CGF - Challenger Limited

[JTLP]

Incredible VFC induced price action today, Low 5.38 ~ High 6.27

You been buying more? You said you waited 5 years and it got even cheaper...

 

[So_Cynical]

You been buying more? You said you waited 5 years and it got even cheaper...

Everything got cheaper - i would of bought more at under 5.50 but it only traded there for a couple of hours on Friday, other
than that CGF is trading where it was in July/Sept 2019, so not crazy cheap at the moment compared to other stocks.

 

[JTLP]

Everything got cheaper - i would of bought more at under 5.50 but it only traded there for a couple of hours on Friday, other
than that CGF is trading where it was in July/Sept 2019, so not crazy cheap at the moment compared to other stocks.

What else do you have your eye on? Agree everything got “cheaper” but what is fair?

 

[Dona Ferentes]

Annuities provider and funds management group Challenger has warned its statutory profit will be impacted as rising credit spreads impact the fair value of the assets on its balance sheet.

According to the group the Covid-19 panic over the creditworthiness of certain borrowers has seen the spreads on investment grade fixed income debt more than triple to 140 basis points as investors dump riskier high-yielding debt for the safety of investment grade treasuries.

Management reported normalised earnings that largely exclude rises or falls in the valuation of assets on its balance sheet (alongside swings in mark--to-market investment gains and losses) are still expected to be in the range of $500 million to $550 million over the full year.

Chief Executive Officer, Richard Howes said: “Challenger is well placed to manage through the current market volatility. We have a strong capital position, a robust risk management approach, an experienced team and an excellent track record of delivering for our customers, shareholders and employees."

- yeah, but the markets have gone against you. All the platitudes in the world, but what happens when 'normalised' is redefined

 

[mikeroxoz]

Down 17.32% today...$5.49 close

 

[sptrawler]

Annuities would be a scary thing to be underwriting at the moment. IMO

 

[So_Cynical]

Annuities would be a scary thing to be underwriting at the moment. IMO

There must be an out for Challenger? surely there is a mechanism for them to reduce the payout on annuities? the Challenger
listed bond fund XARO hasn't fallen, its currency hedged and only holds govt bonds so will continue to yield regardless.

 

[sptrawler]

There must be an out for Challenger? surely there is a mechanism for them to reduce the payout on annuities? the Challenger
listed bond fund XARO hasn't fallen, its currency hedged and only holds govt bonds so will continue to yield regardless.

I might be wrong, but I would have thought they are a fixed contract, they would just have to write the risk into their forward estimates.
I haven't looked into them recently, when I looked a long time ago, the return was pretty low for how much they cost. But I think they were used by those on part pensions, as it was treated favourably.

 

[So_Cynical]

I might be wrong, but I would have thought they are a fixed contract, they would just have to write the risk into their forward estimates.

Ok so i/we know that the bond component of their payout is covered (XARO), can we assume that they have long index puts to cover their market exposure? surely they do, thus the sell off is way over done, market is pricing risk where there is none or little.

 

[So_Cynical]

Googling - Challenger Life is Australia’s leading provider of annuities, providing reliable guaranteed (5) incomes to approximately 60,000 Australian customers

(5) The word ‘guaranteed’ means payments are guaranteed by Challenger Life Company Limited from the assets of its relevant statutory fund.~~
~

Equity exposure is very small, about 10% or so...

 

[Dona Ferentes]

about 10%?

Banks are funded thus

 

[So_Cynical]

about 10%?

Banks are funded thus
View attachment 101418

Wrong thread maybe? Challenger isn't a bank.

 

[mcgrath111]

Wrong thread maybe? Challenger isn't a bank.

I've only ever speculated/dabbled with CGF, as I don't hold the proper understanding on annuities / how it all works...As a bit of a veteran around here, are you using this as an averaging opportunity or greener pastures elsewhere?

 

[So_Cynical]

As a bit of a veteran around here, are you using this as an averaging opportunity or greener pastures elsewhere?

Both but selectively, big downturns like this (GFC) are the golden opportunity to buy the big quality stocks cheap, i have a small pile of cash that i have started moving into
my broking account, the plan is to average into a few key holdings and enter a couple of new big quality stocks, one of the gaming stocks probably and APA or a bank.

 

[sptrawler]

Challenger third quarter report.

https://www.asx.com.au/asxpdf/20200422/pdf/44h4lr77xmxd5g.pdf

Funds under management down 10%, the standout from the report.

 

[Trav.]

I entered CGF today @$5.01 based on the following

- Pull Back signal on scan
- Got through $5 and ended up holding which will hopefully be the new support
- Nice upside until $5.53 which may provide some resistance but will be 10% gain

 

[Trav.]

Nice upside until $5.53 which may provide some resistance but will be 10% gain

I decided to close my trade today @ $5.50 after the mornings opening run. Not trying to pick the top but happy with the trade so locking in the profit. And yes another Rabbit for Trav.

 

[Trav.]

Just updating thread as sell came through on system today.

I did exit early as posted above due to SP going for a run, and although exited a tad earlier the system exit would have been very frustrating as pretty much all the profits would have disappeared.

 

[JTLP]

Challenger Cap Raising. I felt like they did one not long ago? Or am I thinking someone else.

 

[So_Cynical]

Placement at $4.89 and SPP resulting in an increase of shares on issue of about 9%, or a 9% dilution for shareholders that dont participate.