Chesnara Share Discussion Threads

[al101uk] 26/2/2013 22:28

Chairman20,

I don't try, I'm not that clever. I think the swings here are big enough to give me a nice margin of error when I buy. We have traded between 100p and 260p while I've been a holder. EEV has been in a much tighter range. If I can buy at a 50% discount to last reported EEV; I can deal with with a 20% reduction should that happen. Generally that doesn't happen.

... and if we trade in a tight range for a long period of time, I'm more than happy to hold on to them and collect a 9-10% dividend. I have no timescale for selling when I buy, generally I prefer to buy and hold, but if the opportunity presents itself...

[chairman20] 26/2/2013 17:27

tracking the discount to EV and selling when it appears
overbought seems like a good strategy

my only problem with it is estimating the EEV between reporting
periods. I can't.

[al101uk] 26/2/2013 15:26

Just to be up front I sold out of these, very fortunately, at about 230p (as posted at the time).

My view is and always has been that they are a well managed company that will be run in a way that maximises shareholder value, will return that value at every opportunity and be run conservatively enough to ensure that short term obstacles won't be the cause of any nasty surprises to shareholders.

I think the dividend is safe enough, while if past performance is anything to go by, the share price will move between EEV and a 50% discount to EEV depending on the whims of investors.

I sold as a result of the discount to EEV narrowing and there being no clear rationale to suggest that the company may have increased EEV since last reported. I'll buy back in when the discount is sufficient for me to do so.

It's a simple strategy for for a simple investor :-)

[chairman20] 26/2/2013 14:30

Not noticed CSN being a surrogate for bond fears in quite this way b4 - but then I supposethe key thing is that "dividend"

[retsius] 26/2/2013 14:08

a1 thanks. Do you think the divvy is safe?

[al101uk] 26/2/2013 13:57

Chesnara doing what Chesnara does. Share price can be volatile on occasion, I doubt much has changed to justify it.

[retsius] 26/2/2013 13:44

Big drop-- any news? Worrying.

[chairman20] 20/2/2013 18:07

RSA (in my view) benefited from the attempt to
suggest a deal to Aviva - to merge and then split
into a Composite; A savings/life Co; and a closed
book of business.

the deal was always fanciful in my view because it
was an attempt to present a strategy the market
wanted from two failed startegic models. Seen as a
takeover deal it was a classic combination of two
weak companies with differing weaknesses to create
a slik purse. The Pig never flew.

But in a market where a lot of institutional
investors were seeing outflows/redemptions making
them desperate for any sort of action to release
cash and increase base values there was and is
a huge amount of wishful thinking for anything
that smacks of a takeover target.

RSA's own problems and problems on its own are
now more obvious. The natural predator would be another
consolidator = but the bond problems are everywhere and
not too many companies are in any condition themselvs to
take on more balance sheet debt .

[aleman] 20/2/2013 17:00

It's a balancing act, though, isn't it? RSA sounds to have been making paper profits on bonds but not getting in enough cash as interest payments to cover costs and pay dividends, as maturing bonds get recycled into lower yielding ones over the years. As bond yields rise, the reverse happens: you make capital losses but cashflow then inproves grdually as you recycle into higher yields. It's a good lesson in the difference between earnings and cashflows. Each company will be affected differently. Some will have more profit through asset gains and some will have more profit from income exceeding costs. Like I said, though, some accounts can be so opaque it's really hard to work out who wins and loses. CSN generated loads of cash last year but not so at the interims. THen the Q3 IMS suggested a better show to come. What is the underlying trend? It's so hard to know with most insurers. RSA doesn't look to have generated enough cash for a while, though, and traded well above NAV recently. (WHy?) I still hold CSN and don't really feel the urge to sell. They don't seem to have the obvious cash issues of RSA but I admit to find it confusing trying to compare.

[lord gnome] 20/2/2013 16:34

Aleman - what happens when bond yields start to rise to reasonable levels? Surely anyone holding bonds bought at inflated low yield prices will suffer catastrophic capital losses. What would this do to reserve levels in companies such as RSA? I think I know the answer!

[cestnous] 20/2/2013 15:43

I too am out for now. Bought in when things were a lot more volatile some time ago. Hopefully be back after the next 'crash' at a lower price. Making more money on riskier stuff at the moment.

[aleman] 20/2/2013 15:28

RSA dividend cut has been tipped for a cut for a while. It's been uncovered by cashflow for the last 3 years (and I'm not convinced it will quite be covered next year, despite the rebasing, if bond revenues don't rise). I'm not aware that applies at any other insurers. Trouble is, though, that their accounts are all so opaque that I can't understand why RSA have had poor cashflows while others have been better.

[lord gnome] 20/2/2013 15:22

That could well be the reason retsius. All high yield insurance stocks taking a bit of a hit today on the back of the RSA dividend cut.

[retsius] 20/2/2013 13:08

Is this a reaction to the dividend cut at RSA ? Seems to be a lot of stock traded.

[al101uk] 19/2/2013 23:11

Decided after six and a half years to sell my core holding. Might be more upside, but I just don't see it moving too much higher.

Leave something for the next guy and hope to get back in somewhere below 180p at some point in the future.

It's a sad day, got a real soft spot for Chesnara and they've treated me well while I've held.

Good luck to those that remain.

[jonwig] 19/2/2013 17:21

Ah ... a tough one!

[al101uk] 19/2/2013 16:07

Jonwig,

Up is good, but the last time we traded at these levels we were on an EEV of over 300p per share.

I guess the better question is can I generate a better investment idea :-/

[jonwig] 19/2/2013 15:16

Well, the discount rate may well have fallen again (that happened with infrastructure funds such as GCP), equities have risen (though bonds haven't), and new business generated by Movestic should contribute.

So I'd be moderately confident that 31/12 EEV will be up on the last stated figure (30/09).

[al101uk] 19/2/2013 15:07

Can anyone see any reason for a decent uprating in EEV at results (I can't)? If not there seems little reason to hold much beyond current levels.

I hate the idea of selling my core holding here, but the idea is definitely gaining traction. Never fall in love with a share, even one you've held since 2006.

[jonwig] 16/2/2013 07:55

There might be further consolidation in the closed life business, now that PHNX has resolved some debt-related difficulties and has the stated intention of now doing just this.
RSL is less likely to participate.

The last stated EEV of CSN was 266p; any bid would be below that (as Ch20 correctly said) but the Swedish businesses would need to be dealt with separately.

Before people get too carried away by the "dividends", don't forget that these are capital distributions from the run-off book. (Though Movestic, about 1/3 of EV is generating true profits now.)

[lord gnome] 15/2/2013 22:52

Never mind a takeover, sit back and enjoy that chart. It's a thing of beauty.

[chairman20] 15/2/2013 20:28

dream on

why would anyone pay a premium for a run off book of business?

[karateboy] 15/2/2013 20:22

Have a look at one month graph. It is not only divi...Is take over a possibility here by say RSL?

[chairman20] 15/2/2013 19:25

Oh well

iots back to dividend harvesting fofr the time being