (big whoop!)
I saw someone refer to LGEN as being a geared play on UK bonds - is this the dynamic that is playing out?
I also saw reference to the deferred profits - would like to understand that better if anyone has the time. Does that imply that in a bad half-year for operating profit - they can just choose to recognize some lump of deferred profit?
Share buyback is a "possibility" that is later qualified to say that it "remains low".... strange message - not such big news
I may not have borrowed to invest as such, but I've deliberately run up my interest only mortgage (1.1% for 5 years) in order to afford to fully utilise my annual allowance on my SIPP (and latterly ISA). The tax relief on the SIPP makes the arithmetic even more compelling (though refinancing risk has to be taken into account). A boring high yielding share like LGEN has particular attractions for this kind of tomfoolery, but I think SD235 is wise to prefer a basket of income trusts.
@SD235 Interesting that lifetime rates are still low enough for a clunky carry trade - take an equity release from L&G for less than 3% then buy their shares and use the 7+% divs to repay the loan (presume they allow you to repay interest and some capital each year?)
Thanks MPO818 - I did the same thing with the previous dividend. I'm retiring this tax year, I won't need to dodge future dividends, but with LGEN tracking sideways it seems an easy one for dipping in/out.
I was holding some outside of ISA/SIPP - sold at 285.1 a day or two ago and bought back this morning at 273.8 - equates to a 9p tax free dividend after costs (since I don't pay CGT).
In all likelihood they will drift lower at some point, but didn't want to be greedy.
LGEN feels like a very safe play - but occasionally I worry about all those lifetime mortgage adverts on youtube - in case we end up with thousands of perfectly intelligent people claiming that they didn't realise it wasn't free money - and a deluge of opportunistic mis-selling claims overcomes the shares.