Daily Stock Market Report (Mon 24 Feb 2025) - BME, MEGP, XPS, TSTL, BPM, SUPR, GHH, PFC

Thanks Douglas1971, I know exactly what you mean. Luckily I had top sliced Warpaint London (LON:W7L) a few times hitting over 200% gain, so the damage could have been a worse. I think top slicing at those type of gains is probably  sensible, but 25% gains is probably not my usual habit. I also have many examples of selling/top slicing too early. 

The easiest way to settle the debate would be for the Government to issue a  6% NSI  2 year bond  with no investment limit. Keep this open for a year and we will see how much of this "dormant" money moves. I think you might be surprised.

I am sorry - the idea that someone can take control of your assets and give you the opportunity to "opt out" is ridiculous. 

"You may not like the scheme, fair enough - here is a viable way that we can get the economy moving using UK money for UK purposes. You can always have you taxes raised together with services being reduced if you'd prefer - if that meets your definition of 'fair'."

Or the Government could use existing funds more wisely.  Or if you are a non dom or a High Net Worth you could simply leave the UK -  which is what is happening.

So far the Government has not demonstrated any capability to grow the economy - quite the reverse in fact. Why would you want to trust them with more money?

I think you have answered your own question there, Lefty. Top slicing at a 25% gain is probably a recipe for disaster. You will effectively be reducing the impact of your winners whilst still being exposed to all the stocks that go wrong. A 200% gain is a different matter, of course.  

Yes, running your winners, certainly does not always work, especially in this market, l hold Warpaint London (LON:W7L). Mortgage Advice Bureau (Holdings) (LON:MAB1) is another l hold, l did manage to sell half when over 900p. PayPoint (LON:PAY) Is another. CMC Markets (LON:CMCX) another. Time Finance (LON:TIME) also. I'm top slicing many of my winners but not at 25% gains. Although Robbie Burns does often sell for smaller gains.

Very mixed year.

I can't disagree, I can only blame the current situation. All we need is everything to go up then we will all be happy.  

I do hold Mortgage Advice Bureau (Holdings) (LON:MAB1) l did average down  when it fell below 700p, sold most when they went up. I'm looking at charts to indicate when to sell. Many are falling back, probably due to profit taking. 

Rusty if the chart shows Many are falling back, why would you say  probably due to profit taking. 

Could it be a growing sentiment that markets are overpriced and disrupted by American and Geo politics? Is that bear stirring from hibernation?  Warren Buffetts Berkshire Hathaway is reported to be sitting on a recored $334 in cash "probably / possibly"  waiting for VALUE?

I know that I am currently looking carefully at all my stocks, but then to be clear - I am rapidly approaching retirement and well aware of that bias on my personal investing strategy

I guess a few of us have some holdings that are down 25-30% due to shock TU's.   I let winnings run until they get too big then slice but only in a BULL UP Trend . With the current market it is better to take decent profits ...there is no real trend and it is struggling.   Hence i am cautious.

I'm selling before they fall back hopefully. If you look at Mortgage Advice Bureau (Holdings) (LON:MAB1) PayPoint (LON:PAY) Time Finance (LON:TIME) charts,  all spiked up a bit then fell back. Sure you can find exceptions such as Audioboom (LON:BOOM) but that seems to be a trend at the moment. 

Many US momentum stocks have fallen back, see Ed's article on top trending momentum stocks. Many looked well overpriced to me, high PE but low growth. The folio is down around 12% since it was published. 

Ha, what's a BULL UP trend I've forgotten? 

Hi Rusty, I hold all those apart from CMC Markets (LON:CMCX) . Did well on all apart from Time Finance (LON:TIME) , a bit late to the part on that one. Yes Robbie Burns is very strict, but I guess profit is profit. 

We’re on the same wavelength with our Investment methods and holdings. I’ve held Alternative Income REIT (LON:AIRE) since 2020. It’s small and don’t know whether too small to tempt a bidder or an easy morsel. Either way it’s yet another cheap REIT. 

Supermarket Income REIT (LON:SUPR)

I see there a lot of holders here, so I hope that someone more knowledgeable than myself can help me understand a couple of things.

Looking at the 2024 Cash Flow Statement, it looks as though:

• Operating Cash Flow was c£90m
  
• Bank Interest was £35m
• Dividend was £75m

(I believe any interest rate hedges are already included within the Operating Cash Flow figure, with movements from new hedges listed under Financing Cash Flow.
If this understanding is incorrect, I'd be happy to be corrected #alwayslearning)

Does this imply that the dividend can only sustainably be maintained through asset sales, like the one today?

