Member Info for tichtich

"Never catch a falling knife, and be careful of the dead cat bounce."

OK, but then how do you decide when to buy? Technical analysis?

I'm still waiting, but I've got an itchy trigger finger. 🤞

"There is a direct correlation between tariffs applied by individual countries to those now applied by the US."

Actually that's not the case. (It's not a good idea to believe anything Trump says.) We know exactly what formula was used to calculate the tariffs, because the White House revealed it. And the formula takes no notice at all of any existing tariffs or other barriers to trade. It is purely a function of the US trade deficit with that country. Higher deficit means higher Trump tariff, regardless of whether that country has any tariffs or other barriers on the US. That's why some extremely poor countries, like Madagascar and Lesotho, have some of the highest Trump tariffs. They're so poor they can't afford to buy American goods.

See https://benansell.substack.com/p/simple where I've left a comment under the name Richard W.

"Ah but it would only be 10% for those who bought at the tanked price."

The yield is already over 9.5%, or 10% if you round to a whole 1%. If the price fell another 30% from here, the yield would be over 13.5%!!

Holding 65220, average price about 7p. A small-timer!

"Now that we have those laws, Donald Trump should be held accountable for them."

We've already seen that the US legal system cannot hold Trump accountable. Too many far-right judges, many of them appointed by Trump himself. The question now is whether Trump can make himself dictator for life. And even if it's not Trump himself after 2028, it will likely be another Trumpist. They wouldn't give up power willingly after losing the 2020 election, so it's hard to see what will stop them holding onto power after 2028, regardless of the will of the electorate. In my pessimistic view, the only chance of saving US democracy is if the economy does so badly that even many of Trump's based turn away from him. Personally, I feel that the damage to my pension pot is a price worth paying for that outcome!

God help us!

Well, the approaching dividend is not something that many people are going to suddenly notice on Monday (though I only noticed it today). The ISA point is a good one that I hadn't thought of.

For me this isn't new ISA money. I've sold about 20% of my portfolio (not LGEN) over the last few weeks, to take advantage of a possible downturn. I thought that the growing Trumpian chaos might well be the trigger that finally bursts the US market bubble. The question now is how far will it go, and how much will the UK market be affected, especially the defensive stocks that I favour and which are holding up better. It's the market timer's dilemma: when to get back in! I think I'll keep most of my powder dry for now.

I've been waiting for 220p to add. Almost there, but now I'm wondering whether to be greedy and wait for even cheaper. 🤔

P.S. Just realised that we're coming up to a 15p dividend, so effectively the price is even lower than it seems.

Yes, it does seem strange that the acceptance level is so low. Speaking for myself, I haven't accepted the offer yet because I'm unclear as to whether I would still be able to sell my shares on the open market after accepting the offer, so I'm keeping my options open. There's still over a month left to accept the offer, and there doesn't seem to be any benefit in accepting early. Perhaps other shareholders are thinking the same.

If I remember correctly, the offer will only go ahead if there's 90% acceptance. Should we be concerned that this will not be achieved? I don't know. The market doesn't seem very concerned, given that that the share price is only about 2% below the offer price.

From the last interim report....

----------------------

Disposals

In May, the Company announced that it had

sold its UK on-site solar portfolio, UU Solar,

to UK Power Networks Services Holdings

Limited, the private networks business of UK

Power Networks Group, for a consideration of

£90 million. The agreed price represented a 4.5%

premium to the most recent valuation held by the

Company and served to validate the valuation

of the wider portfolio.

Since then, advisers have been appointed with

the aim of selling significant stakes, or inviting

co-investment, in Onyx and EVN and first round

bids are expected imminently. Interest has

been encouragingly high and we are targeting

completion of these processes in the first half of

the calendar year 2025. Proceeds from disposals

will be allocated to the repayment of the

Company’s revolving credit facility (“RCF”) and

share buybacks will also be considered.

The Manager takes both a systematic and

strategic approach to disposals, and as part of

this process the Manager is considering a variety

of disposal options.

If US companies are stockpiling copper to beat incoming tariffs, then the boost in demand will be followed by a corresponding fall in demand, as they use up their stockpiles, so it doesn't do us any good in the long run. Also, this effect is probably boosting the US price more than the world price, so the quoted price of $4.86 is probably not the price that we can earn. Overall, tariffs should be a negative for the prices we earn.

