Forced Stock Sale: Catlin Group

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I bought 199 shares in Catlin Group in August 2014 at a price of 515.35p. The investment cost me £1,037.49 (including commission and charges). I’ve received £64.68 in dividends from them to date, and they’re due to pay out a final Special dividend – 11.70p per share – later this month (£23.28 for 199 shares). All in all, at the end of this month I would have received £87.96 in dividends from Catlin in 8 months. This is a 8.5% ROI for income alone. 

As a share holder I received an electronic message asking what action I wanted to take with the proposed takeover from XL Group. The default option was to have approx half your money back from the investment and the other half would be invested in XL Group on the New York Stock Exchange. I had the right to change this option and request ‘maximum shares’ or ‘maximum cash’.

I’ve just sent through my request asking for maximum cash as I’d prefer to keep my investments in my old ISA as UK only. Not that I have anything against US stocks, but I’d like the opportunity to select which company I want rather than be given one. I’ve also made a nice profit from the takeover too, so I’m hoping to reinvest the profit into another stock which could grow in the future. 

In the middle of May, I’ll receive the cash for my 199 shares based on the agreed price of 710.61p per share. For me this will come to £1,414.11. This will result in a £376.62 profit on my initial investment. 

If I add the capital gains and dividends together it comes to £464. 58, which is a 44.8% return on investment in 8 months. Cha-ching!

I won’t be contributing any new cash to my old ISA with H&L, as I’ve opened a new one with iWeb for this financial year instead. The trading fees with iWeb are £5 + stamp duty as apposed to H&L’s £11.95 + stamp duty.  I plan on reinvesting all of the dividends I receive from the H&L account into more shares when it reaches a figure around £1,100-£1,300 mark.  

I will use the profits from the dividends and the stock sale, with the rest of the dividends I’ve received so far to make a new purchase in my old account as it won’t count towards any ISA allocation. I’m also considering selling my old income fund which I had when I first opened this account. It’s worth around £500, and I think I can make better use of that money in another company instead. The capital I raise from selling this fund should put me at around £2,300 capital, so I’m in a position to buy two companies next month in this ISA alone. 

I was very fortunate to get such a great ROI in such a short time. To be honest, if Catlin were trading on the London Stock Exchange, I would have arguably gone for the maximum share option. As I’m now losing a non-life insurance company, which have performed very well for me so far, I’ve made the decision to make up for that and purchase shares in Amlin for this month. I was close to purchasing Amlin in August, but I thought Catlin was a slightly better option at the time. It turns out that with the dividend payments and capital gains from Catlin, I made the right decision this time around, and I’m just in time to receive the bumper dividends from Amlin too. It doesn’t always work out like that though! 

This extra capital is going to go a long way to help me meet my dividend income goal of £2,000 this year. 

I hope you all have a fantastic weekend!


Does anyone else own shares in Catlin Group? Have you decided what you’re going to do with the takeover?

0 Comments

  • Dividend Drive

    Reply Reply 11th April 2015

    My experience with Catlin is almost exactly the same as yours! I bought into the company back in August 2014 (http://bit.ly/Xn6Anq). As I noted at the time (and you noted above), it was a close run thing between Catlin and Amlin.

    The ROI is very nice indeed. As it stands, I am still unsure as to what to do with my holding after discussing it a few months ago (see here if you're interested: http://bit.ly/1DFEWDm).

    I am tempted to hold onto the XL shares for now though. I have looked into them. Obviously the yield is lower, but all other things seem pretty good to me. Of course, when I get the option myself I may decide otherwise!

    I bought into Amlin this time last month as a Catlin replacement (http://bit.ly/1BTW4qi) and I am quite happy with that.

    If I do take full cash I may push it in the direction of Beazley or some more Amlin. Even if I do stick with XL what to do with the 388p per share in cash coming my way! However, I am aware that I am a little heavy in speciality insurers.

    I will keep you posted on my final decision! I will be sad (of sorts!) to see Catlin go though it must be said!

  • UK Value Investor

    Reply Reply 11th April 2015

    Hi Huw, it's always nice to luck into some excellent gains. I had a similar thing a few years ago with Robert Wiseman Dairies which was taken over by the Muller (of "Muller Rice" fame) about a year later. As usual the takeover price was way over the market price.

    Sadly I was in Amlin rather than Catlin, but such is life. Catlin was definitely right up there on my stock screen but it was just never in the right place at the right time, so I always ended up buying other things.

    Well done, and hopefully Amlin will deliver (for both our sakes!).

  • Theres Value

    Reply Reply 11th April 2015

    Catlin was one of those ones I almost bought then too, but decided to put off the insurance purchase last year. I bought Beazley earlier this year and was thinking about adding Amlin too.

    Cheers

  • Dividend Drive

    Reply Reply 13th April 2015

    Just been notified about the different options with the Catlin-XL deal. Time to make my mind up I suppose!

  • Huw Davies

    Reply Reply 14th April 2015

    Hi DD,

    I wish you the best of luck with your decision. It's a nice decision to have in my opinion. Take the profits or invest in stocks? That is the REAL question Shakespeare!

    You can opt to take maximum shares with XL too if you're interested rather than take any cash, or a bit of both. As I say, it's nice to be able to choose what suits your needs.

    I look forward to seeing the outcome of your decision. Good luck once again!

    All the best!
    Huw

  • Huw Davies

    Reply Reply 14th April 2015

    Hi John,

    It is indeed. It doesn't always turn out like that, but I'll take it when it does. My first experience of shares was very similar. I did the share save scheme with my employer, we bought shares at a reduced rate of 202p, and before the scheme finished (2.5 years later), they were sold for 432p. That experience made me look into investing, so I was very fortunate.

    It's turned out well for me now over the last 8 months, but there are examples where my decisions haven't worked out – Tesco being one last year.

    Amlin are a great company, and I'm glad to be a shareholder. We'll both have big smiles on our faces when the special dividend hit out accounts next month that's for sure!

    Fingers crossed for the future too. All the best!

    Huw

  • Huw Davies

    Reply Reply 14th April 2015

    Hi M,

    I have to say my experience with non-life insurance has been excellent so far. Their yields are high and their volatility is fairly low. Beazley are another company on my watchlist that I'm keeping an eye on. I edged for Amlin based on their dividend yield.

    Thanks for stopping by!
    Huw

  • Dividend Drive

    Reply Reply 15th April 2015

    Yes, just deciding now. You're right, it is a great position to be in!

    I know exactly where it is going to go: back into stocks! Catlin is in my ISA and I have no need for the money as it stands. I may take Miss DD out for a special meal though. She is finishing her job at the end of the month so it seems the perfect time!

    Yes, the deal looks very generous and flexible. I do think I am going to go full cash. XL is quite attractive but I think I prefer a UK-listed only portfolio for now until I work out how to best geographically diversify my portfolio. We will see!

  • Dividend Drive

    Reply Reply 16th April 2015

    Made my decision in the end. Followed the same course as yourself (see my write up here if you like: http://bit.ly/1FXbLhS). I think it best. The clincher was "Would I buy XL if the deal was not on the table?". The answer being "no" it is rather simple really!

  • Dividend Legion

    Reply Reply 17th April 2015

    Hi Huw,

    Wow, what a return on investment! If only we could all get 44% every 8 months, we'd reach financial independence rather quickly!

    I have Amlin on my watchlist, although it's a little expensive for my taste at the moment… but then again, most stocks are.

    Keep it up!

    DL

  • Huw Davies

    Reply Reply 20th April 2015

    Hi DD,

    I'm glad you found time to make the decision before it was made for you. Your assessment is exactly in line with my own. I wouldn't buy XL if I had the cash, and the offer gave me the option not to buy them. I hope we both do well from our respective payouts!

    Cheers
    Huw

  • Huw Davies

    Reply Reply 20th April 2015

    Hi DL,

    I hope you're well!

    I certainly got very lucky. If only every investment returned like this!

    Thanks again for the support!
    Huw

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