The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Is HMG set to sell off its remaining 38.6% NWG stake next month?
Could ~3.37bn shares be on offer for around half the currently 320p?
Sure would explain all the lower gaps
Gap watch NWG -
2nd-3rd Nov 23 - 182.35p
20th-21st Mar 24 - 246.6p
21st-22nd Mar 24 - 253.8p
27th-28th Mar 24 - 263.1p
19th-22nd April 24 - 277.2p
25th-26th April 24 - 290.8p
23rd-24th Feb 11 - 471p
11th-12th Dec 08 - 648p
https://www.theguardian.com/business/2024/feb/28/jeremy-hunt-to-announce-uk-government-sale-of-natwest-shares
ASP
After todays RNS, HMG now only holds 26.95%
And why would they sell them at half the current price ..?
Https://www.theguardian.com/business/article/2024/may/12/capital-group-natwest-shares-uk-government
And I don’t think they would be buying if that was the case .
Seems The Capital Group paid £110m
The RNS suggest HMG holding reduced by ~1%, 27.93% to 26.95%
1% of the shares in issue is ~87.4m shares
87.4m shares for £110m = ~125p each?
Last week I had a letter from Barclays asking if I would be interested in a possible disposal of NWG next month
https://www.theguardian.com/business/article/2024/may/12/capital-group-natwest-shares-uk-government
Guardian article near 3 months old -
https://www.theguardian.com/business/2024/feb/28/jeremy-hunt-to-announce-uk-government-sale-of-natwest-shares
The UK government will look to raise as much as £3bn-£4bn from selling a chunk of its shares in NatWest bank to the public in a measure expected to be announced by the chancellor in his budget next week.
Jeremy Hunt said in his autumn statement last year that he would “explore options” for a retail offering of part of the state’s remaining one-third share in the bank, now worth about £6.7bn.
Pre election public sale of HMG remaining NWG shares ???
ASP, you're clutching.
Genuinely think that Asp doesn’t get it. The 110mil has nothing to do with the reduction in HMG. 🤷
My big fat Lloy Divi is due in next week - it'll be waiting if/when HMG announces their NWG public sale
Clutching OLR??? - It's already old news
At the spring budget, Jeremy Hunt announced the government’s intention to sell its stake in NatWest. The plan is to do this via a retail sale direct to individuals, rather than through the stock market.
The government naturally doesn’t want to sell the shares for less than they’re worth. But equally, unless they’re offered at a discount, investors might as well buy the shares on the open market.
That means the sale’s likely to be offered below the price the shares trade at on the stock market. And if that happens, I’d expect the NatWest share price to fall to close the gap.
On the face of it, this is a strong reason not to buy the stock at the moment. If there’s a discounted sale coming that’s likely to pull the price lower, waiting for that would seem like a good idea.
https://www.fool.co.uk/2024/04/04/should-i-buy-natwest-shares-today-or-wait-for-a-government-sale/
Government exit would end 'sorry tale' for Britain and bank, NatWest Chair says
https://www.reuters.com/business/finance/natwest-ceo-sees-material-opportunities-ai-2024-04-23/
The factor which we all need to take account of is that the latest EPS expressed vs the current share price is well over 10% and thus an almost exceptional result for a large bank.
Well the word in the city is the Gov will sell it's remaining stake at what ever the price would be at the time of sale, however the holder would be in for a yearly extra special bonus dividend or yearly bonus shares capped after 3 years + the normal dividend. However the main shareprice will not be discounted..
Not sure if this is the way it will go but if that is the case then you can expect a bigger uptick in the shareprice going into June 24 as the Gov has to be seen getting the best price for the Tax payers...
With the addition of NWG potentially buying back at least 10% this year which will be cancelled, will only support the increasing share price.
Checkricky, have not seen any specific date for offer mentioned before so what is June 24 ? Announcement, application deadline or start of trading ?
