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On the basis of Reuters and Telegraph "stories" which might or might not be announced....the SP is likely to take a hit as shorters and panicked holders reign between now and Thursday.
Papers suggest that there will be an 800m rights issue, sale of multiple businesses and cancellation of the divi! http://uk.reuters.com/article/2014/02/23/uk-britain-rsa-idUKBREA1M0K020140223 http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/10656090/RSA-to-cancel-dividend-after-fraud-and-floods.html
I wonder if bank of america is stealing my idea ? When they are selling at 105, they obviously need someone to buy at 105, hence the recommendation. No matter, I will join them to sell at 105 and beyond.
19-Feb-14 Bank of America Buy 105.00 105.00 Reiteration 06-Feb-14 Deutsche Hold 106.00 109.00 Reiteration
Looks as though nobody is selling in any great volume...strange to see that on a Friday...usually ditch for the weekend. Maybe a nice leak somewhere....we live in hope
Just for fun I combined latest buy with existing freebies and I'm " in profit".....will look really good if it cracks the £......
Moneymorning had an article suggesting Hester would bring out the deadwood and include ultra cautious provisions so they expected the price to drop short term. I can see why he would do this but have so far sat on my hands and not sold.
Due next Friday...any leaks between now and then might trigger an SP response. Eyes peeled boys.
Not sure about the shareholders getting value. But I am quite sure about the shareholders giving a value of 200m or more.
I'm looking at Hester to do here what he did in RBS...chop out the deadwood..reorganise, and cap the bonuses. Hed led by example on the bonuses issue, and certainly put the frighteners on the frontline staff. Looks the type who demands shareholders get value for their monies.
Risky ..... lets hope its Rewardy! Alb1on - Maybe Hester, not knowing insurance, might be an advantage. He seems a clever boy so maybe he will be able to see where 2+2=5 There must be some who cant despite the turnaround in Italy. Maybe it just about to take off after all the hard work although I dont see it myself but Im no expert
Just gave this one a tickle....a nudge over the £1 mark would be nice.
Again I will defer to your experience here but I would have hoped that the Italy option would have been explored. It does raise the question of why this has not come off? As for short term, I suspect RSA are looking at very short term, why else would you consider selling growing and profitable areas of your business. Maybe priority 1 is to stay in business, 2 steady the ship 3 progress from this low. I suspect that RSA could deal with any of these issues as a one off but has struggled as they have all happened at once to combine into the current storm. It a pity they cant just wait it out but need the credit rating scores and regulator off their back until things improved. It will be nice to see some actual figures and then decide what is the new cheap regarding SP
Funny how many none shareholders commenting, myself included. Grayling - "but if tempted to buy shares in a UK insurer again would I choose RSA?" Im asking the very same question. fastfarm - I would mention that shareholders have a vote and to use it I just hope the 20% pay looks cheap in the long run.
Rights issue? No comment. Bet city slickers wouldn't either. So small investors will probably be asked to mend the mistakes of the Board, so they can keep their perks and large salaries.
So the share has risen on the news that RSA are likely to sell a (presumably) profitable Canadian business for approx £200M. Aside from this being in the ball park for the Irish losses (original estimate) I do not see the sale of a slice of RSAs non-UK business as good news for this share in the long run. Unless of course there is no rights issue and a very fleeting divi cut or suspension. I am happy to be out and watch from the sidelines, but if tempted to buy shares in a UK insurer again would I choose RSA?
The price rise is just their way of telling you the dilution is very "good" for you. But really, it isn't good. I will be shorting more at 105 and beyond.
Markets - dontcha just love em! RSA is having a fire sale of assets, facing an almost certain divi cut and a big rights issue. Then there's the flood claims. And we're top of the riser board today. That Mr Hester is a true magician.
Well its looking like they are going to use "all the options" open to them, Some sales, placement and divi cut/slash. Well they did say "capital capital capital" Assuming all this happens by results day at least they will have there ducks in a row and the regulators should be off their backs. The grade of investments should also be covered too, again taking another worry off the table. This should then give Mr Hester some time to do some fundamental improvements in the group. Where does that leave the SP and value? The weather, which is in the news should be covered anyway although the payouts might be bigger than "expected" it should have been planned for. So a temporary hit to profits. This should then bring an end to the downward pressure on the share price as sentiment going forward should be positive. What that starting price is going to be I have no idea. !0% off for the placement plus the loss of the sold units should drive things even lower. Knowing all this the SP will probably "rise in relief" and do the opposite to what we expect. The value was in the 70-90p region so I could see your 60s coming in. I know alb1on was looking at 75p I haven't decided what is a good price yet or if I really want to be back here without a divi but Im sure some might bag a bargain if the timing is right in the long term. After all how many times can you destroy one company?
The situation re climate / floods exposure remains a current and future liability. above and beyond the lack of governance and management effectiveness 65 - 85p may be seen? - only then will I invest.
The placement will be the most likely outcome. It gives the institutions a chunk of the company at a discount. So they will want to dive in. Part of the money raised can be used to keep the dividends unchanged for now. That way, the private investors will feel nothing has changed and see the dilution as just a temporary dip in the price. In the mean time, more people will be buying in for the "amazing" dividends while the placement institutions can supply this demand for a handsome profit. Notwithstanding any immediate price dips from the news, I suspect the price will recover quickly. Once the placement institutions exhaust their holding, that's when the price will tank. I'd sell on all sharp rallies for next 12 months until they start cutting dividends.
creature - RSA need capital and have said all options are on the table including a divi cut. Nothing has actually been announced but a cut is expected and IMO will be cancelled. chris A-H - I also speed read an article in IC along the same lines of Hester using his contacts to get a £300M placement with the same 10% dilution. It also suggested that speed was the essence in shoring up the company. There may be partial sales but he is there to grow the company not break it up. They also covered potential takeovers but say its still expensive at 1.9x (book I think) IC have a sell recommendation on RSA A 10% hit is not great for the PI's but I suppose there is potential for things to become a lot worse if something is not done to stabilise the ship soon. Will this be enough to save the divi? I doubt it but I dont know how much they need to raise. They did mute some claw back of the pay although they are happy to pay an extra 20% for Mr Hester. I hope that this works out to be cheap!
Are they still paying decent dividends here?
My IG SB news is saying they are looking at a 300m placing with the institutions. That means dilution and the price will have to be lower to reflect that.
I used to work at RSA and have been in and out if their shares for 20 years - back to the £7 days! Some very big buys here showing confidence...however people only need to look out the window at the weather to know there is going to be a hit. Coupled with the near certain divi decimation I have no doubt that this will dip further - I last topped up at 82p ish so I'm holding for the long term as this WILL get back the £1.20s at some point in the future. It it dips further then I'm in again.