City Of London Investment Share Discussion Threads

[penpont] 11/2/2015 16:13

Gets a reasonably positive write-up in the IC, concluding:

IC VIEW:
The dividend yield is enough to justify an investment in CLIG alone - never mind the recovery potential of emerging markets or the group's strong track record in attracting new business. Buy.

[masurenguy] 11/2/2015 07:50

A positive set of interims and some encouraging optimism on forward prospects for H2 & next year.

Some other salient points:

* Basic earnings per share, after a 27% tax charge of £1.2m (2013: £0.9m representing 28% of profit before tax), were 12.6p (2013: 9.6p). Diluted earnings per share were 12.5p (2013: 9.6p).

* It remains your Board's policy that over a rolling five year period the intention is to achieve an average dividend cover of circa 1.2 times.

* We have gained significant traction regarding all of our Closed End Fund Diversification products with Frontier, Developed and Tactical Asset Allocation all winning mandates. A significant percentage of these are as yet unfunded and thus will add to Group FuM over the next few months

* Within Emerging Markets CEF's we are also anticipating being funded with a significant mandate. These unfunded mandate wins total potentially in excess of US$300m.

* Target new money for F/Y 2015/2016, straight- lined to June 2016 - emerging market strategies US$500 million - non-emerging market strategies US$500m

* While we are not in the forecasting business we are at present holding as little cash as possible whilst awaiting a significant rebound in our asset class.

[skinny] 11/2/2015 07:05

SUMMARY

• Funds under Management ("FuM") of US$4.0 billion (£2.6 billion) at 31st December 2014. This compares with US$3.9 billion (£2.3 billion) at the beginning of this financial year on 1st July 2014 and US$3.5 billion (£2.1 billion) at 30th November 2013

• FuM at 31st January 2015 of US$4.0 billion (£2.7 billion)

• Revenues, representing the Group's management charges on FuM, were £12.2 million (2013: £11.8 million)

• Profit before tax of £4.3 million (2013: £3.3 million)

• Maintained interim dividend of 8p per share payable on 6th March 2015 to shareholders on the register on 20th February 2015

• Cash and cash equivalents at the period end of £8.1 million (2013: £9.9 million) after ESOP share purchase (£1.0 million) and share cancellation (£0.3 million)

Note: the financial year end changed from May to June in 2014

I anticipate good progress in the further development of your company over the rest of the current year and beyond."
David Cardale, Chairman


This release includes forward-looking statements, which may differ from actual results. Any forward-looking statements are based on certain factors and assumptions, which may prove incorrect, and are subject to risks, uncertainties and assumptions relating to future events, the Group's operations, results of operations, growth strategy and liquidity.

[skinny] 11/2/2015 07:04

Gary - without knowing yours - I can't say!

[garycook] 11/2/2015 01:20

Skinny, What other high yielding stocks do you have the same as me ?

[skinny] 10/2/2015 15:36

Its probably the 1463 traded on PLUS :-)

[scottishfield] 10/2/2015 15:35

it does move abt a bit :)

[masurenguy] 10/2/2015 15:33

Just a few very small PI sales. A miniscule volume of less than 10,000 shares traded so far today

[janeann] 10/2/2015 15:26

Half year results for the six months to 31st December 2014 will be announced on 11th February 2015.

Bit of weakness this pm in advance?

[skinny] 10/2/2015 08:47

Ok thanks - I did a search of their site, so that explains it.

[masurenguy] 09/2/2015 20:51

No I don't. This was a note that was circulated to clients so there is no accessible weblink.

[skinny] 09/2/2015 20:10

Masurenguy - do you have a link to the above please?

[masurenguy] 31/1/2015 13:44

A note was issued yesterday by Barry Olliff expressing his views on both the past performance and future prospects for the Emerging Markets asset class. It is reproduced below without reference to any charts.

