Henderson Far East Income Share Discussion Threads

[scruff1] 26/7/2023 17:33

Speed
'With a total negative return'
You are in a big club mate.

Zac
Good man. I cant believe I had planned to sell for over a week. Grandaughter arrived, wife sent me to the shop for her and next thing its 5 o clock. A drop of about 50p tomorrow is nailed on !!

[speedsgh] 26/7/2023 16:01

That is disappointing LG. Either their IR dept is inefficient or they are scared of having to answer difficult questions where shareholders might not like the response. Feels kind of red flaggy! Disclosure: long term holder (for now) with a negative total return.

[zac0_4] 26/7/2023 15:13

Well, that's it. Sold my SIPP holding here this afternoon. I'll continue with my ISA holding for the time being. (50/50 split)

What is it Terry Smith says? Something like, "the longer you hold a poor performing business (read trust), the more value it destroys"

I'm just sorry it's taken me 6 years to realise this here! Onwards and upwards to a better performing investment!

[lord gnome] 26/7/2023 15:04

The only response of any description that I have received was from what appears to be the teenage intern who is a model of indifference.

[lord gnome] 26/7/2023 15:02

It's called Channel Shift. They direct you to their website and then ignore you.

[scruff1] 26/7/2023 14:57

There was a time (around 2005) Fabius when I got a call back from the CEO of a co.. RIFT it was. Great conversation it was too. Cant get through to anyone these days - local council included

[lord gnome] 26/7/2023 14:02

Surely the best way to cut the yield is to increase the share price. At 355p which is where I started buying, the yield would be a lot lower. I feel that I have been paying my own dividends out of my capital. Indeed, I think I might have been better off if I had just kept the money in the bank and taken out the dividends as they fell due.I contacted the company to ask about dividend cover. No reply was forthcoming so I complained to them. I got a reply saying that they noted my complaint and that it had been pushed up to senior management for a response. Still not had a reply or even an update. Useless.

[fabius1] 26/7/2023 13:46

For me, the ideal scenario for an income fund is to see @ 50% of the total return represented by dividend distribution. That way, to some extent, we have a valuation supported by increasing cash distribution, preferably supported by healthy cash flow returns rather than feeding on reserves, the holy grail being inflation busting returns. But back in the real world, as we all know, this is not always possible, and certainly not consistently. This suits compound growers and quasi annuity holders alike. However, there is usually a trade off here and capital consumption/conversion is it. The last decade or so has been largely driven by low interest funny money which presents the Income Fund manager with a clear path to a 'jam today policy' rather than growth. This is the case across the board. How many 'flashy motors' have we seen that are secretly funded by the good old debt for equity cash machine otherwise known as property. But then again, this has been the macro game across the globe where money printing has been the go to fix. I am sure Mike K would be quick to point this out and recommend some of their other funds for those who are after valuation growth. The real question here is if we see sustained increases in the cost of cash in the form of interest rates for the foreseeable future, derivative instruments aside, the only cost effective alternative for many funds is to raise capital through share issues, be it in the form of a war chest or simply to increase cover for capital distribution in the form of dividends. A cynical and understandable view is that this is nothing more than self cannibalisation in an income fund that is really only constrained by P&L reserves. Therein lies the conundrum :)..

[bluemango] 26/7/2023 13:10

People always tend to look backwards.

Historic performance is undeniable fact; so it's sometimes erroneously jumped on as the arbiter of all parameters.

Happy to hold this.

[kenmitch] 26/7/2023 12:55

Isn’t too much emphasis being placed on all this when the key problem is surely that their investments have way underperformed others in the sector. OK a reason why is that focus on the big dividend and the wish to increase it every year, which they’ve done for 16 years.

That dividend yield IS a big plus because 10% annualised is a good return in itself. Just a few better chosen investments from this point and dumping of a few underperormers woukd be all that’s needed to improve capital gains.

Another option is to cut the dividend and opt for a more capital gain focus portfolio.

I’m happy all the while they maintain the dividend. Trusts like high performing (except recently) Pacific Horizon which I hold, are the ones to go for if too dissatisfied with the very poor HFEL investment performance.

By continuing to hold HFEL all the while they keep to their current and intended progressive dividend policy investors could have the best of both worlds. i.e big annual income but at the expense of capital gains but also a reasonable chance that the HFEL investment performance might improve to give capital gains on top of that 10%.

Some might find these links useful and for all Investment Trusts:-

[8gggggggg] 26/7/2023 12:26

Agreed , but is it logical to buy in shares that you then have to pay 10% dividend to .. Why not buy up surplus shares , then they will need to find less cash for divis, ..Following this logic , why not stop divi to 4/ 8 quarters and buy in shares with cash saved .....This will get share price up , up and away.....!?!?Dakas.

[fabius1] 26/7/2023 12:02

Fordtin, for clarity on my part, an offer price in the open market below the latest issue price of 241.75 could be seen as a discount. I suspect the fund manager would argue that the NAV is undervalued :).

[scruff1] 26/7/2023 11:26

Yep. Thats why I said its not reliable info - can just use that and the share price to get a flavour. Lots of the balancing goes on after hours as UTs etc so we never really know.

[fordtin] 26/7/2023 11:22

Are sells really exceeding buys? Surely every share traded has a buyer and a seller.
If not, where do the sells go?

[scruff1] 26/7/2023 10:28

Fair comment blue. But if 'the medium term' was applied say 5 years ago it wouldnt have been a particularly sensible investment - you would be down about 30%.
Do many companies experience an share price drop in the run up to a divi with sells greatly exceeding buys (I know its not reliable info)
The best bet here imo is that for those that buy in at this sort of price China and the rest of the FE kick back into gear which no doubt will happen at some point but there is the opportunity cost part of the equation and an individuals time scale

[bluemango] 26/7/2023 09:50

Depends if you take an extreme short term view or, like most sensible investors, have a horizon that stretches at least to the medium term ahead.

Your 'not very heartening' comment could, with identical logic, be applied to literally any company about to pay a quarterly dividend.

[wskill] 26/7/2023 09:18

2.5% record day surely quarterly divis

[fordtin] 26/7/2023 09:18

scruff1 - "10% record day", are you getting a bigger div than everyone else?

Tomorrow's div is only ~2.5%.

[scruff1] 26/7/2023 08:31

If the trades can be believed it looks like a few have the same plan as me. There cant be many suffer an share price drop the day before a 10% record day

[fordtin] 26/7/2023 08:14

Not sure how issuing shares at a premium to the prevailing net asset value can sound like the shares are being offered at a discount, but I've edited my last post in an attempt to avoid any ambiguity.

[fabius1] 26/7/2023 01:25

Fordtin, I would perhaps change the wording to 'more than it's value', or alternatively, you might consider the shares are being offered at a discount. Probably a case of pays your money, makes your choice.

[aleman] 25/7/2023 18:28

HDIV should sack the board. Buying back 3.8% of shares and then complaining they are not generating enough income to efficiently cover overheads so might restructure is lunacy. They've thrown away potential income themselves just to let people selling out get a better price. The only ones who come out of it looking sensible are the ones that sold out in the last year.

HFEL have been doing the opposite - but is it sensible to make your new investors pay more than the market on its own would dictate? Who buys them all anyway? Are they fed to marketmakers?

[scruff1] 25/7/2023 17:36

232 could be a best price thursday. I'm largely out tomorrow I'm thinking. I can see this losing the 6 and some.I see HDIF is admitting its struggling and need to have a re think.