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Law Debenture Corp (LWDB)? Any LWDB fans in the house?

Closed-end funds and OEICs
ReallyVeryFoolish
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Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322755

Postby ReallyVeryFoolish » June 30th, 2020, 12:34 pm

Any LWDB fans in the house? I have recently bought some for a close relative and I am pretty impressed. For a mainly UK investment fund they have some very nice investments. The only likely cutter I could see in the top ten is BP. No baccy, no banks. Some interesting alternative energy stocks. Plus, the well regarded professional services arm underpinning the company. A fair discount and a much better yield than I remember in the past. Though admittedlty, it would be 25 or more years since I last looked a LWDB. I'm quite liking it.

RVF.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322757

Postby MaraMan » June 30th, 2020, 12:42 pm

I have been keeping my eye on it as I am moving more into IT's. I like the factors you mention but the flat lineing SP over 5 years means I have yet to be persuaded. What I try and look for is reasonable yield with modest long term growth, which I suppose is more TR orientated than pure income.
Will keep it on my list of possibles though, probably below EDIN at the moment due to the larger discount.
MM

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322762

Postby ReallyVeryFoolish » June 30th, 2020, 1:00 pm

MaraMan wrote:I have been keeping my eye on it as I am moving more into IT's. I like the factors you mention but the flat lineing SP over 5 years means I have yet to be persuaded. What I try and look for is reasonable yield with modest long term growth, which I suppose is more TR orientated than pure income.
Will keep it on my list of possibles though, probably below EDIN at the moment due to the larger discount.
MM

Cheers, yes it was bought today primarily as an income stock for an eldrley close relative needing to generate a little more income. I hope it repays my decision to buy. I am looking beyond the UK increasingly for income, a new departure for me. An overdue departure too, recent experience shows me.

RVF

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322768

Postby Arborbridge » June 30th, 2020, 1:32 pm

I've held Law Deb since around 1990. No complaints, except that it doesn't quite fit into my later income IT ideas. Still, it has done me no harm and has just kept beavering away over the years. Some people like more frequent dividend payouts, but I quite like less frequent bigger dollops which come as a nice surprise and cause me less paperwork.

The downside is a nagging feeling that the services/fiducial side isn't really what I want as it increases the risk, and the yield has been rather low. But - it's there in my portfolio, has never done anything offensive and I can't be bothered to sell it! - maybe one day.


Arb.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322771

Postby ReallyVeryFoolish » June 30th, 2020, 1:40 pm

Arborbridge wrote:I've held Law Deb since around 1990. No complaints, except that it doesn't quite fit into my later income IT ideas. Still, it has done me no harm and has just kept beavering away over the years. Some people like more frequent dividend payouts, but I quite like less frequent bigger dollops which come as a nice surprise and cause me less paperwork.

The downside is a nagging feeling that the services/fiducial side isn't really what I want as it increases the risk, and the yield has been rather low. But - it's there in my portfolio, has never done anything offensive and I can't be bothered to sell it! - maybe one day.


Arb.

Thanks Arb, the present yield is >5% and they now pay quarterly dividends. Just thought I'd clarify that for others. I have no way of knowing really, but I don't quite understand how LWDB professional services increases risk at LWDB, but it's moot anyway. Cheers.

RVF

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322774

Postby Arborbridge » June 30th, 2020, 1:49 pm

Here's something to help (or not!):-

Image


These are all plotted with income re-invested, to I'm assuming this would show the TR thus compensating the differences between the yields.
The idea was to compare Law Deb with City of London and Monks. The OIECS are on there accidentally, but to be honest I couldn't be bothered to go back and do it all again.
Monks is a weird one, having put on a growth spurt from 2016, which shows that choosing by past performance is always a dodgy game.
Top of the tree is Monls, at the moment, and Law Deb looks like it's consistently second, and even more interestingly, higher that CTY most of the time. Perhaps I should buy some more LWDB!

