At our meeting on Dec 1st we discussed a number of investment possibilities, looking at the share price graphs and the fundamental accounts figures. We looked at investments giving a good income return, but found like Royal Dutch Shell, there was no long term growth. We looked at a number of investments giving none or little income, and here one would expect long term rapid growth. Those we looked at did not grow to beat inflation.
TUI was a possibility, will it recover after Covid? Even before Covid it had been a going nowhere investment. They had paid out profit in dividends and not invested, now having no net asset value, and the share price had fallen in real terms before Covid despite booming holiday markets.
Wetherspoons is a surprise as despite rapid expansion the turnover had only doubled in 18 years, and the profit hardly keeping up with inflation. The share price had increased and even now is 4 times what it was. Despite opening all these pubs and hotels the asset value is only a quarter of the share price. The dividend yield is less than 1%. The directors however have taken out many millions by share sales. Tim Martin, campaigner for Brexit, having taken out £60 million this way in the last twelve months. Share options for directors are a very easy way for directors to get rich at the expense of investors. Several more companies did not satisfy as investments, but the group is keen on TESLA, the problem being a lack of information.
We looked at City of London investment trust. Gives a dividend of about 5% which has increased a little every year for a very long time. The earnings per share have not increased much, but the net profit is such that they are likely to continue giving increased dividends for the years to come. The income seems to be safer than the building societies!
We looked at Kenmare mining, one member wondered about selling to a company offering to buy at about the current price. You have to ask why they want to buy and only at the current price. Maybe we should also buy.
Next meetings are Dec 8 and Jan 12. Let Cornelius know if you plan to be there. mandu@mandu.co.uk. Masks please and do not come if you have any infection. There could be space for a new member, please ask.