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Tambo210 - totally disagree I'm afraid.
People are far more likely to research (or get independent advice) when their future's in their own hands & on the line. Sure, some will get things badly wrong still. But that's no different from the risk faced by private sector employees. And why on earth should it be?
Also, I firmly believe public sector employees must be weaned off any feeling they're entitled to final salary protection at retirement. There's currently too much of a cotton wool mentality. Removing these schemes might well mean public sector base salaries aligned more closely with the private sector. But that would still be far less costly than the status quo. Keeping these schemes going when they're placing an unsustainable burden on the state is plain financial illiteracy IMHO.
As I said before, the government has tweaked pension rules elsewhere by extending the retirement age. So it can be done. That too, meant some had to re-think their finances & postpone retirement. I suspect governments of whichever colour still need to go much further & faster on pension reform, if we're ever going to plug the huge gap in public service finances.
"I personally can't understand why the government hasn't already moved to money purchase schemes for ALL new joiners in the public sector. "
I''ve never had anything but a money purchase pension. The first one dived massively but didn't touch t during the sub-prime crisis. My second one did well, until the same event and then I chopped and changed so much that I've pretty much written that off and just going to let it die now.
My remaining two pensions from current and penultimate job are doing ok-ish. Much bigger pots, but less risk following lesson learnt. But the reason I mention this is because the vast amount of reading and the painful experiences with no one to blame, makes me think that shifting the millions of public sector works to money purchase pensions....is like a ticking time-bomb. They get to retirement having done F-all reading and research and expect final salary like pensions.....Errrr nope!
Tambo210 - on average, wages are still increasing in real terms, so IMHO we're definitely NOT out of the wage spiral danger zone yet.
April's 9.8% National Living Wage increase won't help in that regard (though it WILL benefit those on lower wages, which many will welcome). I guess there's only a certain amount any government can affordably do to encourage the economically inactive back into work. Improvements to childcare is another area that looks sensible in theory. But if nurseries still can't afford - or find enough qualified staff - to offer the extra places, it's not really going to work.
I don't have a great deal of time for the BOE, though I do think they're right to tread cautiously with interest rate drops (largely because they took too long to increase rates in the first place). Whilst I fully expect UK inflation to drop below 2% temporarily this year on the back of energy deflation, I doubt it'll stay there that long. My hunch is that we'll see one, or at the most two x 0.25% falls in UK base rate this year. And that the EU & US will follow a similarly cautious path.
As for public sector final salary pensions, workers seem to conveniently forget the huge benefits these offer when negotiating wage settlements or arguing how underpaid they are relative to the private sector. I personally can't understand why the government hasn't already moved to money purchase schemes for ALL new joiners in the public sector. Suspect it's only a matter of time. Sure, it wouldn't be popular. But neither was increasing the state pension retirement age. Yet they've bitten the bullet on that - and will have to continue to do so.
LLL : Would you say we're out of a wage spiral? I'm not convinced yet, and still believe wage increases to be higher than inflation.
1) Doesn't help the number of economically inactive people. There was quite a frank article in the Telegraph this weekend people should read. They alleged to have questioned some folk on benefits to understand why they opt not to contribute to the economy. Some of the comments whilst hilarious are frankly true.
2) BOE's remuneration increases have themselves been higher than the rate of inflation despite what Bailey and Pill preach to us plebs. They get Final salary pensions still unlike some of us who have to manage our own pensions with no guarantee of a pot size. (What do they do at the BoE? Are they traders).
This is a sticky part of inflation I'm not sure we can kick to get inflation below 2%.
New weekly high on weekly outside price bar, indicates price expansion, breakout. Outside bar, occurs when the high is higher than the previous bar and the low is lower than the previous bar. Heavy volume on the daily chart confirms the breakout is supported. Symmetry of previous price formation implies a 917 price target . The two volatility based bollinger bands are separating, indicating increased volatility, which means a fast sp, movement. DYOR.
Trouts - I totally agree with UK Rail & Telecomms.
But Energy doesn’t work that way - as the now announced April 2024 price cap drop demonstrates.
Nor has Water mirrored inflation historically, though prices ARE set to rise dramatically from April:
www.ofwat.gov.uk/average-bills-press-statement-2024-25/
Re: Telecoms - Ofcom are reviewing mid-contract real term price increases. But their terms of reference look pathetically weak - they’re more concerned about clarity, than whether companies should be allowed to move the goalposts in the first place:
www.ofcom.org.uk/news-centre/2023/review-of-inflation-linked-telecoms-price-rises
The weird system we have developed for regulated industries where they are "allowed" every April to increase prices by Inflation + a percentage is really adding to inflation. Rail, Water, Telecoms, Energy... Once the regulator has proclaimed the permissible increase, they all announce that they will be increasing prices by the maximum! No competition, no real market, just adding to inflation and paying the difference in bonuses.
