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Pension funds managing vast sums on behalf of retirees across Britain came close to collapse amid an “unprecedented” meltdown in UK government bond markets after Kwasi Kwarteng’s mini-budget, the Bank of England has said.
Explaining its emergency intervention to calm turmoil in financial markets last week, the central bank said pension funds with more than £1tn invested in them came under severe strain with a “large number” in danger of going bust.
The Bank said a dramatic rise for interest rates on long-dated UK government bonds in the days immediately after the chancellor’s mini-budget had triggered a “self-reinforcing” spiral in debt markets, putting the stability of Britain’s financial system at risk.
Had the Bank not intervened with a promise to buy up to £65bn of government debt, funds managing money on behalf of pensioners across the country “would have been left with negative net asset value” and cash demands they could not have met.
“As a result, it was likely that these funds would have to begin the process of winding up the following morning,” the Bank said.
The central bank said the meltdown was at risk of rippling through the UK financial system, which could have then caused “excessive and sudden tightening of financing conditions for the real economy”.
AceofClubs

On a constant currency basis the SHELL share price has risen 35% over the past year; EXXON 61%.
Over the past 5 years the SHELL share price has risen 0% (yes 0%) EXXON 22%.
Shell warned that its third-quarter integrated gas trading results are anticipated to be "significantly lower," attributing the drag to "seasonality" and "a volatile and dislocated market."
A "volatile and dislocated market" should be meat and drink to an integrated gas trader with the scope and experience of SHELL. As for attributing any of the decline to "seasonality" - did the seasons catch SHELL by surprise?
I hold SHELL - should have been in EXXON.
AceofClubs

A Sarah Smart apparently - ex Standard Life:
When Smart was hired, Pensions Minister Guy Opperman said: 'The chair is a vital part of The Pensions Regulator, providing effective oversight of this high-profile organisation and engaging and building positive relationships with stakeholders.'

So vital it's a two day a week job!
AceofClubs

A completely random thought:
How much profit have the Pension/Insurance companies been generating by gearing their cash buying Gilts on margin? That game would appear to be over for the time being but was it a significant source of profit?
AceofClubs
P.S. I don't know the answer.

"The question is has PHNX underestimated margin calls. I think not because they have a high tier 2 capital ratio well in excess of what’s needed."
I think you have to delve a little deeper than that TrekMadone.
More pertinent is did PHNX hold enough cash to meet margin calls or was it a forced seller of assets into a market spiralling downwards? The counter parties will have wanted to see cash, not the size of their Tier 2 capital ratio surplus.
We don't know if PHNX was affected, but any forced seller will have experienced a loss of capital which is likely to prove permanent; the size of the Bank of England intervention indicates few will have escaped unscathed.
I hold PHNX but fear to add; it's a bit of a false market at the moment where fortunes can be made and lost.
AceofClubs

Hurricane Kwarteng isn't the only one to batter the AVIVA share price today.
AVIVA is now firmly focused on three markets; UK (oh dear), Canada and Ireland, which is too small to count.
Hurricane Fiona hit Canada a couple of days ago and Paul Gilbody, SVP, Healthcare and Property Claims, Aviva Canada commented:
“We are starting to see some commercial claims come in, but they typically take a couple of days longer to come through, so it may very well be later this week that we see some of that.”
The insurer has seen “quite severe claims” and, with the storm roughly 300 miles wide, some have come in from areas further afield from the eye wall.
Gilbody declined to put a number on potential insured losses, but did say: “It’s going to be a very, very, very big event, and given the scale of the storm, we are going to see an awful lot of claims.”
Unlucky, Amanda, - but then you did say you wanted "focus".
AceofClubs

"Acquisition net purchase price of $210 million (the "Acquisition Cost") after customary purchase price adjustments."
The agreed price of $240M would have been on a net zero cash basis, as is customary. DEC have taken on $30M of debt that came with the acqusition, therefore total cost to DEC is £240M, as previously advised.
AceofClubs

BlackBoulder:
What does a forecast for EBITDA of £200M for FY 2023 tell us?
The magical EBITDA of £162.8M for FY 2022 was turned by reality into a loss before tax of £12.4M.
If you don't believe the shorters try the FT: https://www.ft.com/content/555c56df-2b90-484c-9ee1-22159479a4bc - and do read between the lines.
AceOfClubs

So the IGG directors paid $1 billion (30% of IGG's market capitalisation) for a business (tastytrade) that struggles to generate $41m of revenue a quarter - no mention of any profitability. Less than a year later this business is going backwards.
On 28 June 2021 June Felix commented: "This innovative, high growth, high margin business gives us immediate scale in the largest listed options and futures market in the world."
You were mugged June, and shareholders were robbed.
No wonder the market assigns a P/E of less than 7 to IGG.
AceofClubs

Regulatory compliance is clearly a major weakness at Entain PLC.
"The Australian Transaction Reports and Analysis Centre (Austrac) has launched an “enforcement investigation” into Entain, citing anti-money laundering (AML) and counter terrorism financing (CTF) concerns"

The realy frightening issue for shareholders is the apparent lack of concern and action by the management - one day they will lose a regulatory licence which could have a disastrous domino effect.
AceofClubs

I hold DEC and appreciate the income but for how long can they sustain their business model? Putin's war has extended the time-scale; but for how long?
There is growing momentum in the US to forego the former practice of just abandoning no longer viable oil/gas wells to the elements. As the owner of the largest number of wells in the US, DEC is the current holder of the potentially most expensive tar-baby.
Pennsylvannia State Environmental Protection has documented 26,000 abandoned wells and has been plugging them at a rate of just over 90 per year since 1989. The US Dept of the Interior has documentation on 130,000 abandoned wells nationwide and estimates there are another 800,000 undocumented. Each well has different challenges and costs of plugging a single well can reach $170,000.
DEC's latest reported cost on well plugging is ~ $21,000 - picking the low hanging fruit?
The potentially most damaging accusations are that when DEC acquires wells, reported leakage, primarily methane, inexplicably drops by ~ 90%.
I will stop here as this is a big, complex, subject and DEC is only one player, but its growth now gives it a much higher profile. Those with further interest should look at ohiovalleyriverinstitute.org - it doesn't make for comfortable reading.
AceofClubs
I am reminded of the old adage: "if it looks too good to be true, that's because it is!"

