ZPG Share Discussion Threads

[tiraider] 24/2/2005 17:32

THE ZERO PREFERENCE GROWTH TRUST PLC

The Company announces that the mid price Net Asset Values at 22 February 2005
were:

per Ordinary unit 57.07p

per Growth share 7.25p

per Zero Dividend Preference share 49.82p

Gross assets less current liabilities ?13.85m


On 7 February 2005 the Company decreased the total amount drawn down under The
Bank of Scotland loan facility by ?1,300,000 to ?4,620,000. The Company is
currently eligible to draw down a maximum of ?6,000,000 under the loan
facility.

Fair value of the debt is not materially different from the par value, so no
additional Fair Value NAV is required.

[opthalmist] 24/2/2005 10:23

Nice find soysoy looks very useful website.

[soysoy] 24/2/2005 09:47

look for your investment

[soysoy] 24/2/2005 09:46

interesting stuff

[rambutan2] 22/2/2005 12:12

tilton, yes easy to find positives but its the negatives that are the important factor and thats what folks should use these boards to hunt out, although most dont.

[rambutan2] 22/2/2005 12:11

do you get it soysoy et al?
tiltonboy - 21 Feb'05 - 22:21 - 59 of 62


soysoy,

For the majority of the portfolio it does not matter whether the index is 4500 or 7000, it will not change the profile of the growth needed. A big rise in the market will only aid around 30% of the portfolio, and even then there will be a limit to the growth. Please remember that the constituents of it's portfolio have maximum payouts.

tiltonboy

[tiltonboy] 22/2/2005 07:08

Opthalmist,

Of course I look at positives, it is the positives that draws your attention to a particular stock in the first case.

As for selling prematurely, it happens from time to time, but as my research is based on fundamentals I have to take a view on a company's worth.

I bought ELIZ at 0.35p initially, and they are now 17.5p, and guess what.... I still hold.

I don't worry about morale, you take the short term grief, and then look for the next winner.

tiltonboy

[soysoy] 22/2/2005 07:03

tiltonboy
fousing on the negitves made you sell to early at 1.5p
you could doubled your money

[opthalmist] 21/2/2005 23:55

You are certainly highly proficient in coming up with negatives tiltonboy, which i'm sure helps your particular approach to investing. I find it can also be beneficial to think about positives, especially when i hold the stock! Too much dwelling on negatives can cause one to sell out prematurely, usually just before a big rise, I find, which has a worse effect on the morale than if the stock went down.

[tiltonboy] 21/2/2005 22:21

soysoy,

For the majority of the portfolio it does not matter whether the index is 4500 or 7000, it will not change the profile of the growth needed. A big rise in the market will only aid around 30% of the portfolio, and even then there will be a limit to the growth. Please remember that the constituents of it's portfolio have maximum payouts.

tiltonboy

[soysoy] 21/2/2005 22:15

I think footsie has good chance of making 6 or 7000 mark again with in 3 years
and this will help this share.
but a word of caution is not bad thing !
and maybe moementoum trading is come back into fashion ,that why in last few weeks i have made 20% of portfolo 2 grand out of 10k invested
lets hope it keeps going

[soysoy] 21/2/2005 22:04

tiltonboy
time will tell

[tiltonboy] 21/2/2005 21:58

soysoy,

When I buy a share I try to focus on the negatives, because I am looking to minimise my mistakes.

I often miss out on opportunities based on momentum because I rely on fundamentals, but I would rather be in a company where I can be happy even if the short term performance is downwards.

The problem with momentum is that it brings with it investors who follow it, rather than follow or understand the company. Momentum also stops and turns at some stage, but as long as you get on and off at the right time you will do okay.

I do not profess to know where the share price will go in the short term, though up seems to be favourite, but what I do know is the difficulty in achieving the necessary growth to give the Growth shares value in the long term.

tiltonboy

[soysoy] 21/2/2005 21:45

tiltonboy
i not having go at you but seem to focus on too much negitive things
the postive things are the offer price rise each day and there more buyers and sellers
it`s supply and demand thing at moement and hope to sell in few months with bit of profit

[tiltonboy] 21/2/2005 20:57

Opthalmist,

Some great little stocks I've seen you around in, and I must say that I have benefitted hugely from the ramping that goes on. I was a bit slow recently in selling TTL after Optimist ramped it, but my favourite of all time was EIC, even though pinkle threatened me with some rather nasty things, and jacey called me all the names under the sun...lol...