Arb.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322815

Postby jonesa1 » June 30th, 2020, 5:08 pm

It's certainly done much better than Lowland, which is managed by the same team (James Henderson & Laura Foll). Their performance with Lowland (on a TR basis, income alone has done well) would make me nervous about investing in anything else they run.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322823

Postby Arborbridge » June 30th, 2020, 6:13 pm

jonesa1 wrote:It's certainly done much better than Lowland, which is managed by the same team (James Henderson & Laura Foll). Their performance with Lowland (on a TR basis, income alone has done well) would make me nervous about investing in anything else they run.


"Law Deb has done very well, which would make me interested in looking at anything else they manage"

Other end of the telescope :lol:

Maybe the difference is in the fiduciary part, or in the basic brief. Anyhow, I've been lucky to choose one and not the other. Actually, I nearly bought LWI at one point, but moved on for not good reason.
Investing is just luck much of the time.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322846

Postby jonesa1 » June 30th, 2020, 9:43 pm

Arborbridge wrote:Other end of the telescope :lol:


Fair comment. LWI is just bad luck, or is LWDB just good luck? Will the real fund manager step forward? Passive tracker, anyone? :)

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322849

Postby monabri » June 30th, 2020, 10:14 pm

The "dividend cover" was an attraction says the man from HYP.

https://www.theaic.co.uk/companydata/0P00008ZOC


Dividend - schedule
viewtopic.php?p=316555#p316555

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322878

Postby ReallyVeryFoolish » July 1st, 2020, 2:22 am

Thanks for the comments, appreciated. I thought that given how often CITY is cited, it was interesting to ask about LWDB in the income trust space. Especially when you look at the top ten underlying holdings.

RVF

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322890

Postby Dod101 » July 1st, 2020, 7:34 am

It will be interesting to see their half year results to 30 June. I have not looked at them for a long while but the last thing I need is another UK Income IT. I fear that the results will not look too good and they will have lost a lot of dividend income. They have a huge spread of investments (over 120 individual holdings) and, unsurpringly, a number of doubtful looking ones within that, such as Rolls Royce, Centrica, and Stobart.

They have big Revenue Reserves though, over two years of their revised dividend cost. Their Annual report for 2019 was published before the Covid19 had struck so unlike many ITs with the same year end they have made no mention of it.

Current yield 4.6% and a 5.8% discount. As always difficult to tell at this stage how meaningful the yield is.

Dod

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322892

Postby Dod101 » July 1st, 2020, 7:40 am

Arborbridge wrote: Monks is a weird one, having put on a growth spurt from 2016, which shows that choosing by past performance is always a dodgy game.
Top of the tree is Monls, at the moment, and Law Deb looks like it's consistently second, and even more interestingly, higher that CTY most of the time. Perhaps I should buy some more LWDB!

Arb.


The reason Monks looks a bit 'weird' is because I think it was around 2016 that Baillie Gifford changed the managers for Monks and appointed Charles Plowden, a joint senior partner, as joint investment manager. Prior to that it had done very poorly for some years, but then took off as a sort of conservative Scottish Mortgage. Plowden is set to retire next April but the pattern seems to be set fair for Monks.

Dod

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322895

Postby Arborbridge » July 1st, 2020, 8:01 am

Dod101 wrote:
The reason Monks looks a bit 'weird' is because I think it was around 2016 that Baillie Gifford changed the managers for Monks and appointed Charles Plowden, a joint senior partner, as joint investment manager. Prior to that it had done very poorly for some years, but then took off as a sort of conservative Scottish Mortgage. Plowden is set to retire next April but the pattern seems to be set fair for Monks.

Dod


Interesting that. I also note that Monks started cutting through the bunch rapidly from almost exactly the date of the referendum - June 2016. Is it possible the previous managers had left them well placed after all :?: or was this a rather rapid effect of the new brooms? I believe relative changes in discount might also have worked in its favour.

As for LWDB, I note you caution which is fair enough, but I am still tempted by a small top-up having found the yield is now good (4.9%) but without an excessive discount which indicated some confidence. With their reserves, I wouldn't expect a cut in dividends - if they do we will have bigger trouble on our hands with other sources of our dividends!

As regards being too much in the UK and not needing more: do bear in mind that though fishing in the same pond, IT results can vary widely.

