Member Info for fleccy

Equities 17.9%
Government bonds and cash 32.1%
Secure income 6.4%
Investment grade credit 25.2%
Other growth assets 11.7%
Property 6.7%

https://www.btps.co.uk/MediaArchive/SchemeSite/BTPS352_BTPS_Report_and%20Accounts_August2021_V17_30Sept.pdf

"6.5p/5% drop today is a kicking in my view. Given the already depressed price already."

Lloyds has dropped more over the last 5 days.

https://www.google.com/finance/quote/LLOY:LON?sa=X&ved=2ahUKEwia1qmkrrn6AhUQS8AKHbzkC7QQ_AUoA3oECAMQDQ&comparison=LON%3ABT.A&window=5D

"The aim is to have the most number of shares with the least amount of capital invested - which you are choosing not to follow....constantly adding more capital , putting it at risk"

Without a crystal ball I have no way of knowing which way prices will go, so I buy when I see value, good luck finding a bottom; Take yesterday as an example, BT opened at 125.3, I purchased at 123.55 as it was on its way down, then the price dropped further to 122.5 before increasing up to the close at 127.45. Today the price has dropped again, but I purchased with the intention of holding for years anyway and should the price stay low, or go lower, then I'll add more as the dividends roll in. Everyone has their own investment style, ours is to invest in Blue Chips that pay dividends and hold for income, currently we don't need the income, so reinvestment is the order of the day. I'm not cut out for day trading and paper losses don't bother me as I take the view that a paper loss is meaningless, I can't understand the mentality of people who view a paper loss as a real loss.

"dont be daft...the market knows all that...but doesn't care right now about 2025... who does ?"

I didn't say the market doesn't know all that, I said "The market has chosen to ignore BT's projection of £2 billion annual cost savings". It suits me that the market is letting the price of my stocks stay low, since I'll keep reinvesting dividends and reducing my average cost per share as long as they're down, a couple of years at these levels and I'll be laughing. As an unleveraged retail investor, without clients watching my yearly performance, I have the flexibility to hold and top up my investments as I see fit. If I was in non-dividend paying stocks, or the companies I'm invested in were at risk of going bust I might feel differently.

Perry I agree with your sentiment. The market seems incapable of valuing a company based on assets and bottom-line income growth. BT's Dividend yield alone is good reason to buy/hold. The market has chosen to ignore BT's projection of £2 billion annual cost savings by the endo 2025, or the reduction in lease liabilities due to the Exchange and building closure program; Lease liabilities make up nearly a third of BT's reported debt, not that most of the articles mention that. I always said that BT was a cost cutting play, with income growth on the bottom line in line with future cost savings, but the market appears to be blinkered and focus on revenue only, at least that's the excuse they use to undervalue Telecom stocks in general.

"I have done the same. unfortunately, i have been doing the same since they were £5"

Our initial investment in BT was around £3 and relatively large; Thanks to Covid, War and now the cost-of-living crisis we've knocked over £1.10 off our average price per share. I have great confidence in BT, so I'm happy to continue buying while I perceive value.

"The financial hurricane is on its way and Lloy exposed to business and consumer loans which will inevitably turn sour....you ain't seen nothing yet but we have seen 30p so a revisit to this is likely...and perhaps lower"

The high street has been dying a slow death for years now, but that's more about the move to online shopping. The hospitality industry is a mixture of small business and big holding companies like Wetherspoons, Whitbread, Hilton Hotels, etc. I'm not sure about the foreclosure narrative, implying banks will suffer, since banks operate strict LTV criteria on commercial loans and understand the risk profiles when business loans are issued. Time will tell, but I suspect the foreclosure narrative is overblown.

"if my understanding is correct they are still in deficit, however they were able to slash that deficit significantly (from 5.1 to 1.1 billion)"

Those figures were telegraphed in the FY22 results, but Bond yields have gone up since then.

