Phoenix Share Discussion Threads

[ursus] 14/7/2011 09:20

So just what is going on here? The Chair suggests a Solvency II prob that some but not we know of. Cd be, but other insce companies shd be dropping too on this basis. Some are - eg Resolution, but others like Chesnara (a zombie competitor) and the Lloyds co's are not so affected. The burbs suggests an Italian bond holding, but his figs for these scarcely explain the fall so far. Perhaps a large seller working a deal? No RNS yet of course.
A boardroom fallout? Sandler to the rescue?

[envirovision] 14/7/2011 09:16

Question is how low is this going to go, yield is looking better by the day but does not mean it cant go even lower. I was picking Aviva up at 2.80 just over a year ago so yes could easily see £4.70-£5.00 at this rate.

[scburbs] 14/7/2011 09:09

The government debt split is shown on P43. Italian bonds are 6% of the total.

The big ones are UK, Germany and European Investment Bank (AAA rated)

22% of the total bond exposure (i.e. including non-government) is rated below A.

[scbscb] 13/7/2011 13:28

Thanks for the replies envirovision and dangersimpson2. This looks to be quite a good BB. I will contiue digging. Reckon the price is off not because of any potential solvency issue but because of the fall in Italian Bonds (the world's third biggest debt issuer). Now everyone is beginning to realise that all soverign debt is not risk free despite what the politicians may think. As the bulk of funds are invested in bonds there is a potentail for quite a fall in asset values. Jeff

[jonwig] 13/7/2011 11:55

Ch2, this is from p42 of the 2010 results presentation:

A B C D E
Cash deposits 3,146 23% 7,408 1,081 11,635
Debt securities -gilts 2,963 21% 12,620 424 16,007
Debt securities -bonds 6,264 45% 14,111 1,284 21,659
Equity securities 376 3% 7,631 8,761 16,768
Property investments 156 1% 906 337 1,399
Other investments(4) 1,013 7% 2,196 12 3,221
Total 13,918 100% 44,872 11,899 70,689

A: shareholder and non-profit funds
C: policyholder funds, participating
D: ditto: unit-linked
E: Total

In common with all closed-life funds, equities are a pretty negligible part of the mix. I'd imagine (or expect) they will have cleaned up on the 45% represented by 'bonds' (ie. sold the dodgy stuff), so the risk profile looks sound.

Note 43 of the 2010 AR (p154) shows their asset mix: £52.3bn of the total £58.5bn is rated A, AA or AAA. That looks OK to me.

Yes, Solvency II might constrain their ability to distribute profits, but that was pretty constrained anyway by the bondholders' covenants, so I'd think they are OK anyway on that score.

Last time I looked at the trades data, there was a fair amount of small batches - the sort PIs would be unloading - and there haven't been any negative holdings RNSs.

[chairman2] 13/7/2011 11:29

another thought -
is there a Solvency 2 issue looming in the background
which the pros know about but not us proles?

perhaps needing more capital diverting that annuity
cash flow stream away fro shareholders pockets??

[chairman2] 13/7/2011 11:23

uncharted territory

- any technical traders out there with any views on the
share price chart?

where is there a bottom in terms of resistance - presumably
some fib ratio or other techie mumbo jumbo would help?

I'd like to know what a (sensible) buying strategy would
look like - avoiding buying them all the way down.....

[envirovision] 12/7/2011 15:56

Downgrades 28th June:

Investec cuts its price target for closed life fund business Phoenix Group (PHNX.L) to 597p from 672p, giving the stock a 'hold' rating.

[dangersimpson2] 12/7/2011 14:29

I suspect its the c33m IPO, Founders', Lenders' & Royal London Warrants. These are exercisable at €10.90, €10.90, £15.00, €11.00 respectively so not really dilutive for someone buying at current prices.

See Note 24 here for details:

[scbscb] 12/7/2011 14:04

Hi envirovision Could you please put the negative broker note here, or a link, or failing that a summary of the negative points.

I have been investigating this and in the annual report it states that are dilutive instruments equal to 20% of the equity. Does anyone know what these are, and under what conditions they can be exchanged for equity?
Jeff

[hyden] 08/7/2011 11:35

I topped up the other day at 599p. Let's hope we will be rewarded come the results in August.

[envirovision] 08/7/2011 10:54

Well I just had to add some to my income/growth portfolio since its a 7.5% yield at the current price.

The weakness has been due to a negative broker note which have not been very kind.