Arb.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322911

Postby Arborbridge » July 1st, 2020, 9:52 am

Dod101 wrote: I fear that the results will not look too good and they will have lost a lot of dividend income. They have a huge spread of investments (over 120 individual holdings) and, unsurpringly, a number of doubtful looking ones within that, such as Rolls Royce, Centrica, and Stobart.


Dod


They are a bit of a scattergun IT which maybe does not suit you being averse to diworsification. However, I doubt they will be worried about the effect of the particular shares you mention on income: two of them account for only 0.1% each, and Rolls is only 1.37%. I suggest the disadvantage of the scattergun turns to an advantage on occasions.

In normal IT terms, the 120 holdings would be regarded as lower risk than a conviction portfolio of 30.

In short, with 2 years reserves and a broad spread, I doubt they will be losing their status of 41 years of increasing or maintained dividends, and that will be as much as we could hope for. In addition, their record of increasing dividends suggests that their heart is in the right place and they will be keen to build dividends when they can rather than find an excuse to cut.

Arb.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#322915

Postby SalvorHardin » July 1st, 2020, 10:06 am

Law Debenture is an investment trust which really deserves a subsector classification of its own. This is because of its wholly owned fiduciary services business, whose income has traditionally produced up to 40% of Law Debenture's dividend. This business introduce an element of volatility in the results which isn't present in most investment trusts, personally I welcome it and have been a shareholder for over a decade. I think of Law Debenture as a mixture of investment trust and financial/legal services business, rather than as a pure investment trust.

Prospective investors should note that Law Debenture's NAV includes an estimate of the value of this business. In the 2019 accounts it was valued at 77.7p per share. See page 38 of the annual report (conveniently Law Debenture's 10-year record is on page 39).

Up until a few years ago Law Debenture made no allowance for the business in the NAV and consequently the shares traded at a substantial premium to the NAV to allow for this (usually more than 10%). Since they introduced this valuation the shares moved to a discount.

As to the dividend, the company issued an RNS on 8th June where it addressed the dividend cuts/cancellations:

"With significant turmoil in global markets as a result of the Covid-19 pandemic, a large number of quoted companies have cut their dividends in order to protect the long term future of their businesses. This is happening at a time when the recipients of those dividends may themselves be increasingly reliant on that income. The great advantage of the investment trust structure is the ability to retain a portion of income received each year in order to smooth dividends in times of market stress.

With that backdrop, the unique advantage of the Law Debenture structure has never been more evident. We approach 2020 with a professional services business that has funded 35% of dividends for the investment trust over the preceding 10 years and group retained earnings of £62.5m. The combination of this diversification of income and the strength of our reserves provides us with a genuine competitive advantage over other equity income trusts when forming our dividend policy."


https://www.investegate.co.uk/law-debenture-corp/rns/dividend-declaration/202006080700071773P/

https://www.lawdebenture.com/investment-trust/shareholder-information

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#323043

Postby jonesa1 » July 1st, 2020, 6:01 pm

Laura Foll is interviewed (for about half an hour) on the latest Money Week podcast.

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#323044

Postby Itsallaguess » July 1st, 2020, 6:06 pm

jonesa1 wrote:
Laura Foll is interviewed (for about half an hour) on the latest Money Week podcast.


That Money Week podcast can be found here if anyone wishes to listen to it -

https://moneyweek.com/investments/stockmarkets/uk-stockmarkets/601588/laura-foll-uk-stocks-small-companies-income-yields

Note that if you visit the above URL more than once, you may be asked to register, but I think a single visit will enable you to listen to the podcast in it's entirety....

Cheers,

Itsallaguess

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#323100

Postby jackdaww » July 1st, 2020, 10:14 pm

i am not keen on the supplementary services business.

another issue is gearing , which is over 20%, as it is with MRCH HHI AND JCH.

there are good alternatives to LWDB - eg. CTY MUT and DIG in the same general area.

:)

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Re: Law Debenture Corp (LWDB)? Any LWDB fans in the house?

#323154

Postby ReallyVeryFoolish » July 2nd, 2020, 6:13 am

I note "Tempus" tips LWDB today. Kiss of death?

RVF


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