"IAS 19 gross pensions deficit £1.1bn, (31 March 2021: £5.1bn) due to an increase in real discount rate, deficit
contributions paid, changes to demographic assumptions and positive asset returns"

https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/quarterly-results/2021-22/q4/q4-fy22-release.pdf

That was back in June when the results were released, and Gilt Yields were between 2 and 2.5% then, Gilt Yields are now around 4%.

https://markets.ft.com/data/bonds/tearsheet/summary?s=UK10YG

"Just bought another £5k today at 127"

We added £7k in BT yesterday at 123.55p, still sitting on a paper loss but it brings our overall average purchase price down to 190p per share. We also invested over 7k in Lloyds a couple of days ago at 43.9p.
Unlike many I don't mind price drops, in fact I view them as a gift because we have confidence in the companies were invested in and intend to continue topping up, as dividends roll in, while valuations remain low. Because of the current price drops we decided to add a further £9000 of new capital, rather than only reinvesting dividends; Over the last couple of weeks, we've added over £18,000 worth of stocks.

Any thoughts on this, is the BTPS in surplus or in deficit?

With all the furor over Bond yields and Pensions I thought I'd see if I could find the effect of the recent events on BTPS. I have no idea how BTPS is affected by this, but after reading various articles it makes me wonder if it may now be in surplus.

"Pension scheme trustees have been urged to “brace” for a new market environment, after an “unprecedented surge” in gilt yields, which is expected to have significantly improve defined benefit (DB) pension scheme funding levels.

UK 10-year gilt yields passed 4 per cent today (26 September), having also previously increased to just over 3.8 per cent before the Chancellor stood up to deliver his mini-Budget, followed by further increases amid market reaction.

Industry experts previously suggested that the high levels of government borrowing announced in the mini-Budget could drive up interest rates and reduce DB pension deficits, urging trustees to lock in financial gains while they could.

XPS Pensions chief investment officer, Simeon Willis, also noted that the “unprecedented surge” in gilt yields seen since will have improved UK pension scheme funding levels by “a greater quantum than a whole year’s deficit removal contributions”.

However, Willis warned that market conditions are changing "at pace", with the factors influencing them streching "far beyond the pensions industry".

“We are starting to see liability driven investment (LDI) managers flag new emergency collateral calls, a trend that is likely to continue in the coming days," he explained.

"Agility is key, and schemes should be braced as we move to a new market environment."

In light of this, Willis suggested that schemes using LDI should review their plans and assess whether further action is required to maintain a diverse portfolio, be ready for any further LDI collateral calls and maintain, or even increase, hedging to lock in these improvements.

The Pensions Regulator lead investment consultant, Fred Berry, also previously warned trustees to remain vigilant to investment risk earlier this year, amid concerns that some schemes may be under-prepared for LDI collateral calls, after "years of falling interest rates in which LDI funds were paying collateral back to schemes"."

https://www.pensionsage.com/pa/Agility-key-for-pension-schemes-amid-unprecedented-surge-in-gilt-yields.php

Apparently BTPS runs its LDI portfolio internally, rather than through a fund, so I'm not sure they'd be affected by the margin calls, affecting other pension schemes, and prompting the BOE to start a Bond buying program today.

"The size and maturity of the scheme means that it has a large exposure to interest rate and inflation risk. As such, managing the LDI portfolio internally was almost inevitable, according to CIO Wyn Francis, who joined in 2008, and also has a background in derivatives."

https://www.ipe.com/current-edition/perspective-liability-driven-investing-diy-ldi/10058289.article

Any thoughts on this, BTPS surp

"I just wondered with Porsche's latest damming, sub 80p prediction, whether you still agree with him?"

