Chesnara Share Discussion Threads

[janes bond] 31/3/2009 20:16

Good points jonwig, particularly the second paragraph.

I'm comforted by the fact that you concluded with a suggestion of remedies to the problems.

Surely, at some point, cash rich companies will benefit from the current economic turmoil. Fingers crossed.

Thanks

[joan of arc] 31/3/2009 20:10

JW
At 180p what is the discount rate?

[kimboy2] 31/3/2009 20:08

The EEV has gone up to 180p from 179.1p in 2007 and 171p at the interims. Wouldn't this indicate that they are not returning capital as the DCF is remaining roughly constant despite the dividend.

[jonwig] 31/3/2009 19:54

Perhaps I'm missing something, ...

Your problem here, JB, is that the business is in run-off with hardly any new premiums being written.
What happens when the last policy matures?

To that extent, your dividends are a return of capital (not a return on capital).
On a DCF basis, the total dividend stream is around 180p - ie. the EEV, though the discount rate might differ.

Obviously the solution to the ongoing problem is to acquire other businesses, and they are keen to do that at the right price.

[janes bond] 31/3/2009 18:46

I'm in the LTBH camp here guys. I have never had much to say about the shares - the holdings just produce dividends to die for and just keep getting better - other than that, the set up is quite boring, in my opinion. As with all other investments, I look out for signs of the old adage becoming appropriate, "if it seems too good to be true, it probably is" - it's not been true to date. Anyway, the dividends will eventually help to cover any shortfalls in the share price, if a long term view is maintained. Simple maths can be applied to prove the returns, which would have been trousered, if the shares have been held for years.

With the opportunity to get decent returns on cash through conventional safe means, (banks, building societies etc...), and property being very risky also, I am extremely surprised that more cash has not been interested in piling in here, as part of an income portfolio. Perhaps I'm missing something, or perhaps it will arrive and push the share price upwards.

I agree with the points made about timing of purchases for Denis. I don't subscribe to dividend re-investment plans, but I do tend to re-invest myself. Not that I'm any good at timing, but it's more fun that way. Anyway, my point is, that the share price may be a little more volatile between XD and payment date. As you suggest, it is normal for the share price to trade lower on and after XD, when the shares begin to trade without rights. After payment date, volatility may re-appear, due to holders re-investing.

All that said, these are strange times for anyone in shares and I wouldn't be surprised whatever happens.

Good luck, in any case.

By the way, I assume it is a misprint in the results, about the record date for holders being 14th April 2008?

[ptgint] 31/3/2009 17:20

jonwig - my sentiments and figures exactly !

[denis2605] 31/3/2009 14:43

Thanks for the (quick) replies - and the advice.

My "10%" was a blunt approximation of what the divi is as a factor of the price - jonwig, you put it a lot better than I did!

As it's "ISAble", I'm more tempted for long-term hold and let the divis keep rolling in - if the current rate can be maintained for the next few years then divis would just about cover any investment anyway. I'm encouraged by their points regarding acquisition opportunities and also that the board are confident re: future divi flow.

zangdook - waiting for post-xd would be wise if I thought that the share price on xd date wasn't going to be any higher than it is now. Another assumption I'm making is that we may see a bit of interest (and hence rise in sp) as we get closer and closer to xd-date.

[jonwig] 31/3/2009 14:08

denis - it should drop by 10.05p (roughly) not 10% on xd morning.
If you try to trade in for the divi you're taking on a significant market risk.

What I've not fully worked through here is the extent to which they are paying out capital rather than earnings. The main business is in run-off, and they are busy seeking other opportunities at a reasonable price.

My current viewpoint is to collect the divis so long as the share price is decently short of EEV (180p reported) - ie. sell if it spikes to around 160p.

[zangdook] 31/3/2009 14:04

It will probably fall by the amount of the dividend, but that fall may be reduced or increased by other factors causing it to go up or down. If you discount those fluctuations and assume that it will fall by the amount of the dividend, it might make sense to buy after as you then have your cash in hand, whereas you'd have to wait for the dividend.

[denis2605] 31/3/2009 13:53

Hello,

Relatively new to this one (and investing in general) - been watching CSN for a couple of months.

Am thinking of getting in for the divi but am I right in assuming the price will fall (by about 10%?) when it goes xd?

Just weighing up whether to dip in and out or hold long term...

[ianbrewster] 31/3/2009 12:37

So yield of around 11% - not bad!

[washbrook] 31/3/2009 12:09

RESULTS OUT TODAY.
-------------------------
A final dividend of 10.05p per share in respect of the year ended 31 December
2008 payable on 20 May 2009 to equity shareholders of the Parent Company
registered at the close of business on 14 April 2008, the dividend record date,
was approved by the Directors after the balance sheet date. The resulting total
final dividend of GBP10.2m has not been provided for in these financial
statements and there are no income tax consequences.

The following summarises dividends per share in respect of the year ended 31
December 2007 and 31 December 2008:

2008 2007

p p

Interim - approved and paid 5.50 5.25

Final - proposed 10.05 9.85

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

Total 15.55 15.10

[kirbydon] 23/3/2009 15:59

results on Mon, any comm,s on the Divi

[pneman] 07/2/2009 05:10

Top of the rectangle looks to be around the 140p mark. Anyone think this will go higher than that in the short term?

[pip_uk] 03/2/2009 15:10

Looking very positive today.
Had sold at a small profit, but the dividend just looks too good to miss so I`m back in.

[ianbrewster] 02/2/2009 15:09

On CityWire today

Threadneedle Investments' Jonathan Barber, who is A-rated by Citywire for his management of his UK Monthly Income fund, has named life assurance company Chesnara, which is on a yield of 13.1%, as one that can deliver.

