Shires Smaller Companies Share Discussion Threads

[skyship] 11/12/2008 12:32

Very pleased that outlandish spread prevented me from getting in - YET. They're actually offered @ 56p now - but still not tempted when the spread is 49p-56p. Looking for a cheaper offer........though it has to be said that the MMs have been behind the curve on this one - they should be passing on stock bought in today for perhaps a 2p turn - not 4p-7p!

[rogerbridge] 10/12/2008 22:35

This is getting very interesting!!!!!!!!!!!!!

[aleman] 10/12/2008 16:03

Blimey. Small caps have been starting to move up today yet these are down. Discount has moved to over 30%! SHD is becoming a break-up candidate.

[aleman] 09/12/2008 16:35

But I'm quoting the NAV (including accrued income in brackets). Nothing is counted twice. If you had a share with 10p assets and 90p accrued cash, that traded at 80p, you would not quote the 700% premium on the 10p! It is a 20% discount on total NAV, including income. That is the way I am quoting SDV. I think the way you suggest isn't as good, and could sometime indicate trading at a premium when still actually at discount.

[skyship] 09/12/2008 16:02

Because a shareholder will be receiving that revenue and the share price will drop accordingly.....so the NAV on which to base the discount has to be the net figure.

Crazy this spread - would love to have some of that stock coming out at 56p.....even 54p!! But cheapest offer is some 15% higher.

[aleman] 08/12/2008 12:38

I don't understand. The NAV (and accumulated income) drops when they go ex-dividend so how is that receiving the same revenue twice?

[skyship] 08/12/2008 10:12

14609 sold @ 56p - what a totally and utterly crass sale - presumably a probate sale. What a gift for the MM.

Aleman, you must take the NAV as the net of revenue figure, not the revenue inclusive figure. You can't receive the same revenue twice!

I'm assuming the 79p NAV, so looking to buy @ 61p for a 23% discount...

[barnetpeter] 05/12/2008 17:00

Another heavy fall today. 50p next week?

[aleman] 02/12/2008 15:36

NAV 1/12/08 85.50p (inc. 4.41p acc. income)
Close 66p
Discount 22.8%
Forecast 2009 Yield 10.6%+

[barnetpeter] 30/11/2008 10:53

I do watch this stock but do see it going down further. It seems to have a lot of illiquid investments that justify a large discount. I remember in 2003 the then AIM trust fell to 20p or so, an 80% discount to NAV, before a strong recovery. The Aim realisation fund (ARF) reported last week a nav of, well, nothing at all and has fallen this year from 80p to 3p. No value here yet imo.

[aleman] 28/11/2008 15:41

Discount still a higher than normal 23%.

[aleman] 24/11/2008 17:02

NAV 21/11/08 87.35p (inc. 4.08p acc. income)
Close 66p
Discount 24.4%
Forecast 2009 Yield at 7p+ is 10.6%+

[aleman] 19/11/2008 13:52

Very politely put.

I note the discount has moved to nearly 20% today. Funny investments, trusts. Share price continues to follow NAV rather than yield.

I do hope interest rate cuts bring recovery soon. Dividend cuts are starting to wear me down a little. I note there is a powerful turning point approaching main market indices in the next few weeks if you follow chart patterns, suggesting a big move up or down. I am hoping a further fall in base rate (already being discounted in other markets such as interbank) will force savers out of cash into yield shares. News to drive markets down further with rates so low would have to be very bad.

[crawford] 19/11/2008 13:39

A touch disappointing, but helps to form a base.

[anubus] 19/11/2008 12:49

does this mean the yield is now down to 8.75%, which is still better than 3 or 4%.

[aleman] 19/11/2008 12:09

Got that one wrong. Dividend halved as gearing slashed rather than reduced. I'll be polite and just say OUCH.

[aleman] 18/11/2008 11:44

When interest rates come down as predicted does that mean the value, capital goes up.

Yes, usually.

This stock SHD at 17½% odd yield just seems too dangerous although tempting. Whats the downside?

