Skip to content

(B)(N) IVZ Invesco Limited

October 27, 2013

Drama. The World is changing rapidly and it’s hard for investors to cope or change with it. For example, Invesco Limited, of which Invesco Perpetual is a subsidiary in the U.K., is going to reveal its quarterly earnings report next week – and we have no reason not to think that it might not be good (what?) – but its situation is complicated by the announcement that one of its top fund managers, Mr. Neil Woodford, a veteran with more than twenty-five years experience at the firm, will be leaving in April of next year to start his own firm, also in investment management, and investors may have written down the stock by as much as 6% last week and many of his clients are now wondering what to do next (Bloomberg, October 21, 2103, Is Invesco Losing a Jeff Gundlach or a Peter Lynch?).

We’ll look at that situation in a moment (please see Exhibit 1 below) but there are other reasons for immediate concern.

De revolutionibus orbium coelestium

De revolutionibus orbium coelestium
by Nicolai Copernici, 1543

We have recently learned that scientists have catalogued over 1,000 planets (National Geographic, October 23, 2013, Alien Planet Count Passes a Thousand) and that suggests that in our very own Milky Way Galaxy there are likely to be 100 billion “planets” of which at least 17 billion should be rocky, Earth-size planets, like our own. In that regard, we’ve come a long way since Copernicus (1473-1543) who knew of only one (for sure) but couldn’t talk about it in De revolutionibus orbium coelestium until after his death.

Nevertheless, it is a cause for concern because we don’t know who else might be leaving and our investment angst was raised to an even higher level when we began to think that there might not be enough money in the world – this world in any case – to fund The Perpetual Bond™ which is now, for the second year in a row, up by more than +30% and has more than six hundred companies in it (and 350 that are not).

Lahur Sessa by Thiago Cruz

Lahur Sessa by Thiago Cruz

However, not to worry. We did some checking with the custodians of securities, the firms which record who owns what, and in just three of them, we discovered $56 trillion of workable and underutilized assets (BNY Mellon $27.4 trillion, State Street $26.033 trillion and Northern Trust $5.237 trillion) that are owned by the insurance companies, pension plans and mutual funds which we might be able to re-deploy.

The investment industry also looks after its own. Invesco Limited is itself 30% owned by four institutional investors and a dozen brings that total to 50%. It’s probable that vote of confidence has helped the stock price from $20 last year to the current $32 or so. Please see Exhibit 1 below.

The company will also pay a dividend of $400 million to its shareholders this year for a current yield of 2.7%.

Our estimate of the downside in the stock price due to the demonstrated volatility is minus ($4.25) so that we could expect the stock to be trading between the current $32 and $28 to $36 without surprise and the December put at $30 is still available at $0.50 per share today.

Basically, then, we’re going to be OK although it is said that the Eastern Arctic temperatures are running at a 120,000-year high this year (CBC News, October 25, 2013, Eastern Arctic temperatures likely at 120,000-year high) and it’s supposed to snow in Saskatchewan and Alberta this weekend.

Exhibit 1: (B)(N) IVZ Invesco Limited – Risk Price Chart

(B)(N) IVZ Invesco Limited

(B)(N) IVZ Invesco Limited

Invesco Limited is an investment management company. It provides an array of enduring solutions for retail, institutional and high-net-worth clients around the world.

(Please Click on the Chart to make it larger if required.)

From the Company: Invesco Limited is a publicly owned investment manager. It primarily provides its services to institutional clients including major public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds, and financial institutions. The firm manages separate client focused equity, fixed income, balanced portfolios. It also launches equity, fixed income, and balanced mutual funds for its clients. The firm invests in the public equity and fixed income markets across the globe. It invests in core, growth, and value stocks of small-cap, mid-cap, and large-cap companies. The firm employs a fundamental and quantitative analysis with a bottom-up stock picking approach to make its investments. It conducts in-house research to make its investments. Invesco Ltd. was founded in December 1935, has 6,000 employees and is based in Atlanta, Georgia.

For more information on the Chart Elements, please see our recent Post, The RiskWerk Company Glossary.

For more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: