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CT’s Moss sells out of ‘uninvestable’ Close Brothers
Columbia Threadneedle’s David Moss used a short-lived recovery in shares of Close Brothers (CBG) to sell out of the beleaguered private bank.
The stock was the largest detractor in Moss’s £117m CT High Income (CHI) investment trust in February after it announced the cancellation of its interim dividend in order to start building reserves to meet potential liabilities from the Financial Conduct Authority’s review of motor finance practices.
Moss used a ‘small recovery’ in the share price to sell his position over the month.
‘The FCA review will not report until September and, as we are unable to accurately assess the potential redress payable from the review, we felt the stock had become uninvestable, with the cancellation of the dividend removing one of the key reasons for ownership,’ he said.
https://citywire.com/investment-trust-insider/news/expert-view-close-brothers-dfs-softcat-jd-foxtons/a2439360
Alliance News) - Millions of claims could be lodged by UK drivers who may have overpaid on their car finance, as the emerging issue has the potential to be "on par" with the PPI scandal, a consumer compensation expert has said.
The UK's financial regulator is currently reviewing whether people could be owed compensation for being charged too much for car loans.
It is looking into hidden and unfair commission arrangements on loans taken out between 2007 and 2021.
Simon Evans, the boss of trade group the Consumer Redress Association, which represents claims management companies, said that people are likely to have bought more than one car during that period.
This could more than double the number of claims that come through.
It comes after consumer expert Martin Lewis revealed earlier this month that 1.1 million people had submitted complaints through a free tool on the MoneySavingExpert.com website, which he founded.
He described the number of complaints as "staggering" and suggested that car finance mis-selling could be the "second biggest reclaim payout in UK history" after the PPI scandal.
That saw UK banks pay out billions of pounds in compensation to customers who were mis-sold personal protection insurance from the mid-1990s.
Evans suggested that the scale of those affected has the potential to be "on par" with PPI.
"If you think about the number of people who have bought cars in the last decade-and-a-half, there is a swathe of people who will have bought it in that way," he said, referring to the discretionary commission arrangements.
"What we are seeing through our member firms who are engaging with consumers at the moment is that actually each person has an average of about 2.3 claims.
"So they have had two or three cars in that period and all of those qualify for a claim."
This is likely to cause a "large headache" for car finance companies, Evans said.
But he added a "note of caution on the good work Martin Lewis is doing", suggesting that while many people will have downloaded the template complaint letter, it may not mean that they will all have taken the next step of sending it to their lender.
Meanwhile, the chief executive of the Financial Conduct Authority, Nikhil Rathi, recently downplayed comparisons with the long-running PPI redress.
He said he did not anticipate the car finance issue "playing out as PPI did", partly because the watchdog has intervened earlier.
Lloyds Banking Group PLC, which owns Black Horse, the UK's largest car finance lender, said last month it was setting aside a provision of GBP450 million to cover potential costs related to the FCA's review.
That includes the potential compensation for consumers as well as administration costs in dealing with complaints
If it pops down another 18p or so to the 380s will be time to play - yet again.
Best share this year >>> So far 😉
I'm so confused about what BOA are doing with their shares in these RNS's? They're picking them up and then dumping them again by the looks of it, didn't know BOA carried on like day traders? I dunno
To be fair they should both be on the hook. Yes it was the Dealer who "sold" the interest rate at a higher level than needs be and profited from that via the higher commission payment. Butm the funders did facilitate this and would also have benefited financially via higher interest recovery
Bruce Packard a former bank analyst has a regular column for Sharepad. This week he covers CBG.
Says the £400m they are putting aside is both sensible and realistic, although it will affect short term profitability as either money is not invested or 'safer' options are pursued with lower returns.
CBG provided range of (6) analysts estimates on potential cost of redress impacting business between 2024 and 2026 of £150m to £350m - average of £271m.
He and his friend who runs a hedge fund don't understand why banks are on the hook for this rather than the car dealers.
Thinks in 18 months CBG could be back to earning 15% ROE with eps of around £1.65, possibly 18.5% ROE business once Winterflood etc start hitting their stride.
He has bought some shares.
All he has done is said that anyone getting a response that they don't have a claim, they should forget it as no bank or whatever would risk telling porkies about this. imo loads of people who maybe didn't even buy a car have probably claimed on the off chance that the FCA will just accept all claims and have such payed out.
If that was so, share price would be back where it belongs in the 770s ++
Is there a link to that anywhere, as I can't find any evidence that he made that statement?
Seems that Lewis has backtracked on his claims and the payout provision will no longer be needed.
Is Bank of America holding 6.85 percent of the shares now? The last 3 holding RNS were a bit controversial.
A look at SQZ P/E 4 Yield 10%
Made me look at this holding to compare P/E 7 Yield 17% it states above.
…only dumb people.
Looking at the trading data…
# Trades 1,466
Vol. Sold 542,567
Sold Value £2.14m
Vol. Bought 238,889
Bought Value £925.60k
How does a majority of sellers to buyers result in a 5% gain…?
Add and trim working a treat here at the moment.
Lets hope it holds with the low volume
Super
Yep I know the feeling of Limit Prices set not going through. I'm back in now and only made a couple of shares, I'm in this for the long term, just trying to accumulate some more shares with all the uncertainty around the current issue. Like you've said before, this seems to me like it could easily almost 2 bag in the next 2 to 5 years, any divi's on top of that are going to be a bonus
Gl it could go either way after this rise. I was 50/50 on selling so I thought i try a few trades though I still like this for long term.
So I tried to sell half at 396
It did not like my sell or i got shocking timing I do not think any went through so back to plan a.
I sold at £3.84 a bit earlier today, hopefully I can buy back in and make a few shares the way this is up and down.
Looks like it peaked but saying that I thought this has happened about 5 times today
(Sharecast News) - Shares in Close Brothers Group continued to surge on Wednesday after the merchant bank's first-half results in which the company eased investors' concerns about an upcoming regulatory probe, with Berenberg providing an extra boost after lifting its target price for the stock.
The stock was up 8.5% at 376.64p by 1106 GMT, following a 2.9% jump the previous session after the company announced a raft of measures - including the suspension of dividends - to strengthen its capital position by £400m as it prepares for the conclusion of a Financial Conduct Authority investigation into motor finance, which centres around so-called discretionary commission arrangements. Through DCAs, lenders allowed motor dealers to use their discretion to land on interest rates within a certain range, leading to claims that consumers had been over-charged for car loans between 2007 and 2021.
Berenberg said that actions, which could provide around 390 basis points of capital support, "help to alleviate risks to the bank's potential large and uncertain motor finance redress costs".
The broker added: "While uncertainty remains high, with the bank's share price still down c55% ytd, growth in Close Brothers' core businesses is also reassuringly resilient."
Berenberg upped its target price from 425p to 470p, saying it now values the bank at 0.4 times tangible book value, up from 0.3 times currently.
"We maintain our 'buy' rating, but acknowledge risks may be too great to bear for many investors."
About to blow through £4 ALGOs or not
Or just algos propping this up Mary, this went up like 8% on less than 20k shares.. insane