Schroder Oriental Income Fund

TCA

I'm on the verge of buying into the Schroder Oriental Income Fund Investment Trust. Looks like I just marginally missed my strike price today but I notice that somebody sold 250,000 shares for the best part of half a million quid at 4:28pm just before the stock market closed.

http://www.livecharts.co.uk/share_prices/share_price/symbol-SOI

Although this is a very small proportion of the total ordinary shares in issue, it still sticks out a mile amongst the rest of the day's trades. Does somebody know something I don't? The ex-dividend date is 13th November (Wednesday), so it seems odd that someone would offload such an amount today. Especially at 183.92p which is much lower than every other selling price today.

I guess for every seller there's a buyer but should I be concerned? Can anyone shed any light?

Thanks

srcandas

TCA wrote: »

I'm on the verge of buying into the Schroder Oriental Income Fund Investment Trust. Looks like I just marginally missed my strike price today but I notice that somebody sold 250,000 shares for the best part of half a million quid at 4:28pm just before the stock market closed.

I really wouldn't worry about it but if it worries you don't buy it as life is too short. As you say it is nothing in comparison with the cap of £406 million. And to a big player 250000 shares may also be nothing. And this investment is well diversified across countries, industries and investment types so can't see how anyone could forecast doom unless they see the whole of Asia going down the pan

For sure whoever or whatever did the trade they think they have somewhere better to go. But might be the purchase of a yatch or the rebalancing of some investment vehicle. Or even someone dying and the estate being split. Or ......................

Should say just over a year back I went for Schroder Small Cap Discovery Class A GBP Accumulation and have been well pleased.

But all the best with it :beer:

TCA

srcandas wrote: »

But might be the purchase of a yatch or the rebalancing of some investment vehicle. Or even someone dying and the estate being split. Or ......................

Thanks. I'm not worried. More trying to educate myself having really only bought funds before. Saw mostly selling of this share going on today culminating in this larger sale, so was wondering if I'd missed a bit of relevant news.

Talking of educating.....here's potentially an idiotic question. On the link I posted above we see trades termed "buy" and "sell". Obviously for every buyer there's a seller, so what determines the definition on websites like this? Today there looked to be mostly people selling, but surely that means people buying too?

srcandas

TCA wrote: »

Thanks. I'm not worried. More trying to educate myself having really only bought funds before. Saw mostly selling of this share going on today culminating in this larger sale, so was wondering if I'd missed a bit of relevant news.

Talking of educating.....here's potentially an idiotic question. On the link I posted above we see trades termed "buy" and "sell". Obviously for every buyer there's a seller, so what determines the definition on websites like this? Today there looked to be mostly people selling, but surely that means people buying too?

The market makers maintain the balance. They keep the market in commonly traded shares liquid. They act like a buffer between sellers and buyers. It is why less frequently traded shares tend to have bigger spreads. The spread protects the market maker and is how he makes money.

So you won't see trades balanced in the short term.

Hope that makes sense

bowlhead99

TCA wrote: »

Talking of educating.....here's potentially an idiotic question. On the link I posted above we see trades termed "buy" and "sell". Obviously for every buyer there's a seller, so what determines the definition on websites like this? Today there looked to be mostly people selling, but surely that means people buying too?

There is a bid-offer spread when you're buying or selling. There will usually be a number of market-makers making the market at a point in time.

Say the "normal market size" for a particular stock is 10,000 shares. The NMS is determined by the stock exchange based on the historic market volume. If the bid-offer spread is 101p-105p, that means the highest price a market maker is currently bidding to definitely buy your 10,000 shares off you in one trade is 101p. Of course, you might have less to shift and they might pay 102p. They might even pay you 104p, but they're unlikely to pay 104p if you wanted to shift 10,000 of them at once. If they would, the price would generally be showing 104-105p. At the low end of the price range, if you wanted to shift 30,000 shares you might only get 100p for them, or you can try putting in 3 separate trades of 10,000 and hope the price hasn't moved after you do the first couple of them.

