Trawling back through previous posts is always interesting. One stock I discussed back in May 2013 was the Clime Capital preference share (CAMPA). These shares mature next year so it's worth a quick update.
CAMPA are issued by the listed investment company, Clime Capital (CAM). CAM are managed by Clime Investment Management (CIW).
CAMPA were issued in 2007 at a price of $2.40. At the time of the review in 2013 the price was $2.14, and given the maturity conversion formula, I couldn't understand for the life of me why the price was still so high. CAMPA are now $1.1950. At maturity in May 2017, CAMPA shares will convert to CAM shares at a ratio of 1.36206* for each 1 CAMPA share held. CAM shares currently trade at $.77, so the notional conversion value is $1.05. CAM shares aren't popular at the moment - they trade less than NTA. If you apply the conversion calculation to the NTA value (i.e. assume CIW will trade closer to NTA), then we have a conversion value of $1.18, which is pretty close to the current CAMPA price.
CAMPA pay out a big fat dividend - 18c p.a., fully franked. Given the timing, it looks like there will be another 18c or 25.71c including franking credits of dividends to be paid before maturity. That equates to a yield of 21.6% including franking credits.
The elephant in the room is the CAM share price - its performance has been sub par, thanks to an average performance of the underlying portfolio. If this trend continues, then the CAMPA value also diminishes. If the share price stays at $1.05 (e.g. the NTA stays flat and the discount to NTA persists), the net return drops to 11.7c or 9.8%. If the CAM share price trends down further then potentially all of the income is wiped out.
Looks like money could be made from here - but not hugely interesting for me.
Kristian
No position in CAM, CAMP, own CIW
*not updated for any further share issues since 2013
Hi Christian,
ReplyDeleteI did some number crunching and it looks like as CAMPA are trading at approx. NTA v CAM trading a 11.5% discount (as of 14 April), the yield (inc. divs) on both at conversion in May 2017 will be around the same at 7% if the current discount to NTA holds or 16% if the CAM's go up to NTA. No arb/free lunch opportunity here!