I'm beginning to regret getting seduced recently by the high divie yield that GNE offers. I reckon that over a 3 or 5 year time frame (pretending the 'investment' in GNE is a Term Deposit) I'm going to come out worse off than just leaving it in the bank miserable rates..... or alternatively 'investing' / 'gambling' on something that will give capital gains.
Have I essentially taken a punt on the GNE share price going up nicely - if that is the case bad move.
Anyway I have no idea what the chart I quickly ran up showing the difference between the GNE divie yield (not gross) and the 5 year Govt Bonds means ...but it must mean something.
Many variables in play but it must mean something - even if its only a measure of how 'risky' punters see GNE
Disc - I repeat, I know squat all about power companies and how they make money (now percy will tell me that I shouldn't invest in anything you don't understand...but these are weird times
Last edited by winner69; 27-09-2020 at 01:54 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
I'm beginning to regret getting seduced recently by the high divie yield that GNE offers. I reckon that over a 3 or 5 year time frame (pretending the 'investment' in GNE is a Term Deposit) I'm going to come out worse off than just leaving it in the bank miserable rates..... or alternatively 'investing' / 'gambling' on something that will give capital gains.
Have I essentially taken a punt on the GNE share price going up nicely? - if that is the case bad move.
Disc - I repeat, I know squat all about power companies and how they make money (now percy will tell me that I shouldn't invest in anything you don't understand...but these are weird times
Winner, the main 'mistake' I see investors making when looking at the superior yield that Genesis offers compared to other gentailers is encapsulated in paragraph below that I wrote in April 2019.
Originally Posted by Snoopy
Kupe has a limited life. So the correct way to value Genesis is to work out the present day value of the Kupe field, both the oil and gas components, while modelling the declining cashflows and using an appropriate discount rate. Once you have a present day dollar value for Kupe take that off the Genesis share price. I will call the result of that the 'Kupe Subtracted Share Price'. Now work out the non Kupe earnings of Genesis and divide the 'Kupe Subtracted Share Price' buy the 'Non Kupe earnings of Genesis'. You will then get a PE ratio that is the true underlying long term PE ratio appropriate for Genesis. And guess what? It will be rather higher than the PE ratios you see bandied about in the newspaper.
Since I wrote that two things have happened:
1/ The reserves of Kupe have been upgraded.
2/ The discount rate has lowered further from what were at the time seen as all time lows.
Both of these points are favourable for the valuation of Genesis. But you can't look at earnings on a PE basis of 30 (for example) on an 'ongoing valuation basis', when the source of those earnings will be extinct within 15 years.
SNOOPY
P.S. Don't feel too badly about not having the best handle on valuing the gentailers. IMO a certain other Beagle doesn't know as much as he should either. And it is pretty easy to be seduced by a flash coat of high yield paint in these low interest times.
Last edited by Snoopy; 27-09-2020 at 10:53 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
The mistake you're making my Beagle friend is that you're trying to put a definitive life on Kupe and have been trying to do so for some time.
The reserve upgrade you allude too was quite substantial (about 33% proven reserves), wasn't the first field upgrade and is unlikely to be the last one in my opinion after applying my super sensitive long range gas detector nose to the situation
Winner me ol mate. I recommend some calming herbal tea each morning. Don't worry my friend. GNE was around $3.70 this time last year. Where's it going to go when interest rates go negative in 2021 ?
Its important to take a "dogged" approach to things when some initial adversity comes
Last edited by Beagle; 27-09-2020 at 11:39 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
My perspective is different from yours's me ol mate. I have bought quite a few since the annual result and have treated the shares just allocated this week in lieu of dividend as a partial return of the initial capital price, (as I do for all shares bought cum a dividend).
On the basis of my net purchase price methodology, I am up 1.2% on shares bought last month. You'd have to wait a whole year to get 1.2% on term deposit with a bank.
GNE have been very good to me over the years and a ultra reliable high yield stock despite all sorts of prognostications about it on here over the years.
Last edited by Beagle; 27-09-2020 at 04:31 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
My perspective is different from yours's me ol mate. I have bought quite a few since the annual result and have treated the shares just allocated this week in lieu of dividend as a partial return of the initial capital price, (as I do for all shares bought cum a dividend).
On the basis of my net purchase price methodology, I am up 1.2% on shares bought last month. You'd have to wait a whole year to get 1.2% on term deposit with a bank.
GNE have been very good to me over the years and a ultra reliable high yield stock despite all sorts of prognostications about it on here over the years.
I wasn’t as clever as you as a bit late to the party ...seduction took longer
On a net purchase price methodology I’m down 2.2% over a month
Maybe that’s what the banks are going to charge to look after your money with negative interest rates
Even knowing that some punters are down 10% if they were seduced a year ago doesn’t console me.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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