Member Info for JamesYoung

Anybody knows where BARC net short interest publishes in UK? In US, the net short interest were tallied and published every two weeks. But I can not find the information in UK for BARC. There are only small net short interest on BARC ADR (BCS).

I looked recent trading volume. Daily buybacks ~8M shares is about 40% trading volume in recent days. Yet the stock price can still drop. Naked short sellers must be crazy to do so. With 15 trading days, Barclays has retired ~ 0.67% total shares.

Remember Barclays has only TTM PE 4.22x. As long as they keep on such buyback pace, the shorts will be burnt very badly.

You can read the article from Guardian about the root cause. https://www.theguardian.com/business/2013/jul/30/barclays-cash-call-6bn-capital-gap

The highlight listed below:

Plugging the £12.8bn gap

£6bn Rights issue: a cash call on investors which will not be launched until September and will raise £5.8bn after fees paid to other banks, which are guaranteeing the fundraising

£2bn Issue of bonds: a relatively new form of bond called contingent convertibles, dubbed co-cos, which convert to shares during times of crisis.

£2.5bn Shrinking the bank: by reducing the size of the bank's balance sheet by 2014 Barclays can reduce the amount of capital it needs to hold by this amount

£2.5bn Retaining earnings: the bank will keep a larger portion of the money that it makes between now and June 2014. The cash might otherwise have been paid out in dividends to shareholders or as bonuses to staff.

This tragic increase of shares counts explains why the stock price behaved so poorly since 2008 crash. A quick rebound after 2009 was given a second capital gap hit. Confidence to the bank had been devastated then. Since then, changes of CEOs, wrong doings in forex, punishment from government agency et al formed a string of sad trajectory of a "glory" 325 year UK bank.

I dug out the historic BARC 25p shares outstanding as listed below:

Year 25p (M) Pct

2006 6,535

2007 6,535 0%

2008 8,372 28%

2009 11,412 75%

2010 12,182 86%

2011 12,199 87%

2012 12,243 87%

2013 16,113 147%

2014 16,498 152%

2015 16,805 157%

2016 16,805 157%

2017 16,805 157%

2018 17,133 162%

2019 17482 168%

2020 17668 170%

2021 17420 167%

2022 16876 158%

2023 15556 138%

2023Dec esti 15072.12903 131%

The substantial dilution came at 2008-2009 Qatar capital injection 3B GPB and 2012-2013 5.6B GPB capital raise. The price of conversion were 180p-195p.

Using a linear extrapolation and 155p price, Barclays needs 10 year continuous 1.2B GPB buybacks to reach the same shares outstanding as 2008. There is a long long way to go.

Hi Mike,

In general, buybacks and retirement fund are two main force for total US market growth better than rest world market. They should be beneficial to stock price. If you look at BAC, they diluted share counts to 10B shares in 2012 and they were forced to borrow $5B from Warren Buffet to increase its capital. In following a few years, they bought back aggressively and total share counts reduced to 7.97B now. And the stock price jumped from $5 to $30 and never looked back.

If Barclays reduce share count to the extent of 2012 (1.87B ADR). Per share dividend will be more than double from 8,6p to 18p. I believe stock price would be completely different from today's 150p.

I was hoping Barclay can bounce back to at least match LSE 155p. There were no bounce today and now it dropped 8.5% already, too bad. Barclays management (BOD as your post mentioned) has lost confidence to wall street. It looks pretty painful days in short term.

Best

JY.

The only positive for this stock price crash is 750M GPB buybacks increases the net percentage from 3% to 3.1% of total Barclays market cap. This is a substantial amount and it will provide stock price support once the buyback kicks in.

BCS is down 6.63% in US market now. Wall Street is washing down the weak hands even strongly. I hope it can recover from this deep dive. UK NIM is only 30% of NIM from Barclays. In US, their card business is making good money.

It is unfortunate that Barclays is a UK bank. Barclays produces 68% revenue from US. 1H 70% revenue comes from US, while Barclays stock behaves poorer than regional banks. Its ratio is also far worse than US investment banks, such as GS. London stock market has no constant stream of retirement fund purchasing stock (like 401k fund). The bank is still timid in buy backs and focuses on investment. Total half year return is only 37% net income. Considering full year, it may reach 50%. Sorry for Barclays shareholders. UK banking needs a lot social and political support, which is the only industry stand alone. All other major industry in the country has been sold or in small pieces. A revamp of 401k system in the county will generate fortune for every workers. Let the politicians stop talking wind fall and interest pass through. A strong financial industry is the foundation of a country's success.

Now dividend is only 2.7p. Full year would be 8.1p below estimated 8.6p. Yield is still below 5%.

Buybacks only 750M GPB, also lower than expected 1B GPB mark. I don't know what market will respond. Earning is a beat. 8.6p is ahead of estimated 7.9p. TNAV dropped from 301p to 291p. I have not figured out why the drop.