All because I try and help people out of the goodness of my heart. Soysoy looks ready to turn on me as well!!!!

At least you are honest enough to know where you are coming from.

Hope you make a profit.

tiltonboy

[opthalmist] 21/2/2005 20:45

"When people like Opthalmist and others come on board you can guarantee that very little "real" analysis or research has been done. I'm not having a go at these guys, but if it's a penny share and it moves then you know they won't be far away. "

LOL Tiltonboy - you are probably right.

[tiltonboy] 21/2/2005 20:34

soysoy,

I'm not trying to talk them down, rather, as tiraider points out I'm trying to make a reasoned argument!

When people like Opthalmist and others come on board you can guarantee that very little "real" analysis or research has been done. I'm not having a go at these guys, but if it's a penny share and it moves then you know they won't be far away.

Because of the visibility of the portfolio, and what it's limits are, it is not too difficult to get a range in which the gross assets should be at any set time. The Growth shares need growth of 8% per annum in the asset position to give value, but the GRY on the portfolio is below 7%.

I had a long chat with John Holder today, discussing current strategy, especially with regard to the use of debt, and future strategy with regard to the deployment of wind-up proceeds.

If the shares go up in the meantime, and you can make some money, then good luck to you.

tiltonboy

[soysoy] 21/2/2005 19:51

This allows you to select zeros of BFS managed trusts and hold them in an ISA, PEP or Portfolio Service with additional regular reporting package of valuations and managers' reports.
If you do not wish to assess and choose your zeros, BFS offers a wide range of managed portfolios designed to suit your requirements. This can be done via BFS ISA, BFS PEP and our Portfolio Service.
Shares of BFS managed trusts can be purchased via our dealing desk or a stockbroker.

[soysoy] 21/2/2005 19:50

One of the advantages of zeros is you can make a judgement of the risk and returns from the data published and zeros can be monitored during their lifetime allowing potential problems to be identified.

Asset Cover
This calculates how much the final redemption price of a zero is covered by the current assets and is normally expressed as a ratio. If the asset cover is quoted as 120, this means the final redemption price is covered by 120%. The higher the figure the better the cover on the zero and the lower the risk of not being repaid in full.

Hurdle Rate
This indicates the rate of growth required to repay all prior charges and the zero at its full redemption price. This can be a negative figure, if the zero has a an asset cover of greater than 1, indicating the compound annual rate at which a trust's assets could fall each year and still repay the zeros at their full entitlement.

GRYs
GRY (Gross Redemption Yield) is the annual compound growth rate a zero is expected to provide. Higher GRYs often indicates a zero is not as low risk as others and this is reflected in the lower price. It does not necessarily mean the zero should be avoided. It may be worth investigating the trust further.

Level of gearing in a trust
Gearing is the amount of borrowing a trust has and will be repaid ahead of the zero. Extreme changes in the market can have a profound affect on a trust's assets and gearing can accentuate returns, both down as well as up.

Where the trust is invested
A trust with diversified underlying investments can often have a cushioning effect if one area of the holdings underperforms. However, there are a number of trusts that will invest in specific geographical areas or themes, aiming to make the most of the opportunities these can provide.

The Fund Managers
Most trusts will offer information on who is managing the portfolios and what their experience and credentials are.

[soysoy] 21/2/2005 19:48

John Holder joined BFS in 1999 bringing over 30 years experience of fixed income markets, having held senior positions at James Capel, Citicorp Scrimgeour Vickers, BZW and Merrill Lynch. From these roles he has gained a reputation as a leading analyst and commentator on the zero market and was involved in the formation and re-structuring of many split capital trusts.
He has held responsibility for sterling bond and preference share capital market operations, also managing fixed income portfolios. John is an Associate member of the UK Society of Investment Professionals and a Fellow of the Securities stitute.

Paul joined BFS in October 2000, after obtaining a 1st class BA (Hons) degree in Economics, and an MA in Finance and Investment (with distinction) from Exeter University.
Paul continues to work with John Holder in the analysis and management of portfolios of zero dividend shares, Reverse Convertible Bonds (RCBs) and other fixed income securities.


