European Assets Share Discussion Threads

[essentialinvestor] 09/5/2024 18:20

The share price was at current levels back in early 2013.

11 years later, it's more than reasonable to question performance - I appreciate you may view it differently.

[marktime1231] 09/5/2024 17:14

No we are here for income not growth, EAT is for long term investors not blokes fretting the day to day stuff. When NAV has recovered to 120p on better macro outlook and the share price catches up you won't be complaining. And if your average holding price is 80p or so because you took advantage of the dips there is not a lot to complain about now, given the direction of travel.

The only issues, which may be behind the recent change in manager and which may be connected, are that the portfolio value has not (yet) rebounded as strongly perhaps as other European small and medium cap baskets and the discount is persistent.

But on the plus side NAV has now put on something like 4-5p in a week and has only stretched the discount because we are waiting for the share price to follow suit. Think of it as a buying opportunity,

[essentialinvestor] 09/5/2024 12:10

Needs to be changed, 4%.

The current payout heavily weighing on longer term NAV progession and now the share price.

It makes the Trust less, not more attractive.

[marktime1231] 09/5/2024 11:49

No. The 6% of NAV distribution is wired in to the articles of EAT it is not at the manager's discretion.

The discount is slightly wider because NAV is moving ahead and the share price needs to catch up.

[rosburg20] 09/5/2024 10:56

Discount to Nav seems to be widening. Is a dividend cut under the new manager being priced in?

[aleman] 07/5/2024 16:05

It's a while since NAV was over 100p.

[marktime1231] 02/5/2024 20:34

And a welcome step down in management fees. I sense EAT has lost ground to other European small and mid cap stock pickers so let's hope this is the springboard for better performance and repairing the discount, but actually I was looking for share price weakness to add some before the next dividend round.

[investingdad] 02/5/2024 19:27

Cosh has been replaced as fund manager. Hopefully, the incumbent fairs better and gets the discount narrowed. Objective of the trust remains the same.

[makinbuks] 28/3/2024 11:34

Good to hear they're thinking about it and taking action. I can't help feeling the dividend strategy is a hinderance to the investment strategy, ie it limits the manager or dominates his and her thinking. Personally I wouldn't object if they wound it back a bit

[investingdad] 28/3/2024 07:44

Interesting article. https://citywire.com/investment-trust-insider/news/under-the-cosh-european-assets-wants-a-more-clinical-portfolio/a2438753?re=118720&refea=1266143#ShowComments

[investingdad] 27/3/2024 20:27

It is a shame it is 9 months out from year end and the dividend calculation! However I am hoping that markets led by US continue to go well into the election and into November outcome, then leading into a Santa rally. We might just get a decent dividend and hopefully with it comes an inflow of cash as sentiment continues to move to higher risk and smaller companies. There is a sector wide issue for sure. There is also a huge move to passive investing for retail investors. Trusts are less fashionable and in general under performing with greater fees.

[essentialinvestor] 27/3/2024 14:02

The NAV discounts blowing out is largely sector wide.

MYI often traded at a premium in the past, now near an 11% NAV discount.

[aleman] 27/3/2024 13:55

NAV 99.21p. Highest for about 11 months, I think?

[marktime1231] 14/3/2024 12:56

The discount widening here means we are due a share price step up, other European investment trusts have tracked up on improving economic outlook. Perhaps with the next divi announcement. Bring on the 90s.

[neilyb675] 19/2/2024 14:41

86.40 - 88.90 (GBX) at 14:41:26
on Market (LSE)

[essentialinvestor] 14/1/2024 15:19

ME conflict spreading is very unhelpful. May be available under 80 pence again?.

[essentialinvestor] 04/1/2024 12:44

For income I've plumped for SHRS, HHI and LLPC for 2024.

In terms of EAT, the main headwind is macro over the next 12 months or so.
As price often troughs while fundamentals continue to worsen, I would hope we have seen 'the low' in late last year.

[essentialinvestor] 03/1/2024 23:07

Appreciate the replies, good to hear different views.

[marktime1231] 03/1/2024 23:02

Trimming off some capital gains for a 6% distribution is a perfectly reasonable strategy when the asset value is soaring, which it has done in the past and may well do so again. What is the betting we end 2024 with NAV in 110-120p territory?

A bit like investing in SMT when it returned decades of stellar growth but without having to sell off chunks of shares to derive an income. And without having to worry about CGT. You are right though, this income trust model is not for everyone.

In years where capital value contracts, to keep the faith in EAT, you have to imagine the yield is being paid from the notional "reserve" accumulated in previous years when capital value was growing strongly. Sometimes realised in hard cash when a portfolio asset is bought out. At least this way we get continuity of income, and so long as contractions are short to be replaced by steady growth we end up net winners in the long term.

On the one hand regretting not selling some off when the share price hit 140p three years ago, on the other hand pleased to have built up and retained holdings averaging in the low 80s. It still looks blue in my portfolio and the effective yield is 7% even in these tough times. On a rainy day I will add up what income it has paid me over the years.

But, to answer your question, the natural income from EATs portfolio is only around 2-3% or so before management fees. As you would expect when invested in small and medium enterprises looking to grow.

[aleman] 03/1/2024 21:03

Revenue earnings are around 2.6p per annum so that might be about 3.5p from capital in 2024 - so rather lower than previous years. I think the idea is you might get better growth in the long run if you are exposed to (some non-dividend small cap?) growth shares but still get a healthy dividend by using capital to top up the lower income that growth shares generate. It's a strategy and I see nothing wrong with that if it is clear, which it seems to be. The untilised capital element automatically drops when times are tougher while some other income trusts would pay out from reserves to maintain an uncovered dividend - which is a strategy that is also ok if it is clear. So long as you get what you pay for, you can make your own risk assessments - unlike HFEL, for example, where the dividend scalping and new investment policy don't seem to be clearly expressed by the company or understood by shareholders. It feels like they are making it up as they go along.

When you get older and need income more than growth, there are a few different strategies to enhance income, perhaps at the expense of future growth. I see no problem in holding a mix of investment trusts that are operating slightly different strategies like this, so long as there is clarity. People will have slightly different tax positions so might not all agree 100% about all those strategies. Such is life.

[essentialinvestor] 03/1/2024 19:59

What % of the dividend is coming from capital, rather than revenue.

I don't see an attraction in an uncovered dividend, unless they are using revenue reserves. I hold EAT as per recent posts, as thought bearish sentiment and NAV discount allowed for a lot.

But celebrating the size of a payout partly deducted from capital is a strange reason for any celebration.

[investingdad] 03/1/2024 19:55

I'll be buying EAT regularly if it is under 90p from here on out. That's a great yield with assets that are priced higher and still some recovery potential though setiment is poor.

[aleman] 03/1/2024 16:53

Quarterly dividend going to be 1.475p then? Bought at 89p, that would be 6.6% yield.

[creme de menthe] 29/12/2023 15:40

A yield of 6.6% approx

[contango1] 29/12/2023 13:42

Slight increase in dividend for next year looks likely. c.1.48p/share per quarter