M&G High Income Share Discussion Threads

[mozy123] 27/4/2014 17:40

Colonel - you are correct - was just a quick guess without looking at my model for these. Workings below.

£307,694,761.20 for the ZDP's

£175,350,000.00 for the Income Shares

Total £483,044,761.20

Current NAV £429,100,000.00

Total Shortfall £53,944,761.20

£53,944,761.20/£429,100,000.00 = 12.57%

12.57 n^1/3 = 4.19%

So yes just over 4% compound growth in NAV for next 3 years

[colonel a] 27/4/2014 16:57

Mozy123,
Where do you get 5-6%.
Rounding down / up (193 / 171) ^1/3 ~ 4.1%

[aleman] 27/4/2014 13:56

blackpoolsteve - did you make a mistake in that post? I don't understand what you are trying to say.

[mozy123] 27/4/2014 13:07

Steve - be aware the the income shares are leveraged. Hence the yield is double if not more than what it would be normally.

The company closes in 2017 and funds distributed. Income shares will pay out at 70p only if there's enough funds. There value lays in the income as there is likely to be a capital loss in 2017 unless the NAV can grow around 5-6% pa from current.

[blackpoolsteve] 25/4/2014 21:18

Hi Aleman,

I accept that the dividend on these shares is good,but do you ever make any profits on buying shares high (like now), and buying back later?

Regards,Steve

[aleman] 25/4/2014 16:31

Two days left to collect 1.5p dividend.

25 April 2014
M&G High Income Investment Trust P.L.C.

The Board of M&G High Income Investment Trust P.L.C. announce
that the net asset value (NAV) at 12:00 noon today was £429.1 million.

Income Shares * 73.73p
Capital Shares 3.31p
Zero Dividend Preference Shares 94.27p
Income & Growth Units 77.04p
Package Units 171.30p

The net asset values have been calculated on a cum-income basis,
with dividends payable deducted from net assets on the ex-dividend
date. Financial assets are valued on a mid-market price basis.

* The ex-income NAV of each Income Shares is 70.00p.

[aleman] 11/3/2014 19:17

At the interims NAV was 72.84p. Revenue reserve was £7.138m. On 251.4m shares, that's 2.839p per share. So, revenue reserve and the excess over 70p are the same thing.



[...]

[mozy123] 11/3/2014 18:59

Cheers All!

[aleman] 11/3/2014 18:57

Mozy - the income share NAV dropped from 73.21p to 71.81p between the 21st and 22nd of January.

[colonel a] 11/3/2014 17:46

Mozy,
I don't think so.
The income shares will get the income but only get capital after the zeros.
So the 2.5p adds to the potential upside but does not protect the capital - except at the very bottom which does not bear thinking about.

[2wild] 11/3/2014 12:12

Yes, the difference between the income generated and income payed in previous years goes into the revenue reserve.

[mozy123] 10/3/2014 20:06

Well thats 2.5p more safety for the income shares then.

I always look at the Nav around pay dates and the income shares NAV never drops by the 1.4p payment.

I can only assume its accumulated revenue like aleman states and that current income is not included in the NAVs?

Just trying to build my model to show GRY to march 2017 on the income shares under different situations. Ie 20% market crash etc.

[aleman] 10/3/2014 16:01

I believe that is income accrued so far this year that is not transferred to the revenue reserve.

Edit - this is the case with some trusts which specify current period revenue but, thinking about it, the way MGHI display NAVs such that they all add up to match NAV on the packaged units, I think the revenue reserve must be included in the accumulated revenue attached to the income shares so that you have all accumulated revenue rather than just this year's.

[lord gnome] 10/3/2014 16:00

Correct Mozy - accumulated income.

[mozy123] 10/3/2014 15:32

7 March 2014
M&G High Income Investment Trust P.L.C.

The Board of M&G High Income Investment Trust P.L.C. announce
that the net asset value (NAV) at 12:00 noon today was £434.6 million.

Income Shares * 72.50p


What is the 2.5p on the income shares?

I assume its revenue reserve?

[lord gnome] 21/2/2014 18:02

Great figures. If we assume things stay as they are and the zeros pay out at 123p, then the income shares are worth around 50p net of accumulated income. Only another 20p and then the capital shares start to become valuable and this ignores any income. This is a great bet on a large-cap bull run over the next three years.

[mozy123] 21/2/2014 16:56

3 years to make £47mil for inc shares to be paid out in full.

Any more and capital shares will get something.

[mozy123] 19/2/2014 14:01

Found it - after a load of google searching.

250.5mil shares in each class

So if ending NAV is 430mil in 2017 then;

Zero = 122.83224 * 250.5 = £307.69mil
Inc = 70.00 * 250.50 = £175.35mil
Cap = £430mil less £483.04mil

So £50mil short currently for full payout on inc shares.

I understand Zeros are not worth 1.2283 today.

50/430 = 11.6% rise in assets need to 2017.

[mozy123] 19/2/2014 13:47

Hi,

Can anyone tell me the number of share in issue for each class. Ive looked over the annual report for about 20 minutes and cannot find my answer.

On wind up on 17th March 2017

Zero - 122.83224p
Inc - 70.00p
Cap - Balance ?p

The current Nav is £430mil.

Just need the total shares figures as i cant work out due to the accrual on the zeros.

[gliderpilot2002] 06/2/2014 11:17

I rate MGHI at this price. Yield over 9.5% and hopefully redemption at 70p in 2017 I think. Tasty.

[sleepy] 23/1/2014 12:25

Thanks timbo

[aleman] 22/1/2014 23:34

This site may be of interest to yield hunters that have not seen it before:

[wirralowl] 22/1/2014 13:04

Gary, I've got both RECI and RECP. RECP are prefs that expire at £1 in Sept 2017, so though they are yielding 7.5% at today's price, you will suffer some capital loss between now and expiration; your YTM is more like 6.1%. RECI on the other hand is undated, and capital and divis have been progressively increasing. One last thing, the prefs, being less than 5 years to expiry can't go in an ISA any more.

Apologies all for being off topic.

[garycook] 22/1/2014 12:33

Aleman,Wirralowl thanks for your advice.RECP is the better buy yielding 7.5% with the 8p Divis.RECI yielding 6.37 with a 9.9p Divi is that correct?