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In another of my investments Lombard Odier are shorting. They started a few months ago when the share price was about 2200, and they increased their position several times. The price has risen virtually every week since and now stands at over 2800, with Lombard Odier maintaining their losing position. While we might respect their business knowledge, even admire their stubbornness, they are not always right.

In previous investments where Apple have been involved, they took a stake in the business - this happened at ARM and Imagination - so it's disappointing that they have never done so in Nanoco, even as a protective move against takeover by others. Maybe ME was hoping to induce this when he put them up for sale?

On the face of it, it seems like the falls here are overdone. It's been profitable for a long time, and continues to be so. The dividend is being held. Looks like a temporary blip. There would probably be plenty of people catching the falling knife if the spread wasn't so deterring - it means you need an 8% uplift just to break even.

However, the reasons given for the 2 profit warnings are not entirely credible, and raise suspicions.
In the first profit warning, back in May, they said that sales in the UK and US, the two biggest markets, were up, but South Korean sales were down because of "product development", causing a 10% overall fall in sales. That makes no sense. Product development affects costs, but how does it stop sales? Anyway, South Korea accounted for less than 10% of revenue last year, so how can it be responsible for a 10% fall in overall sales, especially if other regions have increased sales?

The second profit warning, which caused another big fall in the share price, claimed that the sales drop was due to South Korea again, down to oversupply and/or overstocking which was being dealt with by designing new stock.
So they have claimed that product development is both the cause of and the solution to the problem, and that everything is OK apart from the relatively small South Korean division.

It doesn't really all add up, does it?

Astounding result from Hong Kong local elections, with Democrats taking virtually every district, even where young inexperienced candidates stood against supposedly safe incumbents. Chinese propaganda about terrorism has been exposed as utterly deceitful and Carrie Lam's already shaky authority has been eviscerated. Not sure what happens next, but the people have spoken, loud and clear.

rns out today: 5 pharma and biotec companies signed up as early adopters of the Genomic Health DataBANK ahead of work with advocacy groups and the proper launch next year. Important preparatory work before actual, valuable data can be input.

Every broker covering XPP now rates them a strong buy, according to the Share centre:

https://www.share.com/investments/shares/2844/xp-power-share-price#brokerviews

Av. are A Very naughty rival, with sissy management and a chiz divi, as any fule kno.

Revenue £1.94B - up 4.9%
Profit £425M - down 11%
Dividend 11.12p final, making annual total 16.91p - up 2.5%

Capital return of £250m from sale of Sagepay announced, form of return not yet decided.

I don't like to complain, but ... as shareholders (former shareholders?), supposed owners of the business, we seem to have had no say in the merger, have no idea what, if any, valuation has been placed on REDT as part of the merged business, and have no indication whatsoever of what our share, if any, of that business will be. In addition, no timescales or deadlines have been provided for any part of the process, and things only seem to be happen on an ad hoc basis, whenever THEY feel like it.

So no, not quite the BEST ever rns.

Still, mustn't grumble, eh?

That's all very reasonable jatw, and maybe a facepalm isn't truly justifiable, but I do hope they are sending out notes to those very same clients advising them to buy now, helpfully pointing out the rather attractive dividend on offer. (@:

But IMB are in a downward trajectory with a dividend cut forecast. It would be rather pessimistic to expect M&G to be in that position in a couple of years. M&G could have announced an expected dividend at launch of whatever they wanted, within reason, so you'd hope they chose an appropriate and sustainable one, given they had plenty of time to think about it and plan. They have experienced management and will be well aware of all the issues affecting profitability going forward, yet have confidently set themselves a challenging medium term target.

But you are right of course, all depends on results, ultimately, and the first ones will set the tone.

HSBC INITIATES M&G WITH 'BUY' - TARGET 295 PENCE
JPMORGAN RAISES M&G PRICE TARGET TO 278 (271) PENCE - 'OVERWEIGHT'

Yes, that's the same JP Morgan who sold 57 million M&G shares at 205 pence just three weeks ago.

I have been reflecting on barchid's difficulty in believing the expected 8% yield because it seems "too good to be true", which I think may be a widely held feeling. Certainly, it is hard to imagine it as a long term rate, but (hopefully) only because the share price should rise to reduce it, rather than due to a lack of ability to pay it.

But my point about a likely surge in March (was not just because of a sudden "eureka!" moment as the dividend date approaches, with the associated announcement and publicity. It is because the first payout, including the special dividend, is even more rewarding than the yield in real terms. Rather than a yield, which represents an annual return, the expected May payment is only 6 months away, and the ex-div date even less than that. Based on the last two years of Pru dividends the ex-div date is likely to be 26th March, and the payment date 15th May 2020. At the current buy price of £2.286 the expected dividends of 15.77p are currently worth about 6.9% of the purchase price, but on an annualised basis that works out as over 14% using the payment date, and 20% using the ex-div date. As time to payment shortens, those rates of return will gradually increase unless the price rises.

