Cqs New City High Yield Share Discussion Threads

[stemis] 28/3/2018 22:33

Yes, thank you.

[shalder] 28/3/2018 20:58

Thanks for a good link. Much appreciated.

[jonwig] 28/3/2018 20:35

A research note here:

[speedsgh] 26/3/2018 13:26

Half-year Report (cont'd)...

Investment Manager's Review
During the last six months it has become more apparent that the British economy is no longer matching either Europe or the United States.

The main knock on from the Brexit vote has been the weakness of Sterling against the Euro and to a lesser extent the US$. This has had two major effects. Firstly inflation, which was already at 2.9% in June and finished the period under review at 3.0%. There is no doubt that these figures were part of the reasons behind the Bank of England's 25bp rate rise in December to 0.5%. Whilst prices were increasing at around 3.0%, household finances continued to be squeezed as wage growth was between 2.1% and 2.5% hitting savings ratios and increasing credit card spending. Further to this, a survey released by the FCA disclosed that 1.4 million credit card holders had only paid their minimum payment for the last three years. This certainly had a negative effect on retail sales over much of the period, with nonfood retail relying even more on the Black Friday and pre-Christmas sales than previously. New car sales too took a pasting, down 11.2% in the month of November with the brunt shouldered by diesel, down 30.6%. The overall figure for calendar year 2017 was down 5.6% for all vehicle sales. So overall, not great for consumers or retail.

The second effect of the weakness in Sterling has been positive. UK factory orders, at plus 17%, are the highest since August 1998 with orders for chemicals, electronics, and transport goods noticeably up. Job creation was good in the period in both services and manufacturing sectors with employment highs being reached in November. Another positive piece of news was the lower than expected Public Sector Borrowing Requirement also announced in November with the year on year figure down by £4.1 bn to £38.5bn, the lowest since 2007.

We remain with our view that the biggest risk to the UK is political and highly influenced by the media with its addiction to having daily headlines on Brexit and Theresa May's position as Prime Minister.

By contrast Europe has continued to expand, be it in Manufacturing, Services, Retail Sales or the 4.1% increase in car sales up to the end of November. This can be evidenced by the composite Purchasing Managers Index data which are at their highest since April 2011 having increased throughout the period. Retail Sales grew consistently with a consecutive nine month rise in like-for-like sales which equals the record run seen in 2006. The coalition talks in Germany, now resolved, will have a greater effect on immigration to Europe rather than the economy. And Europe will not be giving much away in the Brexit talks; why would they? The overall message coming from Europe is that they are in a far better place in the cycle than the UK.

In the United States, away from the noise and tweeting inside the White House, the economy had a very good six months, continuing to add jobs throughout the period with unemployment falling to 4.1%. Add to this productivity improvements of 3%, compensation costs for workers at plus 2.5% against an all items inflation level of 2%, and the net result to the average American worker is that they should be feeling far more comfortable than their UK counterpart. When you add in the tax changes introduced in December by the Trump administration which benefitted the wealthier Americans, it is easy to see why there has been so much froth in equity markets.

For the Company we had several bonds called or tendered for in the period: Aker BP 10.25% 2022 (at 110), Louis Dreyfus 8.25% perpetual, and Old Mutual 7.875% 2025 (at 125). Tizir rolled its bonds into a 9.5% bond of 2022. Other major sale transactions were the top slicing of Unique Pubs 7.395% 2023 and sales of Nextenergy Solar equity, LV 6.5% 2043, Nat West 9% preference, and Nat West 11.5% perpetual. The major purchases were Wittur 8.5% 2023, REA 9% preference, Raven Russia 12% preference, TES Finance 6,75% 2020, New Look 6.5% 2022, Green King Equity, Regional REIT equity, Ardonagh 8.375% 2023, Punch Taverns 7.375% 2025, Hertz 7.375% 2021, Bombardier 7.5% 2025 and Shawbrook 7.875% perpetual. We continue to look for diversity in the investments we make, whilst maintaining our belief in the ongoing strength of the Financials sector.

[speedsgh] 26/3/2018 13:25

Half-year Report -

Highlights for the Six Months to 31 December 2017
· Net asset value total return of 3.92%.
· Ordinary share price total return of 2.70%.
· Dividend yield of 7.1%, based on dividends at an annualised rate of 4.42 pence and a share price of 62.00 pence at 31 December 2017.
· Ordinary share price at a premium of 5.84% to net asset value at 31 December 2017.
· £9.0m of equity raised during the period.

Outlook
I said above that markets have digested a considerable amount of political change, but it is politics that continue to give us most cause for concern. Since the period end, equity markets which had looked to a robust United States' economy and a Eurozone that continues to recover strongly have begun to see increased volatility in the face of talk of a trade war. Bond markets, too, reflect some of the risks, with global bond yields and spreads rising.

Portfolio diversification remains our watchword as we look for opportunities in a world where, in the view of the Federal Reserve at least, a turning point has been reached in the interest rate cycle.

[speedsgh] 15/2/2018 21:18

Not sure this has been at a 10% discount once in the last 10yrs. That may well of course change as the bond bubble starts to deflate.

[rcturner2] 15/2/2018 18:22

When this is back at a 10% discount I will be interested.

[my retirement fund] 15/2/2018 17:28

Of course. Protecting ones principle does seem sensible also though. Especially given the outlook.

[asmodeus] 15/2/2018 16:42

The heading here is "for income seekers", and that's me, so I'm holding on.

[my retirement fund] 15/2/2018 16:24

Sadly been forced to sell out as the NAV is falling and looks like it will accelerate next week as the bond sell off continues.Fortunately the slight rise last week seems ti have nicely covered the spread and dealing charges leaving a small token profit on my initial purchase.Will reassess later.

[my retirement fund] 06/2/2018 21:47

Still stable. Have taken the opportunity ti load up. May add if a discount emerges.

[my retirement fund] 05/2/2018 15:44

Nav seems to be holding up well at 57.33p

[neilyb675] 05/2/2018 12:37

Hold.....add

[killing_time] 05/2/2018 10:26

Agreed, just topped up, good price.

[lab305] 05/2/2018 08:22

Keeping all mine. Overdone fall after dividend.Reliable steady income from diversified portfolio. There is a reason they they trade at a premium to their asset value.

[11_percent] 04/2/2018 09:55

Ok......they will go tomorrow.

[nerja] 04/2/2018 09:42

Sold 60% of mine , been selling my prefs ,IPE, MXF, etc as well in January, probably be selling more tomorrow. With the utilities under the cosh here the sell off in the pharmas because of trump, the likes of BT being caned its hard to find any conviction buys for income at the moment, it looks like cash may be king for a month or two.

[11_percent] 03/2/2018 23:40

Ok guys, so it is still a "sell"......or have you guys already gone.

[wllmherk] 03/2/2018 23:22

Clever management in my book MRF :)

wllm

[11_percent] 03/2/2018 21:33

MTF,

I wondered why this was taking......bond sell off eh.

Could be a "sell" then.

[my retirement fund] 03/2/2018 19:00

Still some way to fall as the bond sell off gathers apace. Incredibly its still presently trading above NAV.Surley just a matter of time till that becomes a discount tho?

[11_percent] 01/2/2018 13:09

Can trade on HL.

[holts] 01/2/2018 12:58

Can buy them through selftrade

[rahosi] 01/2/2018 09:04

Due to MiFID II, still unable to buy through HSBC.
Costs & Charges document 'unavailable'. (KID is available.)

Are others in the same situation?