Nothing much to report on the Danfolio recently. My last trade (before today) was the purchase of DGE and SLXX.
Greene King
GNK announced a rights issue today. That came as something of a surprise, and I'm in two minds over it. Their claim seems to be that they're doing it from a position of strength - they intend to buy back debt at a discount, and take advantage of distressed rivals to pick up assets (pubs) on the cheap.
KBC Peel Hunt claim that some of their debt is trading at 47p, so £1 spent buying that back adds £2 to their book value. They only pay ~6% interest on that debt, but even so the annual return on that £1 will be >12% (depending on how long-dated it is). Not a great return, but OK.
The prospect of buying up high-quality assets from distressed rivals is broadly similar value. Greene King's RoTA (EBITDA / tangibles) is 12%. Assuming they are getting good quality pubs for below book value, I would expect the return on those assets to be >12%.
So Greene King should produce a decent return on their £200m. It also achieves a small delevering of the balance sheet. Not a stupid idea.
However, I've already invested plenty in Greene King, and I have no interest in investing more. I'm guessing that others will sell their rights rather than take them up, and that will put a short term pressure on the share price. I therefore sold 20-25% of my holdings this morning at 570p, which will give me enough cash to take up the rights in full on the remainder.
Danfolio
Here's the breakdown of my portfolio by investment type:
USD: 44.7
Large UK Shares: 23.0
Large USA Shares: 8.3
Small UK Shares: 7.6
UK Bonds: 4.6
Large Emerging Shares: 4.1
Large Asia Shares: 3.4
Large Europe Shares: 3.0
Small Emerging Shares: 1.3
In the short-run I'm looking to get the numbers up for Emerging, Asian and European shares.
Here are some of my best and worst purchases - top 5:
149.71% BARC.L Bought @ 87.00 now 217.25 earned 0.00
125.50% RBS.L Bought @ 13.97 now 31.50 earned 0.00
66.60% GNK.L Bought @ 341.71 now 562.00 earned 7.30
42.08% NXT.L Bought @ 1088.86 now 1529.00 earned 18.00
41.18% LLOY.L Bought @ 68.00 now 96.00 earned 0.00
Bottom 5:
-72.92% ZRX.L Bought @ 12.00 now 3.25 earned 0.00
-76.79% ZRX.L Bought @ 14.00 now 3.25 earned 0.00
-81.25% RBS.L Bought @ 167.99 now 31.50 earned 0.00
-86.32% RBS.L Bought @ 399.22 now 31.50 earned 23.10
-89.68% RBS.L Bought @ 305.20 now 31.50 earned 0.00