A disappointing management will probably use the excuse of macro economy uncertainty and inflation headwind. If so, the stock may be hampered in short team.

My own AI script predicts ~3.5% increase in the coming 7 trading days. In US ADR, it is $8.73. Note the AI model prediction accuracy is hovering around 50%. So it is comparable to flip a coin.

Based on US peer bank earning, investment bank earning on FICC, deal making all went down 20% or more. NI will increase. Current US ADR estimate, Q2 earning 41c/ADR, or 7.9p. Full year estimate is 32p. 2H total income estimate is ~12.8p (Q3 and Q4 combined). The number does not show much growth in 2024 as we. UK is a much tougher environment for large banks. US large banks amassed $76B net interest income and large banks still do not increase deposit rate. For savory investors, they just directly buy treasury bond, which can easily get yield above 5%. There is no government push for passing high deposit interest rate and windfall tax. US knows that big banks have to get funding to provide stable service to economy. You can not cut the earning from banks and expect them to be stable on difficult times. Economy always have cycles. Government should just open ways for average person to buy UK treasury bond, not let the labour parliament members talking silly about windfall tax and pass through interest. Give people the freedom to do by themselves and not let politician to run the show.

BARC is going nowhere. The board chairman mentioned that higher return to investors would help valuation. But the company has no action to announce buybacks and issue a quarterly dividend like HSBC. The company has dominant revenue stream from US. Why don't they split up the company into BARC US and BARC UK stock separately. Holding this stock is a pain when you see other stock and US index are moving daily.

I think it is possible to get 9p dividend and £1-1.2B buybacks.

Barclays returns roughly 50% to investors through divi and buybacks. For remaining 3Q, if they achieves 9% RToE. Annual profit can hit 31.6p. Applying 50%, they can afford 9p with 1.06B left for buybacks. The key is that BARC does not incur new surprise and world economy does not run into deep recession.

Not sure if investors here read this. https://www.ft.com/content/377e0105-80c3-4dee-a605-333ccecc1802?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev

Board chairman answers to investor questions was disappointing and the side show of spice girl "stop" is just hilarious. No wonder why British stock market is so poor in past decades.

Congrats to longs! BARC is still grossly undervalued. BAC price/Q1'2023 is more than 30x and BARC is only 14.3x. BARC derives more than 72% revenue from US and Q1 US CC&P alone contributed more than 1.3B GPB revenue among 7.2B. CIB contributes almost 4B GPB revenue. There is no reason why BARC ratios not closer to US bank peers. With that, we retail investors should aim for 100% price appreciation from here. Cheers!

Morgan Stanley published Q1'23 earning estimates together with street consensus.

Group Q1 EPS 10p (MS) vs 9.2p (consensus)
Q1 TBV 311p (MS) vs 301p (consensus)
Return on TBV 13.5% (MS) vs 12.3% (consensus)

Morgan Stanley 1-year price target remains at 210p no change.
MS estimated dividend 2023 8p, 2024 9p, 2025 10p

The reduced share numbers from recent buybacks increase ~ 2.2% TBV. Per 2022 annual report, BARC has 295p TBV per share. The latest buy back increases this by 2.2% and retained earning from Q1 (say a conservative 5p), this together brings new TBV to 306.5p. Most US banks are trading at or above TBV. Barc price target should aim for the similar level. Applying 80% for a calculation, we can expect 245p, which is ~60% above current stock price.

To get a fair comparison of UK bank stock, particularly BARC, total UK bank market cap excluding HSBC and Standard Charter is about $99 billion, while US big banks amass $1099B after the recent crash. HSBC and Standard derive most of the revenue from Asia. It has a very small percentage in UK. If we apply a total bank market cap to national GDP ratio, UK banks are valued ~ 50% lower than US. Before the recent crash, this gap was even bigger.

The fundamental problem of UK low valuation is lacking of a constant stream of money inflow into stock market. In US, the retirement fund and company buy backs are the huge force behind the long bull market. It is a very effective value creation mechanism and an efficient machine to boost the innovation by rewarding the new startup companies.

Unfortunately, these two factors will not correct itself in near future. BARC should consider to spin off its US arm and list the shares in US to derive a higher valuation. The existing shareholders should benefit from this. This allows the BUK to serve the domestic dividend investors.

My holding of Barclays is also close to 10 years. It is really frustrating to hold this bank. On surface, the ratios point to a much higher valuation. But in reality, the bank just keeps disappointing investors.
For capital allocation, they are very stingy to dividend and buybacks, but they are very generous on employee compensation. The bonus pool for a year they over issued security is greater than dividend amount. How they can justify such behavior a "bonus" is beyond me. And the last is employee pension is from after tax profit?

Added a small tranche yesterday on the big drop. The price is out of 3-sigma Bollinger band, not conventional 2-sigma. It should have a nice bounce. Current dividend yield is above 5%. It is still higher than treasury bond where I got around 4%.