ASP, If you actually bothered to read the Guardian article it says that Capital Group (CG) bought the shares following HMG reducing its stake below 30% in late March. The article didn't say that CG bought them from HMG; it actually says that CG spent more than £110m acquiring c33m shares at the end of March day's after HMG reduced its stake below 30%. Nothing whatsoever to do with yesterday's RNS saying that HMG had reduced its interest by a further c1%.
Also, from what I've read, it does not appear to be HMG's intention to offload its entire holding to "Sid" and/or institutions. It would appear that HMG is planning to reduce its holding from c27% to c10%. At the end of the day, its seems to be more driven by Conservative ideology (and the thought that it might influence voters at the next election) than financial common sense.
Obviously there's no absolute guarantee that the share price should continue to improve from here, and a bird in the hand is often better than two in the bush, but one would have thought that if HMG wanted to maximise its return (lets not forget that the government will still have lost a packet) it would be better off continuing to sell down its holding piecemeal; either into the market if there is a large buyer or, preferably, direct to NatWest for cancellation (NatWest could probably afford to spend c£1bn per annum on share buy backs).
Personally, I don't think it will be a June date, however there seems to be numerous rumours that it will be.
Assuming recent performance will continue, then there are fourteen working days until the beginning of June. If you believe the government can get the sale sorted by then, you should be able to accept that the share price will continue to increase as it has done recently.
If the share price will increase at 1% per day on average, that means thanks to compounding the share price will end May on 360.
So, a discount of 10% means that the government would be offering the share at 324.
Alternatively, if the June 24th rumour is true, then at 1% average compound increase per day, the share price would be 418 on June 21st - with a 10% discount giving a price of 376.
Either way the share price will be higher than today, meaning it's a buy. I still think the government wants the 500 it paid for the share and will either wait or just sell in dribs and drabs, but I suppose we'll find out soon.
Babarusa - While most shareholders will be hoping the situation you outline will indeed come to fruition, including myself, I rather doubt the SP will get anywhere close to £5 in the run up to (whatever date is chosen for) the Gov's exit.
Banking is inherently cyclical, and whilst NWG have delivered profits very much in line with forecasts, there's little doubt that with likely increasing pressure on interest rates feeding through to BoE finally signalling cuts later in the year, this is likely to place the 'usual' squeeze on (interest) margins going forward.
The SP has outperformed in recent months and without doubt, the prospect of some form of incentivised share purchase being offered by HMG, has /is playing a part.
Once the disposal terms are publicised, there could be a bit of a retrace (imo), should investors not view the terms to be as generous as hoped.
However, for serious investors, the fundamentals remain favourable even if future performance by the Group is likely to dip by comparison with recent results.
Broomfielder - Given there's no fixed date for the government's exit , the SP could definitely be near or even above 500 when they finally exit. Unless you know something...
If/When HMG offloads its remaining stock via a 'Tell Sid' offer - It's going to have to be at a heck more discount than 10% for me to be interested
What maybe not enough discount for one individual investor may be more than enough for others..
As I hear the discount will be applicable via a attractive yearly special bonus shares/dividend + the normal dividend and not to the headline shareprice. So the headline shareprice may continue to rise on a daily basis until mid June 24 as it gatherers investor interest and momentum.
Not sure on a concrete date however the Gov should be able to upgrade the market in due course.
Check Ricky - spot on, there will be plenty of others willing to take the offer.
Asperger1 - The best time to buy is now.
HMG will milk this ride higher for as much as it can. The more it gets, the bigger the (vote winning) tax cuts it can give out. The business performance doe not (imo) support the crazy rise in the share price - and they do not want to attract the accusation of it being a share "giveaway"
If HMG sell 15% back to NWG and keep selling 1% back to the market at the current rate they will be done by Christmas or there abouts.
Fair chance NWG (or the Tories) won't want to risk a Labour Gov. becoming a shareholder - Looking forward to a per election 'Tell Sid' next month - letters of interest already being sent out