CITY OF LONDON Investment Management Company Limited: January 2015
CLIM Strategic Positioning Towards the EM Asset Class

The past year has been testing for the Emerging Markets. They started the year friendless with little enthusiasm from journalists, consultants, asset allocators or our clients. In the final quarter of 2014, they demonstrated significant volatility and an increase in correlations brought on by a collapse in commodity prices, mainly oil. Despite this headwind and increased volatility, in total return terms, the index ended the year more or less where it started.

In October 2013 we sent the first of three letters to our clients (the other two letters were sent in January and March of 2014). In each, we were bullish with regard to the Emerging Markets asset class. Our view was that, looked at just about every way, they seemed attractive.

We referenced:
• China and Chinese use of Electricity
• The global economic recovery and the likely acceleration of earnings growth in the EM
• The battle between buyers and sellers in the early stages of the EM bull market

Bearing in mind that first our influence as a firm is very small and, anyway, if we had influence it would take clients time to consider, the fall of c.4% from the index level in October to December 2013 provided plenty of time for our clients to secure additional exposure, if it was required. The very significant rise (20%) in the Emerging Markets from the low in January 2014 to the high in August did not surprise us, and at that time we felt pretty good about those three emails.

Subsequently, however, we did not feel so good. This was not so much about the Emerging Markets not doing so well, rather it was, at least in the early stages of the fall, about a Chinese slowdown. As perceptions of a Chinese slowdown gained credibility (on the back of a reduction in the growth of GDP from 7½% to 7%!), so the Chinese stock market started to appreciate. Via the Chinese exposure gained from our QFII allocation, we have participated in the significant outperformance of the Chinese A Share market. In fact this was one of the major contributors to the outperformance that was achieved last year.

Increasingly it would seem as if this year the Emerging Markets will start out being, if not an identikit comparison, a pretty similar version of what we experienced last year. That is to say that whilst they remain out of favor they will retain the capacity to surprise on the upside. Obviously, as far as last year was concerned there was no upside, but if a longer term view is taken then it could be argued that our asset class has at the very least made a base from which to appreciate in the event that perceptions towards it change.

First the bearish [possibly somewhat cryptically stated] points:
• Fund flows to the EM’s have been negative
• EM currencies have continued to lose ground to the US$
• US tightening is seen as bearish for the EM’s
• World slowdown in growth
• Geo-political events have not been supportive of the EM asset class
• Slowdown in EM Earnings growth

The above would lead one in the direction of an EM bear market. In fact, this could have been an environment in which on an absolute basis the EM’s performed very poorly. Possibly it could be represented that they had been in a bear market when actually the data shows that they have performed quite well, especially taking into account some of the previously mentioned bearish influences.

The EM’s have been in an upward trend from mid-2009 and we note that the support line shows this upward trend remains intact. This is not a US-style bull market with an appreciating US$, increasing earnings growth and multiple expansion. But neither is it, reading the headlines or the points referenced above, a bear market. In fact the EM Index has appreciated over the past six years by c. 90% in what to most observers has been a bear market and the question is, therefore, what will change this into a real bull market?

Here are a few considerations:
• An end to the present US bull market – possibly caused by excessive multiple expansion?
• An end to the rise in the US$ – possibly caused by changed perceptions regarding an increase in US short rates?
• Cheaper commodities leading to increased world trade – benefitting the EM’s disproportionately?
• Inexpensive EM valuations – supported by valuations of alternative asset classes and potentially an upside surprise in EM earnings growth.
If some of the above were to occur, it would be likely to create the following:
• Fund flows into the EM’s would become positive
• Multiple expansion in our asset class
………..and a new [real] bull market in the EM’s would have started.

We should not lose sight of the fact that most of the larger components (countries) of the MSCI Emerging Markets Index have run their economies differently from their developed counterparts through both this and the previous economic cycle. What this means is that most of them find themselves in a different place in terms of sovereign leverage when compared with the developed world. To some extent this is as a result of experience gained at the end of the 1990’s and at the beginning of the 2000’s. In addition, a very significant change has been that very few EM currencies are now tied to the US$ whereas previously they were. This means that currencies have been able to act as a shock absorber during the recent adjustment process.

