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a 'duster' has been discussed at length on this bb previously.
Fact is, the previous SP of high 30p's could be fully justified by Havieron alone.
And, that was without Havieron's full resource having been proved up etc.
The Market really needs to get a grip here.
I agree with you Dinoken (.....I clearly need to sharpen my sarcastic tone better!).
In my previous post, I was simply mapping out where this Bank are headed and, lets be honest, they have now hardly got the acumen and ability to do much more than the kind of Metro deal you mention, particularly at the price paid.
All IMO of course.
In the years since the financial crisis, there has been recurring hints that RBS (now NWG) would distance itself from being a hybrid Bank with a very significant Investment Bank component (which it once was), to one with a predominantly Retail Bank footprint and one largely exposed to the UK market rather than a global one.
Amongst this discussion, there has even been reference toward moving more to a 'matched book' model where capital and deposits were the source of its lending book rather like Building Societies as they once were. This clearly reduced or effectively removed much of the reliance on the commercial money markets which were deemed a key factor in the demise of RBS as liquidity was withdrawn when the Bank most needed it. Albeit, I accept it became over reliant on money markets.
Its fairly clear that NWG are heading toward their objective of being weighted much closer to that of a quasi savings Bank than the previous Investment bank dominated model.
And for that purpose, we have the appropriate Executive team.
Arguably, the Bank will be less dynamic but be steadier in its efforts to sustain profitability going forward.
At least, thats the theory anyway.
Dinoken - the book being acquired has an average weighted interest rate of 2.08% fixed with an average expiry c2.5 years hence. No mention I see refers to the average remaining loan term.
I don't know where the yield curve sits to see what's projected for interest rates for that sort of time horizon but Political pressure on interest is certainly downward with the UK seriously considering introducing negative rates for the first time.
So, there is clearly an arbitrage possibility to be exploited at least in the short term and whilst future rates may be forecast to pick up 2-3 years hence there is clearly a risk of rates falling considerably below the current fixed rate. And this is assuming asset quality is first class with minimal defaults etc.
Whilst the deal involves the purchase of a domestic mortgage loan book, and arguably a mainstream retail banking product, by paying a premium over book value and taking what could be argued, is an aggressive view of future medium/long term interest rates, moves this deal more toward Investment banking IMO.
Not quite the plain vanilla bolt-on acquisition its being portrayed.
I just thought that was an area NatWest aka RBS were wishing to distance themselves from?
Thanks for this cuddothisnow.
I've clearly been out of the market too long. This deal looks like an arbitrage on interest rates, so the asset quality needs to be top notch. Still the returns on this one after appropriare capital allocation will be very fine.
Apologies Dinoken.
Athough I am clearly out of date (this deal would certainly never have flown a few years back), I agree with your sentiment. And thats even allowing for todays economic environment etc.
Dinoken - where have you seen that Nat West are paying a premium for Metro's resi mortgage book?
These deals are done at a discount irrespective of how good the asset quality is, even assuming there is 'high' demand amongst the sector etc. for this asset type.
There is no doubt GH's personable style, integrity and honesty shone through during his time with GGP. We always hope senior execs in Cos we invest in have these qualities, but I expect many PI's experience has shown that not to be the case.
So, he was especially popular with PIs, but for the reasons he has highlighted in the Proactive Investor interview, he believes he lacks the depth of experience to take GGP to the next level.
Thats the key, and a significant part of that is the 'acceptability' or having credentials acceptable to II's who are either partly invested or are considering investing in GGP.
As larger Corporates are well aware, II's have to be on board with key exec appointments and there is no doubt Shaun Day ticks the boxes for them.
Having bought into the concepts behind CPX's products many years ago, I found myself investing in a Company that appeared to have a technical advantage over most of its competitors. The only problem, was that its 'science' still had to be refined, its potential customers still had to be convinced etc and, of course, in reality, the Co was a long way from moving from its R & D driven advantage to a commercial product(s) which would drive income and profits.
Over recent years, I have invested, then reluctantly sold off (both times at a loss) uncertain when CPX would be able to convert its its technical advantage into a commercial one.
Finally, I think the time has now arrived, and biting my lip I invested again some months back. Orders are arriving and the prospects are now definitely looking up as production ramps up.
The collapse of the agreement with Murata and the repurchase of the production equipment etc., I have to concede, I thought was a mistake. I was wrong.
I now firmly believe the Co is on the cusp of moving into serious earning territory in the very near future.
If the trajectory of potential sales and deals are maintained, we could quickly achieve critical mass that could well attract major external interest in CPX. That would be a bonus, but I still believe CPX could make it as an independent.
Either way, the future (IMO) looks bright and its about to arrive now.
Reading this bb, there are already some people with very interesting Santa Lists. With the SP really motoring in recent days (and this morning), things could get even more 'interesting'.
OK, who is first for the private jet?
......Spring 2021.
The timing for the reintroduction of Dividends is of course the only issue here and I think it will be timed to coincide with the big economic reboot that will happen once some/all the vaccines start to roll out to the public in meaningful numbers etc.
