Posts Tagged ‘GIL’

Buying for dividend yields can be dangerous

In Investments on 10/12/2009 at 11:41 am

Just ask the investors in Global Investments ( GIL, the former Babcock & Brown Structured Finance Fund) and Macquarie International Infrastructure Fund Limited (MIIF)

At the IPO price of S$1.06 in late 2006, GIL was offering a yield of 9%, while MIIF’s prospectus in May 2005 stated “forecast dividends delivering an annualised yield of between 7.1% to 9.0% on the Offering Price for the period ending 31 December 2005 (see ‘‘Financial Forecasts — Assumptions’’)”. Its listing price was S$1.

Well GIL (with lots of CDOs in its portfolio) is now around 24 cents, while MIIF is around 43.5 cents.

The saving grace is that both are trading below their latest available NAV calculations. MIIF’s NAV as at Sept is 80 cents down from June’s 86 cents. GIL’s is 36 cents as at September, up from June’s 35 cents.

The moral of these two stocks is that high yields could be a sign that investors need to be compensated for the risk that the dividends are not sustainable and that the stock price would fall. Of course, if one is lucky, it could simply mean that the market got it wrong — the dividends are sustainable and the stock price undervalues the company.

You place yr bets, and leave it to the cards.

GIL: Worth Analysing?

In Investments on 16/11/2009 at 1:31 am

(GIL) surely must be worth further analysis as a special situation. Published NTA is 35 cents a share as at June while it is now trading at 25 cents (up 2 cents).

But I’ll give detailed analysis a miss as there will be a change of manager. The present manager is part of the defunct Babcock & Brown group (in fact GIL was once Babcock & Brown Global Infrastructure Fund). The directors want to appoint as manager a ST Gp company, while a shareholder with about 20% wants a relatively unknown Australian fund manager.

So better to wait to see who becomes the manager (there is EGM later in November). And in the meantime,  I will try to find out more abt both managers.