Barber says while Chesnara's book value is shrinking, capital is likely to continue being returned to shareholders and he is '99% confident' the company will maintain its dividend. He also points out the company is invested in a relatively conservative mix of assets. With no dedicated sales force and much of its back-office operations outsourced, it has the capacity to keep costs low and weather the impact of economic downturn.

[a0469514] 31/1/2009 19:41

Well you don't amuch better signal than the Finance Director buying.

Xylos

[edmundshaw] 31/1/2009 18:38

Ken Romney (Finance Director) seems quite keen at these prices. I suppose the yield beats bank interest at the moment...

[humbugg] 31/1/2009 09:02

A0469514,
I think i'd fall in between the two of you. we may well get a few "bear rallies" but medium term im in the down camp. i think you underestimate the scale of the problems in our economy, we will suffer more than most, of that i am sure. scooby doo will make sure of that.
washbrook,
good luck.

[a0469514] 28/1/2009 20:48

It looks like you are a lost cause Mr Washbrook. I'm off elsewhere and we can agree to differ. I wonder though whether you hope that I am right or whether you actually hope that you are right. Think about it. Or perhaps you are another crazed shorter.
Actually I noticed that even Simon Cawkwell, one of the biggest pessimists in our game is calling a 1000 point rise on the FTSE in quick time.

Xylos

[washbrook] 28/1/2009 18:06

KIND REGARDS
-----------------------------------

DEPRESSION?

It shouldn't come as any big surprise that with such a provocative title, we would be saddled with questions as to how an economic depression is even defined. Of course, most portfolio managers still don't know that a recession is not defined as back-to-back quarters of negative real GDP prints (which we had neither in 2002 nor 2008) but instead the timing of the peaks in real sales activity, employment, industrial production and organic personal income growth.

As for depressions, there is no official definition, except to say that they have existed in the past. There were no fewer than four in the nineteenth century, one in the twentieth century, and we are very likely enduring another one today. Though this current one is muted by the fact that most countries have an elaborate social safety net (deposit insurance, unemployment benefits, welfare, and socialized health care).

Depressions are basically long recessions - they can last anywhere from three to seven years, while historically cyclical recessions last 18 months - and tend to follow years of leveraged prosperity of Gatsby-like proportions. Considering that in this most recent leveraged cycle from 2002-07, we reached a point where a record 40% of corporate profits were derived from financial activities, where household debt relative to income and assets surged to unprecedented levels and the personal savings rate briefly went negative at the height of the housing bubble, it is safe to say the down-cycle we are currently experiencing did indeed follow a classic elongated period of leveraged prosperity. It is now reverting to the mean.
* $6 trillion - The amount of private sector debt that needs to be eliminated (Based on ML data that total private sector credit market debt relative to national income is still near a record-high of 140 per cent vs a long-run norm of 80 per cent).

* $1 trillion - The amount of excess capacity in the US economy.

* $13 trillion - the cumulative loss of household net worth at the end of 2008.

* 70% - The US's share of global consumer spending/GDP, which Rosenberg predicts will now revert to its long-run average of 64 per cent.

And the scariest bit of all:
As Morgan Freeman (Red) put it so eloquently in The Shawshank Redemption, "that's all it takes, really, pressure, and time." Time is certainly going to be a big part of the solution, and history tells us that deleveraging cycles last years. While the pendulum is obviously on the downswing, the forecasting community is obsessed with locating the bottom. In our view the appropriate focus is to assess just how far the pendulum will swing in the opposite direction, because a mean-reversion process actually breaks through the mean.

[a0469514] 28/1/2009 17:57

washbrook,

Well if you are contented that's fine. Each to his own way of investing I guess. However I am much more optimistic than you. In fact I reckon that now could be the opportunity of a decade. The time to buy is when most people are gloomy and that sounds like you I am afraid. Not that I am knocking you. I blame the press and television who are only interested in gloomy news. When the banks were dropping it was headline news. Has it been the lead item anywhere that Barclays went up 100% in 2 days? Maybe it has but I doubt it. I don't watch the BBC news anymore.

Xylos

[washbrook] 28/1/2009 12:02

A0469514.
You do not know my problems I put them down then erased them .
I am a very contented man have had a wonderful life and I am not going to change my way of investing.
I only have Investment Trusts I have held Chesnera several times.
If I was younger I would be investing in good solid small companies and there at lot around if you do your own research but not yet.
Alas my view is the equity markets have a lot further to fall.
You may laugh my view the FTSE 100 will see 2000 before the year is out.
The FTSE 100 topped out on 6930.2 on 31.12.1999 that is 10 years ago I expect a 70% fall from that figure.
I remember 1973 the FTSE 30 index dropped by 85% and I feel that it is worse this time.
On a lighter note
The Uk all share index becoming the FTSE all share index .In 1825 the high was 77.26 it fell on several occasions by 75% or more.
Next time 77.26 was reached was in 1959 104 years later.
Stock markets do not always go up or they may take time to recover.
Look at the Nikkei 225 in 1990 it was 38000 now 19 years later at 8061 that is a 78.79% drop.

[a0469514] 28/1/2009 11:28

Why be careful when you are 72? Take a few risks and put some excitement in the last few years. Chesnara have one of the safest yields around with the historic yield of almost 12%. Rather better than the building society or gilts for that matter. I do not see Sterling falling much further but even if it does, so what? I think the Bank of England and the government are quite happy to see it fall. It makes it easier for our exporters, deters imports, encourages tourism to here, and discourages us from spending our money abroad. All good for the economy. We could just be at the start of the next bull market. Don't miss the chance to grab the bargains.

Xylos