Gary, you are right about the symptom but wrong about the cause. Just go to any hospital's management corridors (they tend to prefer the exclusive company of the like-minded) and you will find no shortage of managers, deputy managers, (every proper manager needs a deputy and a PA) assistant managers, (every proper deputy manager needs an assistant manger) - full to overflowing. There is more pay and prestige in hospitals in being skilled with a computer mouse than a scalpel or MRI scanner.
The only way to get ahead is to accept the status quo and not rock the boat. The NHS has been mis-manged for years; training of doctors and nurses neglected as "too expensive". Blame Brexit if you must but I blame decades of mis-management, which is ongoing to a scandalous extent - but don't rock the boat.
AceOfClubs
The QueenOfClubs is a full-time specialist clinician in an acute hospital. She has had enough; planned early retirement in about 2 years.

Barclays' silly prediction of 555p is 32% above the current 420p. Our friend's silly prediction of 350p is 17% below the current 420p. In the current market, who wins today's prize for being silly?
I think Barclays have made about 10 predictions on Aviva so far this year; they have yet to hit the target. Analysts' predictions are to show that they know more than you or I: if they did they wouldn't be analysts.
AceOfClubs

"the company felt strongly that the share price has ‘decoupled from commodity prices'"
Has the DEC management ever sat down and asked themselves "why so"?
I would suggest the decoupling is the result of the management's hedging policies which are wrong-headed in the current and longer-term environment.
Natural Gas prices in the US and worldwide are being pulled by a Bullet Train. The rise cannot go on indefinitely but there is little reason for any fall. The prices DEC are achieving are being pulled by this: http://www.lyndonirwin.com/mvdepot.htm
There are a lot of things to admire in this business: but the current hedging regime isn't one of them - in my opinion - other opinions are available.
AceofClubs

From the "Terms of Reference" of the ESG Committe of Entain PLC:
17. In particular, the Committee shall consider the adequacy of the Group’s ESG policies and processes by reviewing reports prepared by management on:
(a) responsible gambling - including but not limited to the prevention of underage or problem gambling and monitoring of the Company’s performance against the Responsible Gambling remuneration metric;
(b) compliance governance – including but not limited to compliance with the gaming licenses held by the Company’s subsidiaries (including marketing practices), anti-money laundering monitoring and controls, anti-bribery and anti-corruption practices;"

What the Gambling Commission found in practice:
Andrew Rhodes, Gambling Commission chief executive, said: “Our investigation revealed serious failures that have resulted in the largest enforcement outcome to date.
“There were completely unacceptable anti-money laundering and safer gambling failures. Operators are reminded they must never place commercial considerations over compliance.
“This is the second time this operator has fallen foul of rules in place to make gambling safer and crime free.
“They should be aware that we will be monitoring them very carefully and further serious breaches will make the removal of their licence to operate a very real possibility. We expect better and consumers deserve better.”

The tone of the Entain statement smacks of self-satisfied complacency: with an ESG committee of very well rewarded directors asleep on the job.
AceofClubs

Hello SD235,
Thank you for the advice on research, hedging, loan protection, the price of oil, what to bother about, moving on, signing off, et. al.
I feel sorry for you that you cannot read a view or opinion that deviates from your own without resorting to personal abuse.
AceofClubs

"I don’t get why there is an issue from some over the hedging."
TheTrotsky encapsulates the issue accurately and concisely:
"It's the potential opportunity foregone (c$2bn) should the current market prices remain constant (essentially the additional profit that could have been booked if DEC hadn't hedged). It sounds bad but......."
In my opinion there is no but: for a company with a market cap of ~$1.3bn to forego a potential opportunity of ~$2bn not only sounds bad - it is bad. Rusty should leave the energy trading to the real professionals who live and die on getting it right. https://www.mercuria.com/trading/natural-gas
The financial derivatives appear equally confused and a mess. Bankers do not sell you derivatives for your benefit - it's for theirs and really are best avoided. If you need protection when borrowing money the time to negotiate that protection is in the initial loan terms!!!
I hold DEC and try not to cry myself to sleep.
AceofClubs

Comparing First Half 2022 with 2021:

Total Revenue +189%
Operating Margin +14%
BOE Equivalent Price Achieved + 21%
Henry Hub Gas Price +120%
Shareholder Dividend Return +3%

I will leave you to draw your own conclusions but if this is the best that can be achieved in these market conditions??
AceofClubs

Meanwhile, for what it's worth:

JPMorgan cuts Just Group price target to 80 (105) pence - 'neutral'
AceofClubs

Entain market cap. $9B - MGM Resorts $14.6B - Entain looks a big mouthful. MGM has cut debt from $15B in 2018 to $7B currently but then capital lease obligations have soared from zero in 2018 to $25B today so some big sale and leasebacks.
The problem remains that MGM doesn't want Entain; it just wants more or all of BetMGM - and what is Entain without 50% of BetMGM?
DrafKings is now a cash burning basket case.
AceofClubs