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News tab reporting broker upgrade for Tesco. Positive analysis from Morgan Stanley. Cost cuts going forward for Bookers too.
Lots of positives despite the sp stuck in the doldrums.
My holding by 10k ,( effectively I’ve got my 50p dividend and won’t have to pay tax as I’ve used my personal gains allowance), question is where to stick it! I’ve watched it bumble along for ages in the same 20p band and watched my other shares climb pretty well with the exception of micro focus : Going to put a few k in Marks & Spencer Just wish I did it sooner when I said I would
I see Brexit is causing concern for retailers and food manufacturers due to delays at the ports. If retailers have been stockpiling then I can see shoppers doing the same as the realisation of potential shortages sinks in. Not sure what the impact on the big supermarkets will be but can see supplies of long shelf like goods, particularly from Europe being in high demand.
Price rises inevitable regardless of any deal. Lets hope TSCO forward planning is a s good as their ability to adapt to the pandemic was.
https://www.independent.co.uk/news/uk/politics/brexit/retailers-ports-inquiry-congestion-brexit-b1775007.html
The currency is hedged. No drama there.
The only variable is that of the currency exchange rate. A nice low dollar to sterling exchange rate would be even better
Yes, the money will be in the bank account for a very short period. During that time the NAV and cash at bank will be higher but, unless that coincides with an end of quarter update we will never know, essentially it is a wash transaction. I doubt whether any one or any institution is unaware of this transaction. The amount and allocation of funds have been known for months and there has been no deviation from the published circular
Yeah, I understand they have the money allocated, but once they receive the proceeds surely they have a bank balance that is 8 billion to the good (untill they spend it) surely this pushes up the share price .. (again, till they spend it)
Poker chips
When you say that the Asia business is doing better, you do realise that there are two Asia businesses, one profitable and one not.
Poker
Yes in part. However, 5billion has not left the busines. It is the value of the businesses as they appear in the balance sheet. The profit on the sale was never in the business to start with.
Mags
There was an initial GM which was put to the vote and carried by a very large majority. The numbers and the allocation of funds have not changed so it is very very unlikely not to be passed.
mags
apologies, poorly phrased. Funds have already been allocated pending approval in February...
I wouldn't have thought they have received the proceeds yet and also I believe there is to be a meeting and vote on the proposal to pay the special dividend, so it might not actually happen .. just my view ..
If they would have wanted to "streamline the business" I would imagine they would have cleared out of central/eastern Europe well before Asia..seeing as the latter was doing much better
mags
My understanding is that the proceeds have already been spent on the Pension fund and special dividend.
The efficiency gained by streamlining the business is unknown at this stage. It is not a zero sum calculation as PC seems to think.
Sounds right to me, you get cash, you give it away and your back to square one .. surely the optimum period for this share is when they receive the proceeds of the sale and before they fritter it away?
Spindler,
Surely the value of the Thai business is already built into the SP ...so..when the value is distributed that value disappears and the SP will deflate accordingly.....just like any other ex div situation
You cannot have the cash dividend in one hand and the continued value of the business (in the SP) in the other
So..it "appears" that they intend to consolidate the shares in order to reduce the number of shares and therefore increase the share price again after the ex div drop ...which would artificially deal with the fact that 5 billion has left the business
Rosewall
You are spot on.
Some Slater Walker companies used that trick many years ago, then a few other listed stocks, the largest of which at the time was Lucas, no pensioners ever benefitted by investing in their own company, to my knowledge.
The old adage of keeping your income separate from your capital has never really been disproved.
Tesco has been very much range bound since around February. Buy around 2.02p and sell above 2.37p
If we break the 50 dma we will test the lower end of the range again.
200-Day Moving Average 224.47
50-Day Moving Average 220.24
20-Day Moving Average 228.09
10-Day Moving Average 226.50
I have only ever been involved with one share where the sp rose as a result of a buyback. Most, such as LLOY, simply depress the share price. I find it shocking that a company cant find any better way of investing shareholders funds. I know the theory is good but I find it rather like flushing money down the loo.
Thanks Rosewall, makes sense and I thought as much.
The pension shares I'm thinking of are company shares awarded as bonus or profit shares and kept, so not strictly part of a pension.
It is interesting that Tesco is not going to do a buyback scheme like a recent one by BP. Some smaller shares that I have come across have utilised this idea for good results.
I wish I'd sold last week ..
Gavster
The pension fund is an independent entity and have rules in place to say what investments can be made. As for the Tesco pension fund investing in Tesco then, unless the law has changed, it is a no no. This dates back to the robber baron Robert Maxwell.
Spindler
Fwiw, I think fund managers are holding this back as they slowly drop money in. They know the timeframe so can take thie so in any direction to suit their agenda.
The recent trend certainly supports that.
I have calculated the money due to me in February and will use that capital before payout to buy more shares. Just a matter of timing. Although it has not been reported, after any share consolidation I can see the yearly dividend to be adjusted accordingly.
The running cost of the Pension fund should be reduced significantly too.
May have my rose coloured glasses on but lots of positives here despite the unraveling from the EU.
Legal and General are in charge of the pension fund, but if I was in charge of Tesco I would want a significant part of my 2 billion investment into the pension fund to be spent on Tesco shares, thereby putting buoyancy into the share value.
I do not know if there are rules against this or not but I have heard of companies that have as part of their pension fund an investment in their own company. Anyone know if this is in anyway part of the plan.. ? Or not ?