That IMO will be around early Spring 2020..... but who knows.
Best of luck HALFMIST - reintroduction of Dividends is a given and the Market know this and I'm fairly sure a chunk of the recent rise from its low in the 90p area is anticipating this etc. IMO, the SP still has legs to go higher as I have stated. We are still in penny share territory after all if you ignore the 'smoke and mirrors' share consolidation.
A real boost to Banks in this Pandemic induced recession, is the sheer amount of Public money being pumped in to areas which would otherwise have resulted in significant debt defaults and other knock on failures.
There will still be widespread pain to come, but it could have so much worse.
See no reason why not PSK. After all, £2 (20p pre consolidation) is a fairly modest hurdle to achieve in our road to recovery. Its certainly deliverable in the timeframe you mention.
The heading still shows, Sainsbury Bank and while I have no great insight into that Bank's operations, as always in such situations, the potential for a deeply discounted acquisition of retail assets is worthy of a scrutiny.
Sainsburys seem very keen to rationalise and focus on their core activities. Could be a bargain to be had dependent upon the price and of course the quality of the assets being aquired.
Finally, I think it will be into the Spring of next year before aspects such as the disposal of HM Gov's shareholding, negative interest rates, a significant revision of current taxes etc will all come into sharp focus ie after the roll out of an effective Covid vaccine in sufficient numbers etc when the Gov efforts will move from healthcare and the NHS to being fully behind restarting the UK economy.
The sustained increase in SP since its low point a month or so back is certainly refreshing with no alarming statements emerging thus far on non performing debts in the current very challenging economic conditions hitting most sectors of industry and commerce.
I think we have all taken too many punches to the head as I can't quite get my head around the continuing farce that are the Brexit negotiations.
Even if the politicians manage to stitch together some form of face-saving compromise to please both sides, just how is industry supposed to react in the extremely limited time left etc.
Finally, its been announced today Ulster Bank will fall under full and direct control of NW/RBS. Only mistake is that this entity should have been wound down years ago as this has been a banking sinkhole of immense proportions.
I'm a bit of a late joiner to Sensyne but, for me, the approach they are taking toward constructing their commercial business has been impressive both in the nature of their alliances as well as the quality of the counterparties.
There certainly seems a momentum now albeit many of their recent announcements will not have happened overnight.
So these achievements were key to me to get involved as well as being in healthcare but not overtly in a Covid stock.
I don't know what their targeted patient numbers are to achieve the critical mass they will have no doubt modelled in their Business Plan, but the numbers already seem impressive and they are building.
Finally, the quasi partnership approach with the NHS is certainly interesting and I'm surely fairly unique in the markertplace.
And it shouldn't take too long for most of these tie-ups to start producing measurable data and results. Altogether very encouraging, even in the short term.
All the best.
B
Rur was the last remaining shareholding of my original 'risky' AIM portfolio started many years ago and in Rur's case, way before the Bolivian fiasco.
Some successes but in truth most were failures - I have to say some of the reasons were colourful to say the least.
Probably not the best time to exit Rur, but I've grown tired of the snail pace of activity and sold the small holding I still had.
All the best to suffering long term holders and, indeed, to any investors here.
B
The frequency and general availability of information flows from AIM listed Companies is often patchy at best.
In my view, it simply forms part of the risk associated with investing in AIM Cos. You either accept that or perhaps you shouldn't invest. Its also not easy for PI's to influence matters in that respect either as past attempts (not referring to GGP here) to coral enough PI's with large shareholdings sufficient to promote a Nominee to the BoD has been extremely difficult to achieve.
I accept its difficult to sit on your hands (which most of us are doing) when awaited key information fails to appear when expected, particularly when our investee co is one whose worth is derived from asset valuation rather than say a multiple of profitability or cash flow in the case of a trading company.
This last factor usually makes for a more volatile SP than we have seen with GGP as sentiment can impact on investors much more easily in the absence of hard facts.
Yes, the risks are there but IMO, they have been managed as best they can be in the case of GGP as many superb posters on this BB have eloquently argued. No-one is saying the risks have been removed.
When our SP fell back from its 'all time highs', I recall that reference to sellers attracted such derisory terms as 'bedwetters'.
Now, firstly, I haven't sold any of my fairly modest GGP holding, but I would object one bit to being called a bedwetter if I had just made close to £6m on my investment as Primorus have just done!
In fact, a zero or two off that figure and I still wouldn't mind.
This RNS should have been issued on 1 October. After all, we could have written it ourselves.
This Bod are culpable.
Obviously delighted our penny share is now back in double digits (12p in 'real' terms once you strip out the share consolidation a while back).
Wholly agree with many recent posters and would reiterate the Executive team shoukd stick to restoring the Bank to financial health for the benefit of its shareholders and staff, both of which have been downtrodden in recent years.
Oh, and cut out the window dressing nonsense of such things as sp consolidation, costly name changes and now socio-political policy statements aimed at an entirely different agenda.
In other words, I think most shareholders would prefer the Exec team simply stuck to the day job, let the results speak for themselves and collectively keep their traps shut for a while.