RE:So Glad I loaded up!Just something to keep in mind. I bought this in the 2s, like many others here. Lifecos i think still have some upside, but with LCS, you have to keep a close eye on the nav. We have talked about split shares and the mechanics and structure of them and the factors that make them risky, i.e. 1) eroding value - they don't have any income to distribute, all of the underlying income goes to the pref holders - we know this abd have done the math 2) whatever they distribute to A shares has to be from leverage or options or sale of units. The high % of return of capital we are not sure of - does it mean they want to help non registered holders defer tax or does it mean the A shares income is from selling capital units or returning funds raised.
Lower payout - lcs only generates 7.5 cents a month, vs 10 cents for LBS and SBC, DGS. This caps the upside of the lcs nav, vs the others.
For the bank A shares like SBC and LBS, there is a further worry. Anyone who owns Can banks has to be scratiching their heads as to why they are worth 35%+ more than thier pre pandemic all-time highs in a slowly rising rate environment, where home sales are down across the board due to no listings. It makes no sense. Less new mortgage volume, less listings, and small spreads (that are growing a bit though). i think Can banks are still trading like late 2020 and last year in a distorted once in a generation way. Big US banks have been up and down 20% monthly, for comparison.
With that in mind, one has to wonder when banks will come back down to earth and resume a normal valuation/growth pattern. It seems very abnormal since nov 2020. EPS are up 50% from end 20 to end 21, no surprise but only 20% from oct 19 to oct 21, due to one-time removal of provisions. But it's like the stocks don't reflect the one time nature of the boost.
POLL: if you bought SBC, LBS or LCS in 2020 at a fraction of the current price, what are you doing to protect those gains, knowing that you're getting 30-40% in yield as long as they pay out? Or are you ready to hold through the next sub $5 crash?
And if financials come back to their long term valuations (no more provisions for loan losses) and any slowdown occurs from pandemic levels (which seems likely and is already happening), LCS would be at risk of falling under 5 potentially as the discount to NAV widens on the way down due to fear of dist cut.