A zero dividend or zero coupon preference share is a type of share created by a split capital investment trust (split).
Zeros pay no income but have a pre-determined redemption price payable at a specified redemption date, normally the wind-up date of the trust.
The redemption value is paid from the assets of the trust with zeros generally ranking ahead of all other classes of share, that is income, ordinary or capital shares, in their claim on these assets, but behind any bank debt.
Zeros trade on the stockmarket like any other share.
You can buy and sell zeros at any time. You do not need to wait until the wind-up date to realise your investment and so are not locked in.
The value of a zero will fluctuate as it moves towards the redemption price depending on supply and demand.


The flexibility of zeros means they can satisfy a wide range of investment needs.

The risk level of zeros can vary. While many are regarded as lower risk than the average equity investment, some zeros can be the same or higher risk than equities.

A lower risk zero may balance a portfolio containing higher risk investments.

Zeros pay no income which may suit if you do not wish to incur further income tax liability.

The return from zeros is treated as capital gains for tax purposes. Crystallised gains or losses can be offset against your annual capital gains tax (CGT) allowance. In some instances, there is the possibility that this can make any gains tax-free.

The redemption value of a zero is paid from the assets of the trust with zeros generally ranking ahead of all other classes of share in their claim on these assets, but behind any bank debt.
The size of the bank debt and market conditions will influence the risk level of a zero and it is important to remember the risk level can change.
In many instances, zeros are relatively lower risk than the average equity investment. There are some zeros that could be classed as medium or high risk.
Zeros are not risk-free and the redemption value is not guaranteed as, by their nature, zeros carry exposure to equity markets.
If a trust has insufficient assets, the final redemption value may be lower than that anticipated. However, this does not necessarily mean all of the investment will be lost and there can be the potential to receive a better return than from other investments.

[tiraider] 21/2/2005 18:23

David / tiltonboy;

that chart rebased ZPGUs value to that of ZPG at the start of the period. I have used the same technique again but used a 2 yr chart. ZPG is rapidly closing on ZPGU in the 2 yr timeframe, leading it in the 1 yr, but longer term (3 yrs) it still has a lot of catching up in terms of relative performance.


2 year


1 year


3 year

Thanks for your invaluable input, reasoned arguement is always welcome.
rgds
tr

[soysoy] 21/2/2005 18:01

tiltonboy
well it keeps going up evan if you seem to talk it down, more buy sells again and it shame the spread got wider

[tiltonboy] 21/2/2005 13:11

ram,

The z's yield 10% from these levels, and given that debt is likely to be repaid, a good % of the portfolio is well covered, and those that are not covered are my favourite bets in the sector, makes them attractive in my eyes.

The case being put on this thread is for the Growth shares, and you have echoed my views on the ability of the trust to achieve the necessary uplift to put them into value.

tiltonboy

[rambutan2] 21/2/2005 12:56

still dont really see where their growth is going to come from. and so are staying out. also, whatever happens its growth is capped as thats what its port of zs are about. if i invest in risky cap share i want unlimited upside and the growth shares dont offer that. also, since reconstruction its port has benefitted from the final flourish of zs uncapped growth as folks finally became confident of the asset class. but that rerating has now happened and so most zs are now pretty much down to their capped growth level ie 7.5%ish pa. therefore, all the risk in zs is on the downside - if mkts keep rising or dont fall they will produce their 7.5% or less depending on any premium. but if the mkt does a nasty drop then that is at risk. likewise, any new zs issues are likely to be issued at a lower growth rate, assuming interest rates dont move up much. imho.

[tiltonboy] 21/2/2005 10:13

tiraider,

I've had a further look through the underlying portfolio, but as BFS only disclose their top 25 holdings it will be impossible to try and track the portfolio forward accurately.

Of the current portfolio, 24%, by value, winds-up in the next six months, 40% is currently fully covered and has a GRY of around 6.6%, and 22% is currently uncovered.

The growth needed, therefore, to propel the value in the Growth Shares will have to come from the uncovered element in the portfolio, as the GRY's on the covered part will only be sufficient to get the NAV just above 75p.

Not knowing what is in the other 14% of the portfolio means that these figures can get skewed, but not sufficiently so to change the picture completely.

If the market continues to rise then the Growth shares could be a decent bet, but the assets will need to grow at a compound rate of 8% just to cover the current share price.

I'm using cost of debt at 6%, and management fees at 0.3% in my calcs.

tiltonboy