So whilst the consensus is again bearish towards our asset class, we would point to the positive factors outlined above regarding the (in our view) quite reasonable economic growth in China and low EM valuations. To this we would also add ongoing abundant global liquidity and the positive impact of
the fall in oil prices on global economic growth and the net oil importers. On balance we find it difficult to get negative on the prospects for Emerging Markets and, whilst CEF discounts remain wide, we look forward to another year of positive absolute and relative returns for CoL Funds.

CITY OF LONDON Investment Management Company Limited Contacts
Commentary
Barry Olliff, US Office
Phone: [phone]
Fax: [phone]

London Office
77 Gracechurch Street
London EC3V 0AS
United Kingdom
Phone: [phone]
Fax: [phone]
E-Mail: [e-mail]

U.S. Office
The Barn, 1125 Airport Road
Coatesville, PA 19320
United States
Phone: [phone]
Fax: [phone]
E-Mail: [e-mail]

Singapore Office
20 Collyer Quay
10-04
Singapore 049319
Phone: [phone]
Fax: [phone]

Dubai Office
Unit 2, 2nd Floor
The Gate Village Building 1
Dubai International Financial Centre
P.O. Box 506695, Dubai, United Arab Emirates
Phone: [phone]
Fax: [phone]

Website: www.citlon.co.uk
City of London Investment Management CompanyLimited is authorised and regulated by the Financial Conduct Authority, registered as an Investment Advisor with the United States SEC and regulated by the DFSA. All reasonable care has been taken in the preparation of this information. No responsibility can be accepted under any circumstances for errors of fact or omission. This document is not an offer to buy or sell securities. Past performance is not necessarily a guide to future returns. From time to time, City of London may implement Fair Value Pricing to value underlying holdings within the portfolio. Such circumstances are outlined in the firm’s Fair Value Pricing Policy document which is available upon request.

[luderitz] 27/1/2015 11:18

Still pays a very good Divi. and Clig does like to test that 340p ceiling doesn't it?

[masurenguy] 19/1/2015 18:34

It is interesting to note that CLIG has now become the second largest stockholding in the MFM Slater Income Fund, as at the end of December 2014.

[masurenguy] 06/1/2015 13:37

Glad to see that Maynards eps projection concurs with my prior back-of-an-evelope calculation earlier this morning in #1426. Some key points from his summary linked in #1429 above.

Projected eps
"However, the forward earnings guidance issued today has effectively trimmed that £7.2m projection to £7.0m or 26p per share. You see, the ‘transfer to reserves’ for 2015 has now been cut from £0.8m to £0.6m (as per the red box below)."

Next Years target
"CLIG is essentially targeting earnings of £9.3m or roughly 34p per share for the year to June 2016. It’s ambitious stuff, and is based on emerging markets growing 5% a year and extra client money of $1.45bn taking total AUM to almost $5.5bn......I’d like to think the managers here would never publish guidance that was totally out of reach."

Dividend
"All the above calculations suggest to me CLIG’s dividend can be sustained at 24p per share — and deliver that 7%-plus yield — given the group’s declared “flexibility” when it comes to dividend cover."

Projected PER
"Depending on the earnings prediction chosen, I make the P/E at 325p to be something like 11-12 adjusted for the group’s £10m/38p per share cash hoard."

[cockerhoop] 06/1/2015 13:16

Excellent summary of the investment case by Maynard Paton

[aleman] 06/1/2015 09:23

That chart says it all: dividend safe, and maybe even a slight rise next year, and £10m cash on balance sheet to show a marginal increase in 2014/15 and a modest but significant rise in 2015/16. It does need markets not to throw a wobbly, though, but it looks like the buffer to protect the dividend is growing again. Good news, and likely to be quite supportive of the share price around current levels, where the yield is still a generous 7.5% for a company starting to show some growth potential.

[speedsgh] 06/1/2015 08:21

CLIG Forward Looking Guidance -

[cockerhoop] 06/1/2015 08:16

They are forecasting to pick up $1.495bn of new business in the next 18 months, thats pretty impressive.........if they pull it off :-)

[masurenguy] 06/1/2015 08:06

Todays update also included the following forward guidance. If the first half increase in profits is maintained during H2 then we could potentially see eps in the range of 25p/26p for the year as a whole which would cover a consistent dividend payment of 24p if approved by the BoD.

Forward Guidance
FuM of US$4.0 billion at 31 December 2014 compares with US$4.5 billion as originally implied at the time of the June 2014 accounts. At that time the assumptions included market growth at 10% per annum whereas the MSCI Emerging Markets TR Index has fallen by 8% from end June to end December. Furthermore, approximately $120m of assets expected by 31 December 2014 will now fall into the latter half of the financial year. The targets for the next six months have been adjusted accordingly.

Assumptions: Starting point Current FuM (December 2014)
Target new money for the remainder of this F/Y, straight-lined to June 2015

- emerging market strategies $350m
- non-emerging market strategies $145m

Target new money for F/Y 2015/2016, straight-lined to June 2016

- emerging market strategies $500m
- non-emerging market strategies $500m

Operating margin adjusted monthly for change in product mix and commission run-off

Market growth: 5% pa
Decrease in overheads for 2014/2015: -2% (compared 2013/14 annualised)
Increase in overheads for 2015/2016: +5% (compared 2013/14 annualised)
Corporation tax based on an estimated average rate of 27%
Exchange rate assumed to be £1/$1.57 for entire period
Number of CLIG Shares in issue (26.9m) less those held by the ESOP Trust (2.2m) at 31 Dec 2014

Any forward-looking statements are based on certain factors and assumptions, which may prove incorrect, and are subject to risks, uncertainties and assumptions relating to future events, the Group's operations, results of operations, growth strategy and liquidity.

It is also worth recalling Barry Oliff's statement in the June 2014 final accounts regarding his own shareprice targets for further personal share sales.

"I would like to restate my intention regarding potential future sales of shares in the Company. I founded CLIG as an asset management business in 1991 and from the outset, I have always sought to align my interests with those of the Group's shareholders, both before and subsequent to the public listing in 2006. The consequence of this is that, as the largest shareholder and the Chief Executive of CLIG, a significant proportion of my personal resources remain invested in the Company and I believe it is appropriate and prudent, for both the Company and me personally, that I should gradually reduce my holding. Accordingly, I propose:Selling 500,000 at £3.50; 500,000 at £4.00 and 500,000 at £4.50."

[skinny] 06/1/2015 07:07

City of London (LSE: CLIG) announces that total funds under management (FuM) at the Group's half year end on 31 December 2014 were US$4.0 billion (£2.6 billion). This compares with US$4.0 billion (£2.5 billion) at 30 September 2014, and US$3.9 billion (£2.3 billion) at the Company's year-end on 30 June 2014.
FuM remained unchanged over the quarter, while the MSCI Emerging Markets TR Index (NDUEEGF) fell 5% over the same period.
As of the end of December the monthly "run-rate" for operating profit, before profit-share of c.30%, is approximately £1.0 million per month based upon current FuM. The Group estimates the unaudited profit before taxation for the six months ended 31 December 2014 to be approximately £4.3 million, which compares to £3.3 million for the equivalent period to 30 November 2013.
Note: the financial year end changed from May to June in 2014.

It should also be noted that our diversification products are now gaining traction and therefore we have set an increased target of $500m for the next financial year (2015/2016).
The Company is currently in a close period which will end with the publication of results for the six months ended 31 December 2014 on 11 February 2015.

more...

[masurenguy] 19/12/2014 14:34

Small top up by Mark Slater.

[masurenguy] 12/12/2014 11:43

A 4th share buyback announced this morning for another 25,000 shares @320p. Running total now 101,500 shares repurchased for £317K.

[masurenguy] 11/12/2014 11:30

The 3rd share buyback since this program started just over 5 weeks ago, with 25,000 @320p. This makes a running total of £245K spent in repurchasing 76,500 shares for cancellation during this period.