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Robusta fundamental, leveraged investments

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Thank you, I have not looked at Challenger previously, it is on the watch list now. Would not surprise to see one of the banks try to take them over.
 
I decided to buy some late last week, superannuation and retirement centric investments are only going to increase in size and providing challenger doesn't make some monumental stuff up they should continue to be around and reap the rewards. Bit of a boring investment really but that doesn't both me as long as it continue's to steadily improve YoY.

I think what may hurt their valuation currently vs their peers is that while their P/E is quite low due to the relatively high EPS, the dividend yield is still only around 5%. Most of their peers have yields around the 7% mark and some are fully franked. Maybe Challenger need to increase their payout ratio a little to entice more more their way.

I wouldn't be surprised either Robusta, was looking at some Financial Planner and FUM numbers the other day in a financial planning magazine we receive at work. AMP/AXA and CBA's numbers are truely huge vs most others, this would lead me to believe that someone like Westpac of NAB might have a tilt if they wanted to expand their financial services market share - although may still be a remote chance as regulators may step in?
 

There was some rumour that CGF will need to boost capital because of change in regulation on how their assets are treated. That may be the reason for downward pressure on the share price. Don't have the link at hand so Google for yourself.

Otherwise I like CGF's annuity products although I don't know if there's really much competitive advantage in their product offering.
 
Looking at the half-year result for CGF, they are clearly exposed to market risk and must report insurance assets at fair value (hence a big hit to profit). Can you gaurantee that this isn't a one-off as the company seem to be implying in their preso? That's the main problem with this company, you take on individual investment risk, but also further market investment risk through exposure to their own portfolios. It's certainly not as quality a hedge against low earnings performance that you find at the bottom of the cycle as you would in a company with a sustainable competitive advantage IMO.

Also check the franking balance available. Why are their dividends unfranked? Does this provide a sufficient hedge in some way to the rest of your portfolio to justify paying the tax that the missing credits create?
 
Nice little milestone for this portfolio today, managed to hold on to a investment in a company for 12 months.

This is my post when I first bought MTU



The renounceable share offer was also participated in in May of this year.


Really should include brokerage in the costing so in total $3680.73 has been invested in this company, no dividend has been paid yet on the converted shares but two $0.09 dividends have been received for a return of $200.70 this gives me a yield of ~5.45% plus $86.02 in franking credits. The cost of my capital through the line of credit is currently 6% so that is a fail on that first hurdle.

To use some ratings agency speak I currently have this company on a "negative watch", after the major acquisition in May I understand debt will be higher, ROE and EPS will be lower for the most recent reporting period. In the absence of any surprises in the Annual report I will be watching the interim and following full year report to see debt being paid down and returns increasing. Before May I would not have considered selling below ~$4.25 now $3.80 + would give me something to think about.

For what it is worth looking at todays closing price of $3.44 the market is offering buy my interest in MTU back for $4791.92
 
Probably should add 52 week low, $2.27 52 week high $3.73. Etrade is showing total shareholder return for 1 year of 30.1%

I would love anyone with the ability to post a chart to put one up for the recent 12 months and maybe another for the 12 month period ending 08/08/11, this will show how volatile the price has been while the earnings have been anything but.
 

 

Announcement today that the additional capital required is not as much as some feared... share price up 6%...
 
skc said:
Announcement today that the additional capital required is not as much as some feared... share price up 6%...
Click to expand...

This is another one I missed out on. I had been watching it and was waiting to get in around $3. Oh well.
 
Looks like I got a little bit of luck on this one, could've gone either way but it just looked like the share price had pushed too far down for my liking.

For the first time in a while some of my investments are doing what they were bought to do lol. I understand the whole market is going up at the moment so its not that spectacular but I feel i'm starting to find my groove with the way i'm looking at stocks.

For interests sake I was looking at morningstar research for a clients holdings today and quickly checked out their CGF research. Their fair value is $5.50 now, will be interesting to see how far this runs. A few value companies have had some decent announcements recently (TGA, CGF, FGE to name a few).

EDIT: Note i don't base my investment decisions on the fair value morningstar has for stocks, just thought i'd clear that up. Just posting for interests sake.
 

There is some satisfaction when the returns start to be positive, as a value investor by definition you are saying the market is wrong, I am right, this security is worth more. On the other side of the coin when I have capital available to deploy I love it when the market is falling, there are so many more opportunities then.
 
However, you may not know for sure that the market was not right to price it lower in the first place and the current rally is wrong for many years to come...
 
Ves said:
However, you may not know for sure that the market was not right to price it lower in the first place and the current rally is wrong for many years to come...
Click to expand...

Would depend on the business, but if should not be too hard to work out by looking at the earnings and cash flow over a decent holding period, if you can get some decent growth - bonus!!!
 
LifeChoices said:
Lucky is a strange word. I'm always told, by others, how lucky I am when something really unlucky happens to me.

Seriously, how long do you think it will be before your investments will be back to b/e?
Click to expand...

LifeChoices said:
2017 maybe? That'll be a lot of posts about new fundamental positions. But I'm sure there will be lots of bargains in between.
Click to expand...

My answer back in October last year was i had no idea but was confident one day it would happen, well that day was 17/08/12

Line of credit drawn $27,797.50, cash contributed $2450.00 = $32247.50

Current market value of portfolio = $32640.87

When this portfolio started the all ords was 4603.8, now 4393.81 FWIW a little outperformance there - a big surprise considering the blunders made I am sure.

Anyway now that little FIGJAM moment is over it does not make any difference to how I view this portfolio and the compensation for the risks taken are nowhere near enough - yet.

Next little goal I will be waiting for is to turn cash flow positive it probably won't happen this year but I have high hopes for FY 2013/14.
 
robusta said:
Would depend on the business, but if should not be too hard to work out by looking at the earnings and cash flow over a decent holding period, if you can get some decent growth - bonus!!!
Click to expand...

Good! The focus isn't on the price - but the underlying business performance.
 
robusta said:
Next little goal I will be waiting for is to turn cash flow positive it probably won't happen this year but I have high hopes for FY 2013/14.
Click to expand...

Hi Robusta

Have you taken into account imputation credits?

I’m a little surprised that you are not already cash flow positive as the market itself is yielding 6.7% gross and I would have thought your selection would be yielding a bit more.

Either there, or nearly there, a positively geared portfolio of businesses offering growth potential is nothing to be sneezed at. A bit more of an equity buffer to deal with the volatility would probably be a good risk mitigation objective from here.
 

Made some spectacular stuff ups in the first year, earned a bit over $900 in dividends, paid the bank a bit over $2300 in interest and charges and to top it off a capital loss just under $3000. I should have read that loosers game article a bit earlier. Anyway that's the past it should be interesting to see the decisions in the future.

I decided not to use franking credits in the returns as these leave the portfolio and are offset against my income at the marginal tax rate. They are valuable to me but I am happy to take a larger tax return in these early years and hopefully reach into my pocket and pay some extra tax in the future.
 
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