Close Enhanced Share Discussion Threads

[skyship] 09/4/2008 15:04

Well - the Glitnir risk is certainly holding us back. With the commodity spike this afternoon the "NAV" is now 314p, giving a GRY @ 225p of 19.49%.

Even @ 240p the GRY would still be 15.44%!

[sharpshare] 09/4/2008 08:59

From the CED interim report...

"Credit Risk

Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company. At
the date of this report all issuers carried an investment grade credit
rating.

Investors should be aware that the prospective returns to Shareholders mirror
the returns under the Debt Securities held or entered into by the Company and
that any default by an issuer of any such Debt Securities held or entered
into by the Company would have a consequential adverse effect on the ability
of the Company to pay some or all of the Final Capital Entitlement to
Shareholders. Such a default might, for example, arise on the insolvency of
an issuer of a Debt Security."


Glitnir Bank does not look as solid as it used to.

[alanji] 08/4/2008 13:18

Thanks, Tilton. Can you elaborate any on "well diversified counterparty exposure"?

[tiltonboy] 08/4/2008 10:36

I've spoken to Close Bros, and am happier having done so. However, that is not to say that the risks should be underestimated. They were very upfront about the potential issues, but felt the Citywire article was alarmist. They also believe that they have a well diversified counterparty exposure.

I suppose the current discount takes into account some if not most of the risk of default.

I will continue to hold, but will probably not buy any more for the time being.

[jzd] 07/4/2008 08:50

Surely Close cannot express any opinion on the Counterparty risk other than to reiterate the Credit ratings of the banks concerned.

[skyship] 06/4/2008 16:34

Glynne - that's how it states it works - from 23/02/09 each passing day registers 1/365th of the final payout - & as you say, the "NAV" discount should narrow as each increment of payout is secured.

The counterparty issue is still an item to be addressed.

[glynnef] 06/4/2008 11:39

I have looked at the paperwork, but found no accurate description of the final NAv to be used. Is it a simple average of the daily prices for each commodity during the last year of this fund's life ?

We should see the share price discount to "NAV" narrowing gradually over time, and closing ever faster from about March 09.

[skyship] 06/4/2008 09:59

My reply to Erstwhile was as follows:

============================================================
Erstwhile - thanks for the above - certainly lays the contrary view in a highly professional way.

We've had the debate about the bank issuers in earlier posts on the CED thread; but as yet I don't think we've seen an opinion from Close - think I'll now write to them.

As to the NAV issue - I think you're being rather disingenuous there as the final NAV doesn't crystallise overnight on the day of redemption - it is an evolving redemption so it is quite fair to relate to today's spot rate in the same way as Close does its daily NAV report.
============================================================

Does anyone have an authoritative view on the issuing bank risk, before I write to the company on the matter?

Incidentally - I make the closing "NAV" 307p for a GRY @ 224p of 18.24% If the commodity price surge holds then on past performance we should perhaps be at a 15% GRY with an share price of 236p. We seem to be c10p-12p adrift at the moment!

[galles] 04/4/2008 21:04

Maturity.... A little hard for me to understand as I'm new to commodities. Reading Jim Rogers's book on commodities at the moment, hopefully I can join in the discussion on this thread in the near future.

Thanks for the replies gents!

[mangal] 04/4/2008 16:39

current CED "nav" = 306
current CED2 "nav" = 142

[ edit:
However, do check out what erstwhile2 has to say about these:

]

[davebowler] 04/4/2008 15:55

Mangal do you have the updated NAV figure on CED2?

[mangal] 03/4/2008 19:19

Galles, this is how I do the calcs:
%gry = ( (maturity_value/current_value) ^ (1/yrs_to_maturity) -1 ) * 100

Skyship, apologies if I have pre-empted you.

[galles] 03/4/2008 18:56

How would you determine this redemption yield?
Thanks in advance

[skyship] 03/4/2008 17:01

Hi Galles - CED is a rather specialist stock, in some respects it bears the hallmarks of a Zero Dividend Preference stock; ie it redeems at a future capital value. The compound growth required to take the share price from its current price to the redemption price is known as the Gross Redemption Yield - which in the above scenario equates to 17.8%pa.

NAV is of course - NET ASSET VALUE.

EDIT - sorry all - inadvertently typed Growth instead of Gross above - now amended.

Mangal - thnx for below.

[galles] 03/4/2008 16:31

sorry Skyship, what's NAV and GRY??

[skyship] 03/4/2008 15:40

WOW - The commodity surge this afternoon has taken the NAV up to 304p - so topped up again @ 223p on the bell. GRY = 17.83% - most definitely an all time high!

[skyship] 03/4/2008 10:45

Commodities have dropped back from overnight levels; so NAV now 299p & CED offered @ 225p for a GRY of 16.24%.

[skyship] 03/4/2008 07:42

With all the underlying prices recovering and the NAV now 302p, couldn't resist buying some of that cheap stock sold yesterday. Bt 8k @ 226p for the GRY of 16.58% - an all-time high.

[davebowler] 21/3/2008 21:33

GRY of 11.5% is cheap especially when you add in immunity from Dollar exposure.

[alanji] 20/3/2008 12:46

At 235 (current offer) the yield is over 15% which is very high historically.
Both Close funds are down - looks like I am ending a bad week even worse!

EDIT posted before reading your update, Skuyship - at 290 yield is back to 11.5%

[skyship] 20/3/2008 12:45

mmm - looking to get back in here having totally screwed-up by selling in advance of the big rise - DOH

But all the commodities continuing to be hit hard - oil now below the magic $100; and the recession talk could well take it back to $80.

NAV now 290p - so once again they're looking expensive - even at the current 230/235p.

[ianbrewster] 20/3/2008 10:38

And now it is!!!

[skyship] 20/3/2008 08:16

NAV back to 304p - so CED @ 244/8 now looking rather expensive in historic GRY terms. At 248p the GRY = 11.52%, so CED should perhaps be 10p lower...