Why I’ve changed my mind on CGF, and some thoughts on sell discipline, page-28

"Any thoughts on how the value of CGF has changed over the past month?
My take is there would have been a massive amount of redemption pushing FUM down. in some instances there would have been derivative overlays protecting the overall value of the fund.
But a 70% drop in 1 month..."

@gordon_gecko.

I don't believe the fundamental value has changed that much, but the short-term business risks have changed.

As they do for any company whose business model is a derivative of capital market happenings. Which is why, down turbulence in capital markets, financial stocks fall the fastest and the hardest.

I don't think its an issue of redemptions that is impacting the stock price (most of their FUM is derived from long-term investors which are reasonably sticky... heck, their investment performance has been quite ordinary and even then the FUM levels have remained intact which just goes to show how entrenched a lot of their FUM is).

No, I think that what has the market shooting first, before even asking any questions, is concern around the performance of the life portfolio, which is invested in sub-investment grade bonds (about 15% of the book, if I recall right), and how that might be impacted if full-blown credit stress breaks out.
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