Try telling that to barchid though: he won't believe it till the fat lady sings.

Roland Head for the Motley Fool on M&G:
"The market isn’t yet convinced, and M&G shares currently offer a forecast yield of 8.5% for 2020.
I think this stock would be fairly valued with a yield of between 6.5% and 7%, in line with rivals."

https://www.fool.co.uk/investing/2019/11/08/3-ftse-100-dividend-stocks-with-yields-over-5-id-buy-in-november/

Hi T,
Tarts were all snatched back by the baker, Tim Cook, but at least he left us with a free oven.

In fact, we peeled off Apple as the likely client right here on this board, shortly after the deal's announcement, certainly long before the plodding laggards at the old-media Torygraph. Sadly, Apple crumbled, the tarts, leaving Nano in the custard, giving us all the pip.

Ah, I see what you mean barchid, and I salute your cautious approach, but surely this statement from the prospectus definitively rules out your alternative reading:
"The expected 2019 ordinary dividend is consistent with the Board’s dividend policy, as described above, being
broadly two thirds of the amount that the Board would have anticipated paying in respect of
2019 on a standalone basis under its new dividend policy."

So they are explicitly acknowledging a notional interim of about one third of the total, with the 11.92p only being two thirds.
Case closed?

Exit Nanonano, wearing a raincoat despite the Heatwave, smoking a cheap cigar...

Good question barchid, and I think it illustrates the kind of confusion surrounding the dividend.
Jatw is 100% correct, but let's expand the explanation for clarity, and explore my assumptions to see if they are unreasonable.

Firstly, obviously the special dividend plays no part whatsoever in calculating the yield.

The expected ordinary dividend of 11.92p constitutes only the final part of the total dividend, there was also an interim payment, as Jatw pointed out, but it is effectively hidden within the Prudential interim. So we need a way to extract the portion which can be attributed to M&G. Historically, the interim is roughly half of the previous year's final dividend, and this policy is confirmed as ongoing in the M&G prospectus (section 3.1 (F)), so we can use the expected final dividend as a rough guide to what the interim would have been. It's not completely accurate, as the interim is normally derived from the previous years final dividend, rather than the future one, but it's near enough for a rough figure.

Therefore, the total dividend can be modelled using the expected final dividend of 11.92p, plus an extrapolated interim dividend of 5.96p, giving a rough total figure of 17.88p. Dividing this by the share price gives a yield of around 8%. A similar figure has been quoted by financial analysts, so we can be fairly confident of it's veracity.

Moving on, we have to take issue with your statement that "the yield comes down, according to the prospectus, about 5.4%." That claim seems to be completely inaccurate. I can find no reference to this in the prospectus.
The prospectus actually states that the Directors expect "dividends to be stable or increasing in absolute terms over time" (section 3.1 (F(i))).
So that surely means it is expected to go up, not come down?
Furthermore, the Questor article quotes Deutsche bank as writing that "90% of the company's dividend was covered for the next three years by some solid sources of income - the with-profits book, and annuities, which total £131bn of 'heritage money'".
Surely that also suggests that an immediate dividend retraction is unlikely?

Finally, I wholeheartedly agree with your rallying cry "don't believe everything you read", so feel free to point out my inevitable errors, and let's find the truth.

Be aware that dividends are not guaranteed, and the figures given here are only estimates or "expected" values.
The M&G prospectus can be found here: https://global.mandg.com/investors

" If a circa 5% yield becomes an annual fixture, it will probably top 300p."

Not sure why you are focusing on a 5% yield? By my calculation the Share price would need to increase to about 360p to bring the yield down from it's current 8% to a mere 5%.

Questor, in the Telegraph last week, highlighted the defensive qualities of M&G, suggesting it is a better bet than Aviva, and well placed to survive a downturn - Deutsche Bank estimated that in the event of a 25% fall in stock markets, M&G's capital generation would only suffer an 8% hit. That's important, because M&G have set themselves the target of cumulative total capital generation of £2.2bn by the end of 2022, and the achievement of this medium-term target would convincingly demonstrate that the dividend policy is solid and reliable. If the capital outflows of the first half are overcome in the second half, as expected, then the M&G story starts to become quite compelling. If all goes well, March results could see a surge in the share price, imo.

https://www.lse.co.uk/news/sunday-share-tips-shield-therapeutics-m-amp-g-fewxihclg9136k3.html
(second story)

I agree jimjam, I suspect there may be some price action if and when the dividend is confirmed in March, as more people realise the considerable short term reward. The "progressive" dividend policy probably means an annual increase of about 5% if profits allow, so we can provisionally expect another good payout next year of something like 6.26p interim and 12.52p final (my estimates).

Be aware that none of this is guaranteed though , and profits attributed to M&G were down in H1 - as a new entity M&g need to prove they are capable of sustaining this dividend rate, but if they can, the opening share price of 220p looks conservative.