Just a quick flag up for non-subscribers that this months purchase might be due a catch up. This is especially so given the on going re-bound in markets and the fact that this Company has continued to operate and actually benefits from stronger markets, but hasn't actually responded to them yet. Since it has a June year end there should be a trading update next month so there should be catalyst too.
So the stock in question is the small fund manager which specialises in funds based on investment trusts and with a bias towards emerging markets called City of London Group (CLIG). It is pretty conservatively run and the earnings estimates seem to be realistic after their trading update on the 21st April, although I suspect they could even beat those given the bounce back we have seen in markets since then. They also said they would review the dividend but were aware of the importance of this to shareholders - so i think there is quite a good chance they may maintain that too.
Based on those estimates and that assumption on the dividend it is trading on around 9x with a 9% yield and has cash on the balance sheet. So on that basis it entered the Compound Income Scores Portfolio this month to reinvest the top sliced money which came from a stock on over 30x and on yield of less than 1%. So although I'm going against the old adage of running your winners there as per the title of the monthly update I'm going for Value instead.
Finally looking at the chart is looks to have been making a base but has thus far refused to participate in the rally part from a brief burst of strength in April prior to the trading update.
I note the gap on the chart at about 367p and these usually get closed along the way. The only other thing to note is that it is not that large with a market cap of around £80m so towards the bottom end of the range in terms of size of Company that I normally invest in but in this case I know this one quite well. It does mean that it is not that liquid and the spread can be quite wide, 311- 324p or 4% or so currently although you might be able to get inside that.
Any way I'll leave it there and we'll see how it goes when they update the market next month. Have a great weekend, stay safe and well and mind how you go.