Two stocks with “hidden” assets | Bonds & Fixed Income

Here are two issues I’m fascinated by at present…

1) A shock particular dividend! Hey, who doesn’t love one of these?

One of my suggestions, Lion Selection Group ($LSX), introduced this yesterday.

Lion owns a focused quantity of names within the junior gold space. Most of its holdings don’t even generate income, not to mention earnings.

What’s the story?

Here’s the cool factor whenever you dig round a company’s accounts, and get to know them.

Lion had some “legacy” investments it made years in the past.

Their communication made clear these had been “non core” assets for his or her new strategy.

And but, clearly, they nonetheless had worth.

Here’s what usually occurs as time goes by. The market ends up putting zero worth on outdated holdings like these. Lion isn’t distinctive on this regard. It occurs all of the time, in the event you watch carefully enough.

I made the case for investing in Lion back in my March situation. Lion stock was trading 20% under its internet asset backing.

That appeared absurd when it was accumulating junior gold shares low-cost at distressed costs…and gold was booming.

I didn’t even care about their outdated legacy positions. But they’d the latent potential to be a free kick someplace down the road.

One of them simply paid off. Lion invested in a firm back in 2012 for just below $3 million.

They simply offered it for roughly $12 million. A tidy return.

Hence the particular 2c dividend coming for my subscribers, alongside the 27% capital gain in 4 months.

Well performed LSX!

We left off yesterday with the concept that junior miners had been a place to search for bargains.

LSX remains to be a good approach to experience this thematic.

Only take into account Lion in the event you’re affected person, although. It backs its companies for years as they go from drilling to research to finance and development.

And, of course, we are able to’t dismiss the standard dangers: commodity bear market, poor investing selections, and so forth.

That stated, the current case of Lion’s 2012 investment is a template of what LSX could possibly be doing in round 2030…cashing in some very profitable selections that they’re making at present.

2) Speaking of “hidden” assets, retailing behemoth Scentre Group ($SCG) is one other candidate.

It owns all of the Westfield buying centres across the nation. That means they own tons of land in key city areas.

From their release at present…

“The Group is one of the largest land holders in the most densely populated areas across metropolitan centres in Australia and New Zealand.

“Mr Rusanow said: ‘Our land holdings could potentially supply a significant number of new dwellings in town centres where people already want to live and work. We are engaging with governments and potential capital partners on how we can realise these housing opportunities across our portfolio.”

You would possibly keep in mind we chatted about REITs like SCG final week. Here’s a great instance of a company having a business model with one other juicy angle to generate worth.

There are tons of causes to love SCG.

Many Aussie buying centres had been constructed many years in the past. They primarily have a monopoly now as a result of land and construction prices are so excessive.

SCG run their centres properly. And now they’ll put housing proper the place people need to stay.

And, but, simply a few years in the past, the market positioned a low worth on all this…

I by no means advisable this one as a result of it’s not a small cap stock.

But for income traders it’s been a cracking concept. You can in all probability maintain it endlessly, subject to your capacity to manage with market volatility.

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Source: Tradingview

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There is a curious transfer happening in UK and Japanese 30-year bonds.

They are getting completely hammered.

The Japanese central bank has backed off from their fixed intervention of their bond market and yields are rising quickly on the lookout for the equilibrium stage.

Japanese 30-year bond yields have jumped from a completely ridiculous 0.7% yield in 2021 to the present stage of 3.20%.

And the uptrend in yields has been accelerating lately.

UK 30-year bond yields simply hit their highest stage since 1998 at 5.6%. Out of control deficits and inflation fears have seen traders dumping their long bonds.

I’ve been discussing the steepening of the US yield curve lately as traders demand a larger return for holding bonds for a longer period.

There are actual financial penalties from the long finish of the yield curve remaining stubbornly high or rising additional.

Mortgage charges are based mostly on 10-year bond yields. Also governments value of debt will rise dramatically at a time once they need to situation more debt as a result of they continue to be deeply in deficit.

Japan is the basket case on that entrance with a debt/GDP above 250%.

If there was any situation that had the power to blow up onto the entrance of traders’ minds and disrupt the at present bullish outlook it will be a bond market disaster within the UK and Japan.

But conversely it seems odds on that the US Fed will begin aggressively dropping rates of interest in response to softening employment and a weak housing market.

So there are nonetheless alternatives on the market.

We jumped into a housing stock in my new worldwide stock trading service, and it jumped almost 8% on Friday after Fed Chairman Powells Jackson Hole Speech!

Not a dangerous approach to kick off our transfer away from Australia’s shores and I plan on discovering many more like that in future.

Today is your final day to entry the service as a founding member with a massive low cost thrown in, particularly in the event you be part of for 2 years.

So make sure you take a look at what I’m up to by midnight tonight when the offer is taken down.

All advice is common advice and has not taken into consideration your personal circumstances.

Please search unbiased financial advice relating to your own state of affairs, or if unsure in regards to the suitability of an investment.