On the buy side, the 105p offer price means you shouldn't have to pay more than 105p to buy the "normal market size" amount of shares. Someone is out there offering 10,000 shares for sale to you at "only" 105p. If you are desperate to buy 100,000 shares you might need to pay 105.5p. Or if you only want to buy 9000 shares but you want to pay for them on a 10-business-day settlement timescale instead of the standard T+3, you might need to pay 105p+.

The market maker who is offering 10000 shares at 105p to might not be the same one who's buying them at 101p. Perhaps the one who is keen to buy and not very keen to sell will pay 101p but only sell at an uncompetitive 107p. The one who will sell them at 105p might really really not want any more, and would only buy them at 98p, so will not end up buying any that day because people keep selling them at 101p+ to other MMs. In this way, he can balance his books and not end up with too many shares without being short of shares either.

So the 101p-105p is just what you can get or what you must pay to definitely sell the shares or get the shares, but it is a mix of different MMs who are on the bid or the offer at a point in time. If you trade 1000 shares at 101.5p the stock exchange is told that this trade happened, but it isn't told who was the buyer and who was the seller.

But as the price is closer to the bid than the offer, some websites will show it as a "sell" because it's nearer to the quoted bid than the offer and it's more likely that you're dumping rather than accumulating at that price. Of course it might still be a buy, and if it's over a certain quantity (or an accumulation of a number of smaller related trades) it might be reported late, by which time the quote had moved around so that what appears to be a buy at that time was actually a sell from earlier. So some websites will just give you the data and not try to classify trades between buy or sell

So in summary, whether a share shows as a buy or sell depends what the standard bid-offer is at the time it's reported, but it isn't definitive. And to be honest, there's more to it than this but beyond the scope of this post. If you pay for a subscription to "level 2" live market info from your broker or an external source, you can see exactly what is being bid and offered for different volumes by different MMs and it might give you a clue as to direction.

For most of us, this isn't worth trying to over-analyze. If you see a 250,000 "buy" it might really be a sell. Or it might be matched with an equal or similar trade in the same day and merely represent a roll-over of an expiring contract that the person didn't want to exit so he re-booked his position at the same or new price, with no net disposal or acquisition. Or it may be a broker to broker or MM to MM trade clearing up their net exposure without trying to actively buy or sell shares as an investor.

Different reported trade types have different codes that will be shown on the stock exchange website, but the stock exchange website only shows the last 5 trades so is a pretty useless source anyway for most stocks. Other 3rd-party sites (e.g. ADVFN) carry more free data but for your occasional trade on an investment trust, don't get too hung up on it

TCA

Thanks again srcandas and also to bowlhead99 for the customary excellent explanatory post.

Very interesting stuff and as you eloquently summarised, probably a topic I need delve no further into for my occasional purchases. Especially given the difficulties in reading into any buy/sell labelled trades.

That "sell" I highlighted is classified on the LSE website as type "O", ordinary, so nothing to be gleaned there as you said. Incidentally it was priced well below the lower level of the spread, which was another reason it got my attention.

So my purchase will likely proceed tomorrow on the smallest of price dips. The ex-dividend date is 13th Nov, so I hope purchase on 12th will see me ok to pick up the dividend.

bowlhead99

If you trade on the 12th and it doesn't trade ex-div until the 13th, that means you get the divi, because after the standard three day settlement period the seller has your money and you have their shares just before the deadline for reviewing the registers and deciding to whom they should pay the divi.

If instead you bought Wednesday, due to the three day settlement your name would not be on the shareholder register until next week and you wouldn't get paid. Of course, if the dividend is worth 5p, the shares will open down 5p on Wednesday as the fund just reduced its net assets by 5p per share and a share is not worth as much to the buyer.