Just one more point on inflation. My gut feel is that in the UK (& to a lesser extent the US & EU), its trajectory will be quite uneven.
At home, the energy price cap drop in April - & probably again in July? - will have a major impact on headline inflation. That’s likely to lead to increased calls for the BOE to cut interest rates more quickly & aggressively. But they’ll be looking at underlying inflation & wage settlements too, which may well tell a rather different story. The 9.8% NLW increase from 1 April will, in itself, be quite inflationary.
Having been way too slow IMHO to increase interest rates initially, I suspect the BOE will now have to be equally slow & cautious when it comes to dropping rates. Had they acted sooner, they could have squeezed inflation out of the system far more effectively, but hey ho.
Ubik_Fresh - I agree, market sentiment should improve generally as interest rates gradually start to fall. This could be particularly beneficial for SMT’s unlisted holdings & the prospects of one or more of them IPO’ing.
I don’t think we’ll have to wait until next year for the tide to turn, though I suspect both inflation & interest rate drops will be far slower & more drawn out than current market consensus.
Nice. Also the first time I've been significantly up on my position having bought in the 7s and 6s. I think patience will reward us. Next year should see rates ease and equity come back into favor. Still a lot of cash on the sidelines and in money market funds (me included).
Well put LLOL, this has been the best day SMT has seen in a long while. I am finally back in profits! Once I am 10% I plan to sell half then hold the rest. I think having most of my eggs in this basket has been a bad call on my part. I will diversify with the half I sell but I am a big believer in SMTs portfolio so will keep the rest for at least 5 more years.
On 15/03/2024, the Company announces the purchase of 2,559,132 Ordinary Shares at a price of 814.49p. The shares purchased will be held in Treasury.
The answer is yes, loads of people selling after just 5% rise, mind you we don't know what they bought in at, or what their holdings are, I'm sticking to my guns and will hold until £12 or more, then sell 10%, and buy 10% at about £6, but you never know...
Will there be a sell off from the people going short, who are happy with another 5%..?🤔
So they announce a buyback of up to £1bn over 2 years (representing about 8.7% of SMT's current market cap) & the share price instantly rises over 5% (despite no new repurchases being RNS'd today).
Maybe they should do it more often!
Seriously, though, such a significant upgrading of their buyback scheme suggests managers are confident & feel the current discount to NAV is unjustified. Will be interesting to see the longer term impact.
CaptLard : Management may have accepted that shareholders have been making noises and its time to appease them. Not just bury your head in the sand and continue the beaten path they've been doing watching the spread between NAV and SP as wide as it is.
I like the fact they're returning capital to us. There is always doubt regarding buybacks and how much value they add. Sure EPS should go up, but in the end, the open market votes.
I think the positive catalyst has to be interest rate cuts. As well, SpaceX IPO would serve them well.
I'm seeing headwinds in the Semiconductor space, so they'll need to keep an eye on ASML, NVIDIA in 1H2024.
"Surely that 1bn should be invested into a current portfolio company or grab a new one. Ideally publicly traded."
Only if they take the view that the £1bn can be deployed well. And making the money available for buybacks doesn't take it off the table if something better comes up.
It might be the case they have a view of when some of the currently privately held companies are going public and taking a view that buying some of the resulting price action at a discount to NAV is a good move.
Capped - I agree, it might be something Vodafone should do (although the benefits always seem rather theoretical to me) but it seems a bit odd from an investment company. Motley Fool always whinge that it shows a company can’t think of anything better to do with its money, but in this case can’t the company think of anything better to do with its money?
SP responding well. Need this to go up. Third of my portfolio is SMT with average of £5 per share. Seen the highs and wished I'd cashed out. Still think it will come back in the next year when inflation falls
Good Morning
It's good news but will that translate into a narrowing of the NAV? Only time will tell.
It may help the SP, but I am dubious of why they are doing this. Surely that 1bn should be invested into a current portfolio company or grab a new one. Ideally publicly traded.
Excellent news on the £1bn buyback. At that level, I'm sure it will have a material impact on the share price and the discount to the NAV. Just need to sit and wait.
Will have a decent effect on SP - probably lots of good news from the unquoted companies that don’t ordinarily provide transparency that negative market would like.
SMT NAV trading 18% premium to SP.
Yes, an interesting development, though I’m slightly dubious the Senate will pass it.
And even if they do, how enforceable would it ever be, what with VPNs etc?