Merchants Share Discussion Threads

[chc15] 11/11/2022 08:22

No one knows the future or can predict the stock mkt. If Simon wants to take profits on recently bought housebuilders, that's up to him. Happy to hold this and my other inv trusts for the long term, as will be living off the divs.

[superiorshares] 10/11/2022 19:14

You wouldn't mind if you people were day traders ?
Grafton group up 10 per cent today ..did you sell it ?
Housing will be on its knees next year !
The government can import half a million people each year for sure , but they ain't going to be getting a mortgage that's for sure .
Taxpayer will be paying for their Hotel accommodation.
Get your ten per cent out of Grafton before it's too late

[superiorshares] 10/11/2022 19:09

Oh look a good day and all the ultra positives appear again :-) .

Below £5 by the end of Jan 2023
£3 ish by end of 2024 .
Dow up a lot today because inflation dipped slightly in the latest CPI .

That's what you do Investors take one piece of information and invest on that basis .
Everybody knows that :-)
A little higher on MRCH and it's time to short it .
Regards to you Investors

[chc15] 10/11/2022 16:08

Maybe won't see sub 5 again, Grafton Group over 10% today, good call by the manager.

[tim 3] 10/11/2022 14:01

LolYep Dow futures up nearly 10000.

[mister md] 10/11/2022 13:48

'Meanwhile over the pond' ...

[gateside] 09/11/2022 20:28

Dividend is paid tomorrow - which I'll be reinvesting in more MRCH

[superiorshares] 05/11/2022 04:23

Oil . Its not rising again is it ?

[superiorshares] 04/11/2022 21:38

Where are you all ??
All the Ultra Positves ??

Looking like interest rates in the US are going to go way higher than originally thought .
Plus your about to loose some of your dividend to the Left Wing , Tax Guzzlers

[superiorshares] 02/11/2022 19:53

Meanwhile over the Pond .

[superiorshares] 02/11/2022 07:41

To Quote Gurgle

" We currently have half a years, worth of reserve . "

Oh look theres that share issue again !

The reserves wouldnt be coming from that constant issue would they ??????

[chc15] 01/11/2022 09:50

Interesting comments, note new holdings including Grafton Group, I have also been buying that recently.

[superiorshares] 01/11/2022 04:50

I'm back...
Reading all your copy and paste garbage .
This will be below £5 by the end of Jan 23.
It will be at the low end of £3 by the end of 2024.
There I repeat my predictions .
There has never been a fund manager ever who has told you not to invest in their funds .
They got paid if the share price goes up or down .
It's not there money that they earn their wages from .
An alternative view .
For those that invested at £5,50 plus , you wnt even break even for years and years to come .
Capital depreciation will make the dividend irrelevant.

[zac0_4] 31/10/2022 22:21

Ct3 - thanks for posting article and link to city wire presentation and q&a session.

[ctrader3] 31/10/2022 14:46

THE MERCHANTS TRUST: The only way is up, says boss Simon Gergel, who remains upbeat about UK stocks bringing returns in tough times
By JEFF PRESTRIDGE, FINANCIAL MAIL ON SUNDAY

PUBLISHED:29 October 2022 | UPDATED: 10:59, 31 October 2022

Although the outlook for the economy is looking bleak, the investment manager of UK fund Merchants remains remarkably upbeat about his ability to generate returns for shareholders.

While acknowledging that there are short-term issues aplenty to unsettle the UK stock market, Simon Gergel believes we are 'close to peak pessimism'.

'There are some encouraging signs out there,' he says. 'In recent weeks, both oil and gas prices have fallen as have freight costs and timber prices. At some point, interest rates will take a pause for breath and then will start to fall again.'

Gergel, in charge of UK equities for investment giant Allianz Global Investors, runs a multi-faceted portfolio, built almost entirely around UK-listed companies.

As a result, the £715million stock market-listed investment trust comprises big stakes in tobacco giants (BAT and Imperial Brands), exposure to energy companies (Shell and BP), as well as commodity businesses such as Rio Tinto.

It also has holdings in a number of companies such as house builder Redrow which are currently horribly out of favour, but which Gergel believes will power ahead over the next three to five years as the economic outlook improves.

'Our modus operandi is to invest in good businesses which are undervalued by the market,' he adds. 'We then hope that their stock market fortunes will improve in the fullness of time. Redrow fits this bill.'


