Merchants Share Discussion Threads

[ctrader3] 17/2/2021 08:11

BAT raised its full-year dividend by 2.5% to 215.6 pence from 210.4p paid out in 2019.

[panshanger1] 15/2/2021 13:42

Last published

[panshanger1] 15/2/2021 12:43

Big spread and well over NAVStill I am here for the dividend!!GLA

[mister md] 15/2/2021 12:18

a very decent 20p (4.6%) gain so far today

[ctrader3] 15/2/2021 09:20

Stock prices in London opened sharply higher on Monday amid optimism inspired by the UK's vaccination effort and a strong close in Tokyo.

Markets in China were closed for Lunar New Year, while Wall Street also will be closed on Monday for the Presidents' Day holiday in the US.

"Sentiment remains positive towards risk thanks to the ongoing Covid vaccine rollout and slowing virus outbreaks, boosting expectations about a sharp global recovery later this year - especially as bets are also rising for more US stimulus," said ThinkMarkets analyst Fawad Razaqzada.

[tim 3] 12/2/2021 10:29

Smoking, gambling , defence and oil .

Certainly couldn't accuse them of ethical investing lol

[ctrader3] 12/2/2021 10:17

Merchants (MRCH), the high-yielding portfolio of UK value stocks, has reiterated its determination to keep growing its dividend after a painful half-year saw its shares drop by a third......


Merchants fund manager Simon Gergel acknowledged ‘some of the most volatile and challenging investment conditions’ of his career as interim results for the £403m UK equity income trust showed shareholders experiencing losses almost twice as severe as the wider UK market during the coronavirus pandemic’s first wave.

The trust also faces questions over the sustainability of its record as a leading ‘dividend hero’, with a lofty 8% yield to maintain if it is to extend its 38-year record of consecutively rising payouts.

In the six months to the end of July covered by the results, shareholder total returns fell 34.3% compared to the 17.8% decline for the FTSE All-Share index, as lockdown upended the high-yielding strategy.




Gergel identified the trust’s gearing, or borrowing, as a major factor in the outsized losses.

Merchants entered the period with gearing, which amplifies both positive and negative returns, standing at 15%. That had actually been cut by its board from just under 20% six months prior, preventing an even worse result.

Without gearing, the portfolio would have fallen 25.5% over the six months, the company said.

By the end of July, gearing was back around 19%, with Gergel reiterating its potential to enhance long-term total returns.



Otherwise, the Allianz Global Investors fund manager said his positions in economically exposed ‘cyclical̵7; stocks drove the underperformance, with industries like travel, leisure and aerospace almost shutting down, along with ‘value’ stocks becoming even more unloved.

Housebuilder Vistry (VTY), Aerospace company Meggitt (MGGT) and bus firm National Express (NEX), where the stake has been reduced, were the worst-performing holdings over the half year.

Compared to the index, however, not owning the strongly-performing AstraZeneca (AZN) took the most away from relative performance. While competitor GlaxoSmithKline (GSK) is Merchants’ top holding, Gergel said shunning Astra was partly due its high valuation.

The best performing holdings over the six months were spread betting firm IG Group (IGG) and Stock Spirits (STCK). Some profits have been taken on the latter, a leader in vodka in eastern Europe.

With buys and additions, Gergel said he had tried to reduce the portfolio’s sensitivity to economic conditions amid the downturn, as well as boost the income potential.

Tobacco companies have risen back to the top of the holdings list behind Glaxo. British American Tobacco (BATS) and Imperial Brands (IMB) were 4.9% and 4.7% positions respectively at the end of July, after Gergel added to the stocks.

The manager also bought into BT (BT.A) and Vodafone (VOD), with valuations depressed though the telecoms sector should be resilient during the recession.

After reducing the stake in Shell (RDSB) following its landmark dividend cut, they bought high-yielding Diversified Gas and Oil (DGOC). Vistry was also jettisioned in favour of fellow housebuilder Bellway (BWY), which has lower debt.

Gergel picked out several companies in the portfolio they had taken advantage of market volatility to add to, including DFS (DFS) and WPP (WPP). Next (NXT) was a new buy, with the manager noting its successful transition to online retail and track record of repositioning itself.

Complete sales included insurer Prudential (PRU) and German property specialist Sirius Real Estate (SRE) due to their economic sensitivity, and events company Informa (INF) with the pandemic fundamentally impacting its business.

Some profits have been taken on other stocks which have done relatively well, including copper miner Antofagasta (ANTO) and PZ Cussons (PZC), the maker of Imperial Leather soap.

Income challenge.

Gergel said it had been ‘particularly challenging’ to deliver a high income stream this year as dividend cuts had swept the FTSE, adding the trust had been writing more call options to generate extra income.

Earnings over the six months were 8.9p per share, a decrease of 45% from 16.1p per share in the same period last year.

While the manager mulled a ‘new normal’ level of dividends for certain companies, Merchants’ board reiterated its commitment to a ‘high and growing yield’ – a goal which looks under increasing pressure – backed up by revenue reserves.

While reserves covered more than one year’s total dividend at the end of the last financial year, analysts have questioned previously whether those reserves are as strong as the accounts make out, once the timing of the trust’s dividend payments is factored into the equation. By the end of July, reserves had fallen to 22.6p per share, from 28.8p a year prior, meaning they no longer cover a full year’s dividend payment.

[panshanger1] 12/2/2021 03:39

Thanks speeds Fully committed to the dividend for the next couple of years Happy to hold GLA

[speedsgh] 11/2/2021 22:16

Merchants: we can yield 6% without buying bad companies -

[superiorshares] 04/2/2021 19:17

Another BIG 🍌🍌🍌🍌 skin
Are SPACS
Apparently they are far less regulated or scrutinized than IPO 's.
A spac health care company today got crushed !.
The reason some analyst had said Investors had been seriously mislead in the prospectus.
Watch the upcoming regulation .
Pile in with your money if you think it's a nothing issue ?????

[superiorshares] 04/2/2021 19:05

Was watching all the political gumph today over the pond .
I know you Investors don't think impending regulations will affect companies in Mrch :-).
The Lefties were not only talking about their hatred of shorting .They don't like share buy backs either .
Investors check your top ten . See which ones will come under the scrutiny of the man with the support of dead people .
Regards all

[tim 3] 03/2/2021 16:27

It's certainly not helping is it, let's hope bargain hunters start buying a few but GSK's chart looks horrible.