[hyden] 08/7/2011 10:39

Well, I must admit to being mystified by recent performance. Company remains on target to deliver against all 2011 objectives yet the share price continues in the mire.

[jonwig] 07/7/2011 19:10

Ch2 ... given the share price performance here, any reason you give is worth considering, but I'm mighty puzzled, even so!

Replacing Moss with Bannister as CEO was initially greeted with enthusiasm - he's hugely experienced in the insurance industry. I do seem to remember Sandler saying there would be no acquisitions until the debt position was settled, but strategy may have changed since then.

As for overpaying for any acquisition, they do have considerable economies of scale here, and the phrase "Management Action" refers, of course, to cost-cutting.

Hyden ... thanks for the link - haven't time until the weekend though.

[chairman2] 04/7/2011 11:30

Stock evaluation (as contrasted with Company evaluation)
seems to spin around the connundrum that if co biz is stable
the cash spin off from the wasting asset should be valued as
an annuity income stream is valued for capital purposes. But
that implies a discount to (historic) EV and management may be
tempted to use that discount in a financial engieenering
inspired takeover - in effect appearing to buy cheap but actually
giving away the investors expected discount to EV for less
than its worth (to investors).

This dichotomy between the drivers for investors and the drivers
for incentivised management is value destructive so a huge
issue for investors is just how much weight do you give the
management skill, competence, and balls in looking after their
real interests.

mkt seems to be saying this management is noit worth much an
d their chances of making a value delivering deal are low
and worse their chances of doing nothing (nearly always the
best option) are worse.

[hyden] 04/7/2011 11:30

jonwig, try this ...

//www.webcastphoenixgroup.com/phoenix009/default4.asp?Media\

[jonwig] 04/7/2011 08:47

Hyden - didn't catch that (only the pdf). I'll look later in the week to see if it's there.

[hyden] 04/7/2011 08:27

Caught the first 40mins of the webcast at the weekend. I thought JY and MM were shocking. AM was much more confident and saved the presentation, imo. can't imagine that JY and MM inspired confidence and surely they will need market support if they intend on acquiring other close books? A great shame and a miseed opportunity, imo.

Nevertheless, AM confirmed the company remains on-track to deliver on all 2011 key metrics. imo, there remains considerable upside in the share price as debt is paid down and the discount to EV reduces in line with sector norms (80%MCEV implies 60% upside in the share price). I'm happy to continue holding.

[jonwig] 04/7/2011 07:20

Yes, Ch2, it's a pdf on the website.

Mostly an overview of how the life cos are arranged. Splendid economies of scale when you have everything under a single asset manager umbrella, and managing zombie funds is more a matter of balancing bonds than picking equities.

They also have an aspiration to improve customer satisfaction, which has always been a big cause of criticism in the Sundays.

[chairman2] 03/7/2011 22:59

jonwig

did you find it?

[jonwig] 24/6/2011 07:10

Phoenix Group will today be hosting a presentation for analysts and investors focussing on the Phoenix Life business.

No material new information will be provided during the event. Copies of today's presentations and a replay of the event will be made available on the Company's website.

Will look for it this evening.

[envirovision] 17/6/2011 14:51

Could not resist adding another slug of these today.

[jonwig] 17/6/2011 12:22

amalor - 17 Jun'11 - 11:46 - 188 of 188

Cheapskate!

and then ...

I just wish I had the dosh to get some....

I assume you do irony, then!

[amalor] 17/6/2011 11:46

Cheapskate!

The essence of the article is that it's chucking out money and will either pay down it's debt or agree a restructuring and either way it'll escape the restrictive covenants and be able to boost the dividend. However all of this may take a while.

It finishes:

"Even if the dividend stands still this year, the yield is still tasty and Phoenix will erode its debt one way or another. And with a solid balance sheet and trading at a 46 per cent discount to its embedded value, the shares are too cheap. Buy."

I just wish I had the dosh to get some....

[jonwig] 10/6/2011 11:21

Thanks, ev.

On principle I try not to pay for stuff. Anyway, I got a screen-shot of the teaser bit before it was obscured by the invitation to subscribe:

Bull Points:
• Attractive dividend yield
• Impressive cash-flow generation
• Low operating costs
• Growing asset management business

Bear Points:
• Restrictive covenants on current debt
• Strong competition for closed-life funds.

The last point is interesting. Considering its size, PHNX must have advantages of scale here. Having assets managed in-house gives it an edge over some competitors, eg. CSN who use Schroders I think.