Gergel says the house builder's shares are 'priced for disaster' – they're down nearly 40 per cent over the past five years. Other builders and housing related stocks held by Merchants include Bellway and building materials suppliers CRH and Grafton.

The trust produces a healthy dividend, which it pays out quarterly. In the financial year to the end of January, it paid dividends totalling 27.3pence a share. So far this year, the two quarterly payments it has made – 6.85pence – are 0.05pence up on last year. Shares in Merchants are trading at £5.20.

'We don't focus on dividends when picking stocks,' says Gergel. 'If we did that, we'd miss out on some good investment opportunities. But if we get our stock selections right, dividends usually take care of themselves.'

Merchants' impressive dividend record is longstanding. It has built a 40-year record of annual dividend growth, although in the past two financial years it has had to dip into its income reserves to support payments to shareholders.

It currently has the equivalent of 16pence a share tucked away in reserves – more than half a year's dividends – which is reassuring for investors.

'UK-listed companies have done a good job in rebuilding their dividends since 2020,' says Gergel. 'It means we're on course to meeting the dividends we pay our shareholders from the income we receive from the trust's holdings.'

In terms of generating total investor returns, Gergel's approach is proving effective. Over the past five years, the trust has delivered a return of 43 per cent. This compares to a 12 per cent return from the FTSE All-Share Index.

Apart from the attractive income on offer – equivalent to an annual 5.2 per cent – Merchants takes less in charges than many rival trusts. Annual charges total 0.55 per cent. The trust's stock market identification code is 0580007 and the ticker MRCH.

Investment trusts with a similar UK equity income bent to Merchants include City of London, JPMorgan Claverhouse and Murray Income. All three have grown their annual dividends for longer than Merchants – 56 years in the case of City of London.

[ctrader3] 30/10/2022 07:01

Reserves
That supports the dividends we pay out to shareholders. This chart shows 40 years of dividend growth, but it also shows importantly, one of the great features of investment trusts is that the directors of the company can put money aside in good years to pay out dividends in more difficult years. They did this through the financial crisis, and they’ve done it through the pandemic. Put money away before the pandemic into reserves and drew on those reserves to keep paying a growing dividend every year in 2021, 2022. As you can see there, visually, the red bar where we’ve been drawing on reserves has declined dramatically in the last 12 months. The drawdown was quite modest last year and there were still 16 pence per share of dividends at the end of the last financial year, which is just over half of a year’s dividend.

The second objective of the trust, as well as paying a high yield, is to deliver good performance. The total return of the trust, at the shareholder level and at the net asset value has been far above the benchmark over the last decade as you can see on this page. There’s an element of gearing, which distorts the return and amplifies the return in any particular year. So, we show at the bottom, the performance of the portfolio on its own compared to the benchmark. Over ten years, for example, the portfolio has delivered 7.3% per annum. The benchmark was 5.7%. So, the portfolio has delivered 1.7% per annum outperformance, which is a good level of performance, particularly in an environment that’s been quite challenging for a value investor, we may come back to that. So, we’re very pleased with the performance we’ve delivered and obviously, the income stream as well.

We have debt in the portfolio. The company, investment trusts borrow in order to enhance the long-term return. The idea behind this is if we can deliver a better return than the cost of debt, then we should be able to deliver higher returns for shareholders. At the moment, the cost of debt has come down. It’s come down by over half in the last five years, as we’ve repaid some expensive legacy debt and now it’s about 3.7%. Gearing is around about 13%, 13.5% today, but it’s quite a modest cost. That should helpfully, give superior returns in the long-term if we can achieve more than that 3.7% cost of debt. It also enhances the income for technical reasons, which I can go into if there are questions.

So just to conclude on where we started, really. The Merchants Trust is trying to deliver a high and rising-income stream. We have the 5.5% yield. We’ve grown that dividend every year for 40 years. We’ve got significant reserves in place. We’ve got a strong performance record driving by active high conviction and value-driven stock-selection approach and we have a modest management fee, a very strong board.

[chc15] 27/10/2022 13:54

Well good so far, have some cash in reserve just in case there are more sub 5 days.

[tim 3] 26/10/2022 19:15

Looks like a good call never looked happy below £5.

[chc15] 17/10/2022 14:23

No one knows the future. I still believe in UK value for the next few years, so have this along with TMPL. I'm comfortable with my recent purchases.

[superiorshares] 15/10/2022 19:13

Chc15
I like your honesty . My opinion is it could go a lot lower . Not just MRCH but everything another 25 per cent off everything at least.
Regards