Just browse through his general posting history and it will tell you everything you need to know.

https://www.lse.co.uk/profiles/porsche1946/

Needs to pay more.

https://techmonitor.ai/technology/emerging-technology/big-tech-broadband-network-bt-vodafone

Not sure what's being suggested, but the article talks about investment in Infrastructure. My guess is they're talking about servers being sited closer to the end user, in order to reduce bandwidth requirements on the core backbone network. Net Neutrality has allowed big tech to profit big off Telecom investment, I suspect the Telecoms companies will continue canvassing Government and regulators to ensure FANG type stocks contribute toward the bandwidth they currently have relatively free use of.

"Radical is only any use if it is THOUGHT THROUGH"

I agree, but the only way to find out if something will work is by trying it out. The market isn't the all-seeing oracle when it comes to economic policy and most economists agree to disagree on most things, so it'll be interesting to see if these policies will work long term. What is clear is the drop in the pound will drive inflation, so I suspect we're looking at a 1% rate hike from the BOE, whether they wait until November, or step in sooner, remains to be seen.

The market is dysfunctional and operates on a herd mentality principle. I have no idea whether the Truss's tax cutting agenda will work in the UK, but there are examples of Positive non-interventionism leading to growth and a booming economy. Hong Kong is a good example of how radical policies had a positive effect; John James Cowperthwaite is credited with turning Hong Kong's fortunes around, using Positive non-interventionism, whether similar policies would work in the UK remains to be seen, Hong Kong didn't have the debt issues affecting the UK and many other countries.
It's clear that radical policies are required to attract the correct type of investment into the UK, since the high street is dying a slow death due to likes of Amazon and online purchases in general. The UK needs to attract the new industries, like AI, Robotics/Automation, manufacturing, etc. I'm of the opinion that something needs to change to alter the current trajectory of the UK industry and investment, who's to say that Truss isn't correct? With new jobs appearing on the back of these policies.

I don't know if a sale will add 13p, or whatever, but spinning off an asset forces the market to look at the valuations of all the component parts of a company; If this is worth that, then that may be worth this scenario. The market currently seems incapable of valuing telecom companies based on the assets, anything that underlines an asset valuation may well be a good thing.

Article reiterating what we already know.

https://www.thisismoney.co.uk/money/markets/article-11246211/Vodafone-looking-sell-large-stake-12bn-phone-masts-division.html

"The fibre remains in the ground though, and I'd take a guess that Ofcom won't let BT buy from failed companies, so it would be rebooted from a much lower cost base. Better for BT that they struggle on than go bust?"

OFCOM have already discussed the issue of Openreach becoming a supplier of last resort, in the event of Altnets going bust. Some failing Altnets may be in the wrong geographic locations to attract takeover offers, in which case Openreach would step in and take over the service; Under those circumstances the Altnet investment would simply be written off.

"Building 'regardless of recession' makes no sense if demand is muted, costs higher, and debt becomes unsustainable."

Just dipped in to take a look and I agree with everything Erik stated, I've been saying the same for a long time. Of course, you won't read anything about future operational cost savings in the media, they just bang on about the debt and pension liabilities. The media either ignores or is ignorant of the reduction in debt as exchanges close, since lease liabilities make up a third of the debt, they ignore the cost savings from convergence with reduced network equipment and power requirements. Openreach alone is worth more than BT's market cap, or another way of looking at it, is that Openreach is worth more than BT's debt, so the market assigns no value to Consumer, Enterprise, Global and Digital.
Consumer is made up of BT, EE, Plusnet and currently BT Sport and generates more revenue than Openreach, but Openreach beats on Ebitda probably because half of Openreach revenue is designated as internal and comes from BT Group.
Clearly BT is undervalued, at some point that will change.

Thought I'd share my trades in a UK listed stock, it isn't like I can invest in Ryanair since they've delisted off the FTSE. I'm amazed at the bargain basement valuations of various stocks and todays posts are a continuation me airing my thoughts after DT brought up BT in a Wednesday post, otherwise I would probably have stayed on the sidelines. It isn't like I've said anything derogatory about Ryanair, so I wouldn't see any problem with anything I've said.