My Portfolio: Year In Review 2022

01 January 2023
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,680-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2022 as well as provide a few remarks about valuation. 

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. Any upsets I will suffer during 2023 will most likely be caused by the shares I already own rather than any new shares I will buy.

I undertook the same annual review at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022.

My portfolio lost 23.3% during 2022. This other post explains that performance in more detail and clarifies how my portfolio begins 2023.

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[Podcast] CITY OF LONDON INVESTMENT With Mark Atkinson And Maynard Paton

24 November 2022
By Maynard Paton

I have recorded another episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We discussed City of London Investment (CLIG) and my recent share purchase, my AGM attendance and the company’s 9% dividend yield: 

We cover:

  • My recent CLIG purchase and history of ownership.
  • A lack of capital gains, but superb dividends.
  • Where CLIG stands in my portfolio now.
  • How does CLIG invest for its clients?
  • My attendance at the AGM and previously receiving a letter from CLIG’s founder.
  • Major shareholder George Karpus and his future plans.
  • The performance of Karpus Investment Management following the merger.
  • CLIG’s regular client income, but fees are being squeezed.
  • Employee remuneration versus client returns.
  • The share-price KPI and potential double-digit returns.
  • CLIG’s investment team approach and employee retention.
  • History of funds under management and recent client-money inflows.
  • The S&P 500, institutional ‘allocators’ and portfolio ‘buckets’.
  • The attractions of emerging markets and potential for outperformance.
  • Private investors holding CLIG and liking cash-rich income stocks.
  • The 9% yield, valuation comparison with Liontrust and closing thoughts.

Extra links:

Happy listening!

Maynard Paton

PS: The AGM took place on 31st October 2022 and the podcast recording took place on 21st November 2022.

Disclosure: Maynard owns shares in City of London Investment.

CITY OF LONDON INVESTMENT: H2 2022 Profit Drops 20% And FuM Slides To $8.5b Although Yield Now Tops 8% And Run Of Net Inflows Extends To 4 Quarters

21 October 2022
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Rough market conditions causing funds under management (FuM) to fall 17% to $9.2b led to H2 net fee income dropping 5% and H2 profit diving 20%.
  • A post-year update showed FuM sliding a further 8% to $8.5b, but also the fourth consecutive quarter of net FuM inflows that may signal clients re-appraising CLIG’s ‘value’ approach.
  • Buying SPACs at discounts to cash helped merger partner KIM outperform the original CLIM division with 6% five-year annualised returns versus 3-4%.
  • Revenue “100%” denominated in the stronger USD, handy cash conversion plus net funds and investments of £30m counterbalanced an H2 margin squeezed to ‘only’ 42%.
  • Near-term earnings could now be running at 36p per share, which should still support the 33p per share dividend and 8%-plus yield at 400p. I continue to hold.

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CITY OF LONDON INVESTMENT: FuM Drops 13% To Below $10b After H1 2022 Discloses 49% Margin, Welcome Special Dividend And (Finally!) Some New Client Money

19 June 2022
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • The Karpus merger ensured impressive headline progress, but this H1 performance was almost identical to the preceding H2 as funds under management (FuM) remained at $11b.
  • Wishful thinking perhaps, but two consecutive quarters of net FuM inflows following consistent FuM outflows may signal clients re-appraising CLIG’s ‘value’ approach.
  • Rough market conditions during the subsequent H2 will test CLIG’s investments, with FuM dropping 13% to below $10b not indicating obvious outperformance.
  • A wonderful 49% margin and net cash of £25m funding a welcome £7m special dividend suggest the accounts can survive any further market weakness.
  • Although the possible P/E is 11 and the yield tops 7%, the shares have been rated modestly for years as major new clients remain extremely elusive. I continue to hold.

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My Portfolio: Year In Review 2021

01 January 2022
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,609-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2021 as well as provide a few remarks about valuation. 

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. Any upsets I will suffer during 2022 will most likely be caused by the shares I already own rather than any new shares I will buy.

Read more

CITY OF LONDON INVESTMENT: Net Client Withdrawals Of $752m Continue To Limit Re-Rating Potential Despite FY 2021 Showcasing Record $11.4b FuM, 49% Margin And £26m Net Cash

25 November 2021
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • The Karpus merger ensured a record financial performance and a 10% dividend lift, although funds under management (FuM) during H2 (+4%) did not enjoy the buoyant market gains experienced during H1 (+31%).
  • Further client ‘rebalancing’ led to FuM withdrawals of $752m — almost entirely negating the net client inflows of $758m received during the previous five years. 
  • The absence of fresh client money and investment gains lagging the MSCI World index — as well as staff using paper payslips and fax machines — could be evidence of a business rather stuck in its ways.
  • A startling 49% operating margin, net cash at a hefty £26m plus small demands on cash flow confirm the accounts remain in good shape.
  • Although the possible P/E is 10-11 and the yield tops 6%, the shares have been rated modestly for years as major new clients remain very elusive. I continue to hold.

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CITY OF LONDON INVESTMENT: H1 Figures Reveal Record $10.9b FuM And Astonishing 55% Margin But Client ‘Rebalancing’ Keeps P/E Stuck At 11x

24 February 2021
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Very buoyant markets alongside the Karpus merger helped funds under management (FuM) reach a record $10.9b and lift the dividend by 10%.
  • Client ‘rebalancing’ led to FuM withdrawals and, despite fledgling strategies attracting new money, overall fund flows remain frustratingly low. 
  • Recent leadership retirements have not led to any dramatic changes and shareholder information has remained reassuringly comprehensive.
  • The Karpus merger has raised the group margin to an astonishing 55%, but future bonus-pool arrangements could reduce such profitability.
  • The possible P/E is 11 and near-term yield might top 7%, although the shares have been valued modestly for years and a sustained re-rating remains very elusive. I continue to hold.

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My Portfolio: Year In Review 2020

01 January 2021
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,631-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each business performed during 2020 as well as provide a few remarks about valuation. 

These reviews are very useful to write — not least because they help ensure I am still invested for the right reasons! Any upsets I will suffer during 2021 will most likely be caused by the shares I already own rather than any new shares I will buy.

Read more

CITY OF LONDON INVESTMENT: 2020 Dividend Up 11% And Yielding 7.5% After FuM ‘Capacity’ Warning Limits Growth Potential And Explains Upcoming Merger

18 September 2020
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Funds under management (FuM) endured a rollercoaster second half, but finished the year up 2% to lift profit by 10% and the dividend by 11%.
  • FuM ‘capacity’ has become an issue, and explains CLIG’s limited past progress and probably prompted the upcoming merger. 
  • The Karpus deal appears logical, but similar to CLIG the merger partner has struggled to attract new clients.
  • The accounts continue to sport high margins, decent cash flow, high equity returns and net cash.
  • A potential P/E of 11 and yield of 7.5% seem attractive, although the shares have been rated modestly for years. I continue to hold.

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City of London Investment: Market Crash Pushes Yield To 9% After Positive H1 Results Show 11% Dividend Lift And Potential To Maintain Payout

23 March 2020
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Funds under management rallied to a record level in GBP terms, lifting revenue by 11%, profit by 22% and the dividend by 11%.
  • However, the market crash that followed these results has superseded a lot of the statement’s commentary and accounting.
  • Profit may now be running almost 40% lower than at the start of the year and may just about cover the 28p per share full-year dividend.
  • The accounts continue to sport high margins, decent cash flow and net cash — all of which ought to see the business through the present downturn.
  • Although the shares have been rated modestly on a P/E basis for years, the possible yield now tops 9%. I continue to hold.

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My Portfolio: Year In Review 2019

10 January 2020
By Maynard Paton

Happy January!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 5,562-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2019, as well as provide a few remarks about valuation.

As I mentioned this time last year, I find writing such reviews extremely useful — not least because I double-check my investment logic to ensure I am still invested for the right reasons! The upsets I will suffer during 2020 will most likely be caused by the shares I already own rather than by new shares I purchase.

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City Of London Investment: Dividend Yield Still Tops 6% After Mixed 2019 Summary Shows FUM At Record (GBP) High But Fee Rates Sliding Lower

26 July 2019
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • These 2019 summary figures contained no surprises, as lower funds under management (FUM) throughout the year left revenue down 6% and profit down 16%.
  • FUM ironically ended the year at its highest-ever level in GBP terms (£4.2b), as client money once again trickled out of the main emerging-market funds and in to other strategies.
  • The overall fee rate paid by clients slid from 80 basis points to 76 basis points.
  • The accounts continue to sport high margins, a robust return on equity, decent cash flow and net cash.
  • The P/E is approximately 10 and the yield tops 6%, although the shares have traded on a similar rating for years. I continue to hold.

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City Of London Investment: Dividend Yield Now 7.5% As H1 Profit Drops 21% And Tough Markets Extend Wait For Significant New Clients

18 January 2019
By Maynard Paton

Results verdict on City of London Investment (CLIG):

  • Monthly updates had already braced shareholders for lower funds under management — which in turn reduced first-half profit by 21%.
  • Tough markets have again prompted the fund manager to cut its projections, as fee rates are trimmed and costs creep higher.
  • As before, significant new clients are required to bolster earnings and support a decisive share-price re-rating.
  • I am hopeful the replacement chief executive might one day re-energise the group’s marketing.
  • The accounts remain cash-rich and high-margin, and the shares yield 7.5%. I continue to hold.

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My Portfolio: Year In Review 2018

01 January 2019
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now raring to do battle with the market for another twelve months!

This first Blog post of 2019 provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2018, as well as provide a few remarks about valuation.

Read more

City Of London Investment: Fees Cut, Forecasts Reduced, Funds Underperform… But Lifted Dividend Offers 6.8% Income

01 August 2018
By Maynard Paton

Update on City of London Investment (CLIG).

Event: Trading update and shareholder presentation/summary results for the year ending 30 June 2018 published 17 July 2018.

Summary: Bumper first-half figures and subsequent monthly updates had already ensured the fund manager’s summary annual results would be positive. However, the second half did witness funds under management decline and the group’s own projections for the coming year have now been reduced. In addition, client fees have been cut once again while the main emerging-market strategy continues to underperform. I still hope that, one day, this cash-rich, high-margin business can attract meaningful new mandates to spark a share-price re-rating.  Until then, a 6.8% income remains available. I continue to hold.

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