As an example you can look at the chart of LLPC which went ex div last week for its 4.6p payout; it's pretty obvious from the chart which day is ex-div day. Of course a drop on ex div day is only "all other things being equal" and in reality the price will keep going up and down with the markets.

Personally if I was dealing outside a tax wrapper I wouldn't usually buy a share the day before it pays me a dividend because with the immediate price drop my total return is nil but I have an income tax bill and the hassle of waiting for the dividend receipt to reinvest it as soon as I get it. I would prefer to just buy at a net lower price the next day. But inside a wrapper or maybe for basic rate taxpayers it's fine.

Different people have different motivations and the timing of dividends is not too much of an issue if you are looking at the big picture of whether your cash should be in Asian Income or UK Income or Growth or Real Estate or cash or whatever at that point in the cycle.

TCA

bowlhead99 wrote: »

Personally if I was dealing outside a tax wrapper I wouldn't usually buy a share the day before it pays me a dividend because with the immediate price drop my total return is nil but I have an income tax bill and the hassle of waiting for the dividend receipt to reinvest it as soon as I get it. I would prefer to just buy at a net lower price the next day. But inside a wrapper or maybe for basic rate taxpayers it's fine.

Thanks again for the reply. So I guess the value of the next dividend is slowly being built into the price after the previous dividend is paid. My purchase hasn't gone through yet as the price opened up by 1.5p and I see now that the bid/offer spread has widened to 3p, whereas I'm sure yesterday it was only 1p (I think). But I see a "buy" going through just lower than the mid-price so anything seems possible.

Looking at SOI share prices on the previous ex-dividend dates, it's a bit unclear as to what's happened but I don't suppose you can take these days in isolation or consider only dividend data as no doubt lots of other factors at work:

7th June 1.8823
10th June 1.93
11th June 1.8467
12th June 1.865 (ex-dividend date, 1.5p div)
13th June 1.825
14th June 1.845
17th June 1.88
18th June 1.89
21st June 1.855

5th April 2.000
8th April 1.9165
9th April 1.995
10th April 1.995 (ex-dividend date, 2.95p div)
11th April 1.9615
12th April 1.975
15th April 1.9925

I'm currently a basic rate tax payer and buying unwrapped, so not too worried on the dividend income versus capital gain situation. But having said that and looked briefly at the share price history above, I might just follow your approach and buy on the dip after the ex-dividend date instead. Or just set my limit order a bit lower and see what happens.

Cheers.

srcandas

TCA interesting numbers. You can see that daily variations are much more significant than dividend payments so the dividend impact is lost in the fog.

Just in passing I noticed this morning Glaxo are trading down roughly the next dividend value of 19p. But the ex divi date is not until tomorrow. Has it dropped in anticipation and could I still get in??? It would be easy to convince myself. But as bowlhead explained so well there is real danger in microanalysis

On the spread it is interesting that when I trade with HL I often get a message saying the average middle was £x but we traded at £x-np. You saved nnp. Rarely is it much but it does show that a competitive market is functioning - well hopefully that is what it shows

And finally to make you feel even more nervous I'm going to have a dabble at your Schroder Oriental Income. On your head be it :rotfl:

TCA

srcandas wrote: »

And finally to make you feel even more nervous I'm going to have a dabble at your Schroder Oriental Income. On your head be it :rotfl:

:eek:

Ha ha. Good luck. But at what price are you going to buy and when? Price currently steady at about 187p....

srcandas

TCA wrote: »

:eek:

Ha ha. Good luck. But at what price are you going to buy and when? Price currently steady at about 187p....

Probably in a week or so after I decide what to do with my Merlin and Infinity IPOs. As for price as long as there is no large movements (+ or - 5%) whatever it happens to be.

I'm convinced both high cap Asia and EM Asia will do well in the coming years. But don't take that as a recommendation. I'm heavily into the Philippines but if the almighty sends them more earthquakes and typhoons the islands may disappear. Also Indonesia which has been a dog recently. But I'll hang in there.

:beer: