Member Info for tichtich

"..LGEN continues to bumble along with steadily decreasing capital value over the medium term."

Even if the market price of the shares is decreasing, it doesn't follow that their value is decreasing. If something keeps paying me out an ever greater amount of money, then I would say that its value to me is rising, even if no one is willing to buy it off me at a fair price. Of course, it's open to question whether LGEN's dividend will keep rising over the long term. But I don't think you can assess the shares' _value_ without making some judgement about its future dividend prospects.

@Nomad1

I sympathise, but once people here stop digressing about SIPPs and ISAs they'll probably just go back to pointless complaining and speculating about the share price. 😴 (Pesrsonally I find the subject of SIPPs and ISAs a little bit more interesting than that. But each to his/her own taste.)

People here (including me) rarely have much to say about LGEN's actual business prospects because they're so hard to understand or predict. I really don't expect the LGEN board to tell me anything that would help my investment decisions. But I can't help reading it anyway!

With apologies to those who are fed up with this subject...

"From a purely financial point of view, the pension always wins."

While you are basically right, I would quibble with the word "always", since this could end up not being true for money invested now, if tax rates change in the future.

As a basic rate tax payer, I'm avoiding 20% tax on my SIPP contributions now, and probably only paying 15% in retirement instead (thanks to the 25% tax-free sum). So far so good.

But if the basic tax rate goes up to 30% (for example) by the time I take the money out, I will then have to pay 22.5% tax. So I would be worse off than if I put the money in an ISA and just paid 20% tax now.

I don't think an increase in the basic tax rate is so unlikely, given the parlous state of the country's finances. Nevertheless, I'm still putting as much was possible into my SIPP, though that may be only the lower limit of £2880 (net) this year. Most of my income is unearned at the moment and will have to go in the ISA.

Not by my cal

No problem, Coeur. My comment wasn't meant to be a criticism.

By the way, I find it interesting that the price of SHIP shares has jumped every time the company has announced plans for a share redemption (in January, May and now) and not moved much in-between. It feels as if Mr Market only cares about pay-outs and not about the company fundamentals! (I must admit, I like a pay-out too.)

It will be interesting to see if the share price drops significantly after the redemption. Personally, I don't mind if it does, as I might take the opportunity to buy some more.

I've tucked mine away in my SIPP. 😎

That said, I'm not sure this is necessarily a stock to tuck away for the long term and never look at. Shopping (oops, shipping) is notoriously cyclical. Just because it's doing well now doesn't necessarily mean it will do so indefinitely. I've recently taken profits on most of my other shipping stocks, as they were up so much over the last year. SHIP seems to be lagging by comparison. (I redeployed some of my profits into more SHIP.)

P.S. I may not have explained that clearly. If the basic tax rate goes up to 25% in the future, I would lose almost all the tax benefit of putting money in my SIPP now. If it goes up to 30%, I would be better off putting my money in my ISA now.

The basic tax rate has been over 30% in the past.

As a basic rate tax payer, I'm only saving 5% tax by putting money in my SIPP rather than my ISA (the 25% tax-free effectively reduces the tax rate from 20% to 15%). But that's assuming that the basic rate of tax doesn't go up in the future, and that the 25% tax-free isn't reduced or eliminated.

Since I'm not fully using my ISA allowance, I'm thinking of taking tax-free lump sums out of my SIPP and putting them in my ISA, just in case they mess with the tax free lump sum in the future. Then again, they might mess with ISAs, so who knows what's best.

@Fromage

A buyback does increase the value (but not necessarily the price) of shares if the shares are bought at a price below their value. I would still prefer a dividend, though, and let me decide whether I want to spend it on buying more of the supposedly cheap shares.

I agree with Actuary63. I would just add that the electricity pricing system is probably going to change in a few years time, to one which will pay most for electricity at times when it's in short supply (look up 'REMA'), and that will likely be to the disadvantage of intermittent renewables. Also, intermittent renewables could be less in demand in the long term if non-intermittent low carbon sources (like nuclear or geothermal) take off in a big way.

According to the Torygraph, "Labour is planning to push Britain’s tax burden to a record high". Well, if I'm not mistaken, it's already at a record high, thanks to the Tories, so even the tiniest increase would be a new "record high".

"what you gain from the divi you would lose more in capital."

Only if the fall in share price represents a fall in the long term fair value of the company, and not just market sentiment, or if you sell before the share price returns to fair value.

As a long term investor for dividends, I don't care too much about temporary share price movements. That said, it's annoying to think that if I'd waited I could have bought cheaper, and I worry a bit that maybe Mr Market knows better than I do (not that I have much faith in Mr Market!).

"You can't argue with results!"

But what does that mean in practice? When making investment decisions, it's future results that matter, not past ones, because you can't change the past. Past results can have some relevance to the future, but they can also be misleading, especially since an asset which has become very overpriced will have a high past total return but is likely to have much poorer future returns.

P.S. Reading the announcement again, it sounds like HL is going to swap your SHIP shares for SHPP shares, even if you don't ask them to. I guess I would be OK with that if II does it to, though I think they should really make it optional.

SHPP isn't new, but it sounds like HL hasn't allowed you to trade it online before. I think the same is true for Interactive Investor, who I'm with. Personally, I preferred to buy SHIP, as I had spare USD.

From the latest report:

"At 31 March 2024, there were four debt facilities in the Company’s group, at Emitel, CRA, Speed Fibre and the fund-level Eurobond. The €200 million Eurobond is a term loan, with a bullet repayment in September 2026."

and

"CRA’s debt package is due for renewal in mid 2025. The investment Manager and CRA have begun work on refinancing these facilities well in advance of the term date."

So at least 2 of the 4 debts have relatively short maturities. However I note that the average cost of debt is given as 6.7%, which seems quite high, so hopefully rolling over the debt at maturity is not going to increase the interest rate by much.

In some ways I prefer to see a high rate of interest being paid, as it means the current earnings/AFFO are already based on a high interest cost, and they shouldn't be hit hard if the debt is rolled over at a similarly high rate.

There were also a couple of director purchases in the last few days. I assume they were not allowed to buy until after the results came out. They probably knew the results were going to be good, but they had to wait and then pay a higher price!

I'd be tempted to add some more if the price pulls back a bit.

To me, "buy and hold" does not mean "buy and hold regardless of anything that happens". Of course anyone who owns shares in individual companies should be prepared to consider selling if circumstances change. (At the same time, it probably pays to not sell unless you have a strong reason to do so, and prefer to err on the side of holding. Personally, I think I've been too quick to sell in the past, but I'm trying to change!)

As a (hopefully) long term investor, I don't care whether the share buybacks increase the share price in the short term. A share buyback is effectively equivalent to paying an extra dividend that I'm forced to spend on buying more LGEN shares. That's OK with me. (I don't want to own a lot more LGEN, but the small amount we're talking about is not a big deal.) If you'd rather have the extra dividend to spend as you like, you can achieve the same effect (apart from transaction costs and spread) by selling enough LGEN shares to keep your total ownership of the company the same as before (since the buyback increases the fraction of the company that each of us owns).

Copper price has retreated quite a long way from its recent peak, which was probably fueled by speculation. Let's hope CAML locked in some high prices while it lasted! Anyway, price should still be pretty good going forward.

I'm still holding UKW for long term income. The NAV model's assumptions seem reasonable, and on that basis, the dividend seems fairly safe in real terms. Of course there are longer term risks, such as a change in government policy. I'm a little concerned about what the effect of Labour's Great British Energy company will be.