This time of year is a time for being with your loved ones, thinking about the past year and what your goals are for the next. Some send Christmas cards to all of their friends wishing them a very merry Christmas and all the best for the new year to come. However, it seems that the management of Delta Lloyd, a Dutch insurance company, wanted to send a very different Christmas card to all of their employees this year. The message went along the lines of ‘you know what we want you all to think about this Christmas?’ And the answer to that question is ‘how and where to find a new job’. The reason behind this story is that another Dutch insurance company called NN, short for Nationale Nederlanden, has made an unsolicited offer for buying Delta Lloyd. This was a few weeks ago and at the time Delta Lloyd’s management was not amused. They were actually very verbal in the media about why they thought the offer price at the time did not at all reflect the value of Delta Lloyd. Now, they accepted a higher offer price announced on the 23rd of December. However, the increase is actually not 10% as stated in the article behind this link. In October NN offered EUR 5.30 per share of Delta Lloyd. In December they increased it by 10 cents ie EUR 0.10 to EUR 5.40 and not by 10%. The percentage increase is therefore closer to 2%. For this December announcement, timing is everything. In my view, NN buying Delta Lloyd will lead to a lot of lay offs as they really do not need two of everything. So, I think that some of Delta Lloyd’s operations people will very much worry about their jobs at the latest when this m&a transaction will be finalized. I think that this includes Delta Lloyd’s fund managers. As you know, I own or better owned one Delta Lloyd fund in my portfolio. So, what I did on Friday when I heard the news that this deal was supported by Delta Lloyd’s management (Delta Lloyd shareholders still have to agree), I decided to sell my shares in this fund and today the order was completed. The main reason is what I described above. It is my personal opinion that the fund managers will be busier thinking about their careers than about the fund’s portfolio for the next couple of months. I guess I should have included this reason in my post on when to sell.
Either way, I am out of this fund now. So, time for a post mortem analysis of my investment in this fund. The total value sold was EUR 1,435.05 and after transaction costs of EUR 9.65 or 0.67% a total of EUR 1,425.40 found its way into my bank account. When I bought this position in March 2015, the transaction value was EUR 1,509.30 on top of which I paid transaction costs of EUR 10.76. So the total cash out was EUR 1,520.06. This number does not compare favorably to the net amount I received today. Luckily, during my holding period of this fund, I received some EUR 61.96 in post tax dividends. So, doing the math, I spent 1,520.06 and received 1,425.40 from the sale plus 61.96 in dividends. This translates into a net cash flow of negative (!) EUR 32.70 or a not annualized total return of -2.2% from this position. As a result, I need to step up my game if I want to achieve financial independence. At this rate, I am never going to get there.
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