Henderson Far East Income LTD (HFEL)

[londoninvestor]

I wouldn't know what I was looking at. But others here have on occasion looked at HFEL's reported numbers and failed to find any evidence of options trading. I any case, the performance overall remains dire.

They refer to revenue from option selling in today's report:

Another driver of income was option premia following elevated volatility in our markets, a remarkable example being in August 2024 when the Japanese market's 12% one day stock-market plunge spilled over to other markets. We capitalised on such volatility to write covered calls on existing portfolio positions. We managed to lock in attractive option premiums while hedging some of the Company's exposure to the technology sector.

Not sure how much of the total income this makes up though. (I don't hold this, was just curious as to how you get a near 11% yield from a portfolio like theirs!)

[BullDog]

I wouldn't know what I was looking at. But others here have on occasion looked at HFEL's reported numbers and failed to find any evidence of options trading. I any case, the performance overall remains dire.

They refer to revenue from option selling in today's report:

Another driver of income was option premia following elevated volatility in our markets, a remarkable example being in August 2024 when the Japanese market's 12% one day stock-market plunge spilled over to other markets. We capitalised on such volatility to write covered calls on existing portfolio positions. We managed to lock in attractive option premiums while hedging some of the Company's exposure to the technology sector.

Not sure how much of the total income this makes up though. (I don't hold this, was just curious as to how you get a near 11% yield from a portfolio like theirs!)

Thanks. That is pretty unambiguous.

[ian56]

I wouldn't know what I was looking at. But others here have on occasion looked at HFEL's reported numbers and failed to find any evidence of options trading. I any case, the performance overall remains dire.

They refer to revenue from option selling in today's report:

Another driver of income was option premia following elevated volatility in our markets, a remarkable example being in August 2024 when the Japanese market's 12% one day stock-market plunge spilled over to other markets. We capitalised on such volatility to write covered calls on existing portfolio positions. We managed to lock in attractive option premiums while hedging some of the Company's exposure to the technology sector.

Not sure how much of the total income this makes up though. (I don't hold this, was just curious as to how you get a near 11% yield from a portfolio like theirs!)

Number 4 of the notes to the financial statements states refers to other income which, in addition to bank interest of £160m, includes £6,144m of option premium income (£2,869m in 2023) so about 13% on top of the income from investments, a not insignificant amount.

[88V8]

They refer to revenue from option selling in today's report:
Not sure how much of the total income this makes up though. (I don't hold this, was just curious as to how you get a near 11% yield from a portfolio like theirs!)

Number 4 of the notes to the financial statements states refers to other income which, in addition to bank interest of £160m, includes £6,144m of option premium income (£2,869m in 2023) so about 13% on top of the income from investments, a not insignificant amount.

Let's hope they continue to be lucky in their calls. About time they stopped eating capital and spitting it out as divis.

V8

[daveh]

There is an Edison investment report on HFEL here:
https://www.edisongroup.com/research/po ... nds/34128/

which has some discussion on HFEL's use of options to increase income:

Portfolio income supported by a call writing strategy

The manager’s efforts to protect and enhance portfolio income are also reflected in his decision to modify HFEL’s option writing strategy. The strategy now focuses largely on writing call options, with much less emphasis on writing puts. In Duhra’s view, this reduces the risk profile of the option strategy, and its potential cost, while also increasing income by using smaller positions over a wider number of underlying holdings.

[daveh]

Dividend:
https://www.investegate.co.uk/announcem ... on/8697778

The directors have declared the first interim dividend of 6.20p per ordinary share in respect of the year ending 31 August 2025. The dividend will be paid on 28 February 2025 to shareholders on the register on 31 January 2025 (the record date). The shares will be quoted ex-dividend on 30 January 2025.

[daveh]

Half year results:
https://www.investegate.co.uk/announcem ... 25/8830763

Performance

The NAV total return performance for the first six months of the Company's financial year was 2.4%, 2.2% behind the FTSE World Asia Pacific ex Japan Index and 3.3% behind the MSCI AC Asia Pacific ex Japan High Dividend Yield Index. This is not unexpected given the Company's bias toward yield in comparison to the former index which was boosted by the performance of Chinese technology companies, most of which have zero yield. The share price total return for the six months to 28 February 2025 was 3.2%.

It is gratifying to note that at 28 February 2025, the Company's performance both in NAV and share price total return terms, was positive over one, three, five and ten years. It has been some time since this was the case and it demonstrates the Board and Fund Manager's commitment to addressing the overall performance whilst maintaining the progressive dividend.



Dividends

The first interim dividend for the year ending 31 August 2025 was declared on 20 January 2025. This was in the amount of 6.20p per ordinary share.

We are pleased to declare the second interim dividend for the current financial year, also in the amount of 6.20p per ordinary share. This represents an increase of 1.6% on the two interim dividends declared in first half of last year. The second interim dividend will be paid to shareholders on the register at 2 May 2025.



Share issues

The Company has issued 5.2m shares in six months to 28 February 2025. This issuance has raised £9.7m for further investment. In the period since the half-year end, a further 1.3m shares have been issued raising £2.8m.

and dividend declaration:
https://www.investegate.co.uk/announcem ... on/8830818

The dividend will be paid on 30 May 2025 to shareholders on the register on 2 May 2025 (the record date). The shares will be quoted ex-dividend on 1 May 2025.

[monabri]

Better than the poke in the eye with a blunt stick.

[idpickering]

Better than the poke in the eye with a blunt stick.

Agreed. I'm surprised I missed the announcement.

Ian.

[88V8]

Better than the poke in the eye with a blunt stick.

Slightly better.
Bought in 2019, which fired the starting gun on a downhill slide of the SP. It became a classic tail swallower, and while I do regret some of my ill-timed disposals last week, this is not one of them.

V8