Another thought I had centred is on the annual rental increase cap included in many of Supermarket Income REIT (LON:SUPR)'s agreements.

Today's announcement stated that new 15-year leases were signed with Tesco, which will be reviewed annually, are RPI-linked and are capped at 4%.

Is there a risk here that returns don't keep up with inflation going forward? RPI in the UK just hit 14%. Who's to say it won't reach these heights again over the next 15 years?

I would be interesting to hear if my understanding above is correct or if I'm missing something obvious.

Many thanks in advance.

A

Jim Bianchi is out on a limb here. If the Americans do swap treasury bonds held by central banks for zero coupon bonds with a 100 year redemption, they will be worthless, untradeable and America will be in default. Make no mistake, this will mark the end of the USD as a reserve currency and gold is likely to go ballistic.

Our own BoE holds over USD 600 billion of US TReasury Bonds, although we cannot be certain as the holding is not declared seperately. That is USD 600 billion that will be worth precisely nothing should this plan come to fruition.

It will mark the end of America's influence through their exhorbitant privilege accorded by virtue of issuing the World's reserve currency.

The reason gold is rising - and I hold 35% of my portfolio in Gold Bullion and Royalty Streaming Company, WPM, is a function of several factors:

First Basel  accord places gold bullion as a first tier asset for central bankers; 

Second rich Chinese have very little option as to where they place their liquid funds due to capital controls, negative returns in real estate markets and low returns in the bond market .... so they have been accumulating gold which is actually encouraged by the CCP; 

Thirdly, the World's central banks have seen how the USD has been weaponised by the Biden administration and have been buying gold heavily. Incidentally, I suspect the Euro will follow the same path when the Germans, French and Brits decide to grab the USD300 billion of Russian central bank assets held in Europe, when Trump walks away from Ukraine and Europe.

I read in the book Unknown Market Wizards, which i thought was interesting, a trader called Richard Bargh sets a target and once reached sells most of the position only leaving a small percentage still in play.  If the SP still moves in the desired direction that’s great still making a small profit but if the run is over the risk has already been reduced. 

The one's that normally show Robbie a small profit are generally new (ish) trades if he buys a new stock and it goes up a bit and then starts reversing he's out, having attended a few of his seminars I would say he's in the top 1% on the planet when it comes to stop loss/money management.

I would not trust Trump. He is a man totally without honour. I work as a case volunteer with a well-known military charity serving veterans. I know honour when i see it, and Trump, the draft dodger, has none.

I have mentioned before that I think Schroders is selling down their holding in #ZTF. It is a large holding and they have just reduced by a small amount so far plus it is an illiquid stock and there seems to be very little buying to soak up sells, therefore it is quite possible that the price of these shares could fall for a good while yet, till Schroders reaches the holding they want. With no more Rezorce the investment thesis may have changed for some holders. One to watch for the moment?

Hi abtan

I think that's all roughly correct. As a REIT it has to distribute 90% of its earnings so the dividend is only ever just covered. In some years it ain't and some years it is.  And the debt means it's doubly interest rate sensitive, with inflation risk thrown is for good measure.

However, I don't really trust (or perhaps it would be truer to say that I don't understand) the cash flow statement due to the adjustments. By the company's own measure of adjusted eps then the dividend is (just) covered by earnings:

The metric adjusts EPRA earnings by deducting one-off items such as debt restructuring costs and adding back finance income on derivatives held at fair value through profit and loss. Adjusted Earnings is considered a better reflection of the measure over which the Board assesses the Group's trading performance and dividend cover.

While I recognise that, for example, the fair value of buildings needs to be accounted for I don't see how that is, in any meaningful way, a cash flow. Yet this is the norm. As ever accounting is its own special kind of magic.

Overall, though, I don't see there's much risk here. The assets are real, the annualised passing rent is increasing (12% last year, through acquisitions and renegotiation), operational costs decreased and interest rates are (slowly) going down. 

It's easy to see why this and other REITs are trading at large discounts. In common with a lot of them the only way it can grow is by recycling assets and taking on debt, as there's no possibility of issuing equity, so there's a dependency on the skill of the managers as well.

I don't see much short-term risk here to either capital or income , and there's a reasonable chance of a re-rating. Will it shoot the lights out though?

Nope!

timarr

Just a couple of points....firstly it need not be all holdings... just an agreed amount. Secondly, why would a zero coupon bond be worthless ? Normally such a bond prices in an implied yield....like say War Loan ? Clearly the price they are issued at should account for this....lots of unknown details here and all I am doing is highlighting what's being discussed. Jim may be out on a limb but Gillian Tett normally has her finger on the pulse.... so im not so sure nothing is on the table....watch this space, and good luck with your gold.