Also, I'm pessimistic about peace in Ukraine, but even if it comes, I don't see how it's going to help the copper price. If anything, it's likely to be a negative, as wars require more metal, and maybe exports of metal from Ukraine will increase. (Don't get me wrong, I really hope there will be peace.)

Sorry to be a downer, but I prefer to be realistic.

I was wondering why the share price went down yesterday. I hadn't noticed that it went exdiv. That would explain it. Everything still on track then. 😀

@DavidBrent

That's music to the ears of a long term investor who's thinking of adding more. It's 6 months since I last bought any LGEN, and it would be nice if I could add at the same low price of 216 that I paid back then. 😎

@DramChart

I don't know PHP's history, but I think their dividends have been covered, in which case share issuance has probably been for investing in new properties, not for paying costs. If shares are issued to buy properties and increase rents, that's not necessarily dilutive (depending on the details). That said, the LTV (loan to value) of 48% is rather high.

As far as I'm concerned, the main risk is higher interest rates (and higher inflation). Their average cost of debt is only 3.4%, which is pretty low, so likely to increase when debts (or hedges) mature, and that's going to eat into the dividend. I wonder what interest rate they would pay on new term debt today. Hopefully not too high, as they're probably considered a safe borrower, but I'm sure it must be higher than 3.4%, and interest rates could go even higher in the future. In the long run it's _real_ interest rates that matter, so there might not be a problem if higher interest rates are caused by inflation. But that only works if they can increase their rents in line with inflation. I think their rents have fallen behind inflation over the last few years. Let's hope they can keep up in the future (and maybe even make good some of the past shortfall).

@rylidan

I suggest you just filter him. (I just have.) It saves time.

I noticed that Stephen Lilley talked about a "dislocation between public and private markets". I assume he's referring to the fact (if it's true) that assets like wind farms are trading at NAV in private markets while the shares in funds that hold those assets are trading well below NAV.

That raises the question: which do you think is a better judge of the assets' value, the public or private markets?

Regardless, under those conditions, it makes sense to sell assets at NAV and buy back more shares below NAV (unless buyers are just cherry picking some under-priced assets).

"Rylidan, yes the div may be covered, but the share buybacks will have to be at least, in part, funded by debt unless generation improves."

Based on the presentation slides, they have £155m in cash, enough to pay for the £100m buyback programme.

But it would be disappointing if cash generation doesn't improve.

Many people seem to see investments in shares as being like money in a savings account. So when the share price goes down, they think they've lost money, as if some money had disappeared from their savings account. Never mind the fact that they haven't lost any shares.

That said, I'm not one of those who say "you don't lose money unless you sell at a loss". If the share price has gone down because the future dividend prospects have actually got worse, then that is a loss. But then it's the worsening of the future dividend prospects that is the underlying problem, not the share price. So we should discuss the future dividend prospects, not the share price. (Of course, if you want to sell soon, then the share price does matter. My point is for long term investors.)

"continued failing" should read "continued falling". 😕

If you think the shares are underpriced (relative to fundamental value), then buybacks make sense. If you think they're overpriced, then buybacks don't make sense. It you're not sure, and you want to play safe, then it's probably best to pay off debt instead.

I don't agree with those who think the money should be spent on more wind farms. Wind farms typically changed hands approximately at NAV. Since shares can be bought well below NAV, buybacks are a cheaper way of increasing the amount of wind farm per share.

In any case, I don't think the spending on buybacks was enough to make that big a difference either way. Buybacks are not the problem.

I think the main culprit in the current low share price is the recent loss of confidence in net zero policies. I also note that UK solar funds have ticked up in the last week, while wind funds have continued failing, so maybe there's a particular concern about zonal pricing, which will affect wind more than solar.

AAM and DWL prices both up today, after good results from AAM:

https://www.prnewswire.com/news-releases/aam-reports-fourth-quarter-and-full-year-2024-financial-results-302376639.html#:~:text=AAM's%20sales%20in%20the%20fourth,billion%20for%20full%20year%202023.