In a world of low nearly zero interest rates this poses two risks to CGF: * nearly no return on the safest bonds *push into lower grade bonds to get yield (but are responsible for the loss), or move up the risk curve into other higher risk assets.
So market is currently being correct in viewing CGF future earnings with some skepticism in light of current yield opportunities.
But that is also the opportunity, because the market is pricing the shares at a much lower multiple against its bv and NTA (ie the market is forecasting that CGF will not be able to make historical returns on its investment portfolio with reference to historical times).
For myself I now see some middle balance ground whereby the discount in share price to BV and share price NTA have contracted sufficiently that I don't need those historical returns to justify my investment at current market pricing (but I am exposed to loss risk still!!!)
CGF Price at posting:
$5.01 Sentiment: None Disclosure: Held
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