Thank you for that / that's pretty much how I see it too. I am Not so convinced that Watsa and Noonan will see off within a year - in Noonan's case I expect a slow release over many years . I think Watsa may wait for dividend time .
Can you quickly explain the potential here - to my eyes AIB are the most overvalued bank share in Western Europe by far - to a dizzy eye piping level !!!!!! Any takers for AIB at even 50% of the current price assuming you had to hold for a year ? Not me thanks
The big investment funds are likely looking at aib, the potential of aib as a long term holding ~ 5 yrs is very attractive, keep a watch on boi & aib.. Ross has left considerable change on the table by selling at 0.26... Aib is very similar to bankia, but much more attractive as long term investment, noonan could recoup the entire govt investments if he plays the cards well..
I'm had an early start this morning so all the zeroes are giving me double vision. I reckon every cent bkir goes up its worth around 45million to Michael and 20 million to watsa. If they read all the positive expectations on this forum they should be happy men.
Even though watsa has less than half noonan's holding, him selling will probably have a bigger impact on price. He probably has less reason to sell and he didn't at this price before.
Government priority seems to be aib at the moment. Seeing as there was a bit of a "Ross beat noonan to it" at 33c last time he might like to go that little bit further as well. Pure speculation on my part. Pointless trying to second guess a finance minister and a billionaire.
I'd say politics will trump business and Govt will exit before the election to show a success for the taxpayer. Jam today. He's long pretty much the rest of the banking sector anyway. Lloyds is the template in my view - the UK sells in stages touting that taxpayers get their GBP back at a profit. If I was in his shoes with the debt and deficit metrics of Ireland, I'd sell too and reduce sovereign borrowings. Less conviction about Watsa - bragging rights over a Molson with Ross if he sells out for more?
Only my thinking here but have either a reason to sell. The bank could easily return 5 to 10% for the next few years. In A Time when yeild Is hard To find its a return watsa might appreciate. If Michael does get to refinance the IMF loan at 1.8% ( looks likely) and bkir gives him 6% it starts to look better to hold. Add a dividend in a couple of years and even better.
For me the drivers of the share price are: (a) improving Irish macro picture; (b) leading player in an ever more concentrated domestic bank market with attractive diversification in the UK; (c) adequate and growing capital (expect BKIR to pass the Oct stress tests; then repay the prefs and meet Basel 3 fully loaded by early 2016); (d) strong liquidity position and a highly accommodative ECB monetary policy; (e) adequate NPL coverage with improving asset quality and declining NPLs; (f) return to profitability with significant operating leverage, so improvements in NII, NIR, and provision releases should flow through to the bottom line as costs are under control; (g) a return to dividends in 2016, with nothing else to do with the cash other than pay it out to shareholders, and (h) strong leadership team. The risks to me are: (a) reversals in any of the above, (b) failure to grow the loan book, (c) regulatory curve ball – Central Bank decides to follow Sweden and hike capital and risk weightings, so depressing BKIRs RoE and valuation, (d) share overhang – Messrs. Noonan and Watsa virtually certain to dump c 20% of BKIR over the next 12-months (initially it will depress the share price but no further overhangs thereafter, so medium term positive), (e) Govt. imposes further reparations pre-election through a hike in the bank levy, caps on fees and charges etc., (f) idiosyncratic event – BKIR go all out next month to really mess up payroll, ATMs go offline, hack etc., and (g) valuation relative to other banking stocks – BKIR is not a dripping roast of value. I think the positives currently offset the negatives, and this has driven the re-rating and I remain positive over the medium term but would not be surprised with a pull-back given relative valuation. Personally, I don’t see insiders at play setting this up for a fall. Outside of Noonan and Watsa, the top shareholders are Capital Group, FMR, Europacific and Blackrock, and I suspect they hold BKIR in value/growth/long only funds. 9 brokers rate it a buy, 3 hold and 6 sell.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.