Some holdings will cut dividends paid to SHD so income to fund our dividend is clearly going to suffer but I can't see it being cut by 50% as the yield would suggest. I'm looking for more like 20% and a few here think they might pay an uncovered dividend for a while but I would not fancy that. Also funding could be a problem and force portfolio sales. Reduced gearing could also bring down the dividend a bit, at worst another 10-20% although I don't expect much of that.

Three main factors have driven bond yields up. Rising inflation, the risk of default/bankruptcy and forced selling. Clearly lots of shares and bonds are priced to discount possible bankruptcy when they are not all going to go bust. Much of the high yield is people selling things because they have run out of cash and don't have or can't sell anything else. Inflationary pressure is still falling. CPI is down sharply from 5.2 to 4.5% and long gilts yields are down below 4.1% which should bring yields down and push prices up. Forced selling obviously helps you on price so your worry just seems to be the risk of each company going bust. Can't help you much there.

[anubus] 18/11/2008 11:28

Aleman ...slightly off topic but need thoughts on Corporate bonds. Seriously looking at Baillie Gifford currently yielding a touch under 9%. When interest rates come down as predicted does that mean the value, capital goes up.I have never quite got my head around bonds gilts etc. This stock SHD at 17½% odd yield just seems too dangerous although tempting. Whats the downside?
thanks in anticipation

[aleman] 18/11/2008 11:12

But most lending costs are coming down. Interbank is down 0.27% in the last week and corporate bond yields are showing signs of peaking.

[skyship] 18/11/2008 09:20

The future may be a little clearer once that £11m has been refinanced, but with high gearing at an expensive rate, it surely doesn't suggest that SHD is a bargain baseent stock until the Market is once again in a confirmed uptrend.

======================================================
Zero Coupon Finance

The Company employs gearing to enhance the yield and uses a combination of £20.4m of zero coupon finance ("ZCF") and a £10m long term loan. In December 2008, around £16m of the ZCF will mature and it is the Board's intention, as on previous occasions, to roll over into a new 5 year structure. Debt markets in general have become more expensive and have seen significant volatility in interest rates, including 5 year sterling interest rate swaps from which ZCF is priced. The Managers closely monitor pricing trends for ZCF and considered recent quotes to be expensive.

Since the end of June, there has been some improvement in the pricing for shorter durations (longer dated ZCF remains more expensive) and consequently the managers have rolled £5m or almost a third of the zero coupon liability
for one year at 7.18% leaving a balance of approximately £11m to be refinanced before 19 December. Re-financing part of the liability now is also a sensible way of mitigating risk in more uncertain investment conditions and has the benefit of phasing future re-financings. In the second half of 2008, we believe it will be possible to re-finance the balance for a similar cost but over a longer duration. Following the transaction, the overall level of gearing
remains unchanged.
=========================================================

[aleman] 17/11/2008 16:52

NAV 14/11/08 95.67p (inc. 4.85p acc. income)
close 87p
Discount 9.1%
Yield 17.5%

[aleman] 12/11/2008 13:09

1256 GMT [Dow Jones] Barclays Capital now expects an 100 basis point cut in UK interest rates in December, taking the key rate to 2.0% from the current level of 3.0%. "The November Inflation Report gave a clear indication that the Monetary Policy Committee thinks the policy rate needs to be cut much further if inflation is to hit the target in the medium term," Barclays Capital says. Predicts interest rates will reach a trough of 1.0% in February 2009. (EMC)

[crawford] 12/11/2008 12:35

Aleman,
I agree, it has to double/triple or more.

[aleman] 12/11/2008 11:41

Merv has just said he expects RPI (not CPI) might turn negative and that they may be forced into more rate cuts to hit inflation targets. The money markets are starting to discount a base rate less than 2% and the £ is weakening.

Why aren't people buying these? If the dividend gets cut to ,say, 12p if about 20% of companies pass dividends, they still yield over 13%. Compare that with 1 or 2% available on savings later next year and you get the feeling we have a serious capital gain coming.