Member Info for knot

They could have bought bought puts, although they would then have to sell more of what they have on a net basis declared as reduced, i.e. the shares they bought. Buying puts alone will not reduce a reported short position. The reduction came from a net reduction of the short position.

The 40% is just a rough finger in the air of the zero growth £100m cancelled dividend against a market cap today of £314m considering an earnings perspective in 2022 of £165m (not the more bullish £202m in 2021). The initial dividend could (unlikely) also include a distribution of any excess from the circa £400m buffer. My expectation is the dividend is more likely to start off low (1-3%) as they build the business, comparable to what Centrica did when they reinstated the dividend. The 40% was an indication of the possible relative dividend value being so far out of alignment with the current share price level. Were not arguing about 2-3% difference or change, more like 20-30% differences.

Remember you don't get rich quick, you get rich slowly. You get poor quick.

L'Estrange v Graucob [1934] 2 KB "When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not." [p403] "It is an important principle of English law which underpins the whole of commercial life; any erosion of it would have serious repercussions far beyond the business community.” [p394]

That principle has stood since 1934, until the CoA decided "hidden in plain sight" was in any remote sense valid..

Look at it this way, the company appears to have a reasonably stable earnings base for a PE of under 2 (excluding the recent one off write downs). Would you short that purely based on a possible ruling from the SC, which will not change the underlying business earnings, rather be purely impacted by one off charges. The short positions are purely a short term play. At some point they close out.

If the shorts continued to build up a position to hold the price below say 230, in 2 years time CBG would pay a dividend of over 40%. How does that figure ?

It's all a perspective on time and Reeves under a bus driven by Starmer.

The early short positions appear to have been on the back of (mainly after) the CoA ruling, which removed institutional/large buyers and then allowed the share price to be pushed down. They did not pre-empt the CoA ruling, so why would there be an expectation the SC ruling would be different and they would now short more ?

Pushing the price down forced sellers out from indexed funds (FTSE 250 trakers) so was a known leveraged play of sorts. That strategy appears to have been quite a success with CBG falling out of the FTSE 250 and all the trackers flushed out. With the price fall short dated call options could have been bought in, which would have helped cap the price rise and provided an exit strategy. This could have been a factor in MW due to the dates and levels they closed out at.

MW have been slowly closing out, while Qube appear to be increasing. The exact rationales will never be known unless either participant publicly makes a comment. Qube I doubt would be positioning on the court ruling because the appeal is still over two months away, unless they are going to try and build a 5% or more short. That I would find quite a disproportionate risk given the case details, so would view the increase as a short term position on the back of Reeves and the resulting higher inflationary environment, helped along by Bidens additional oil sanctions.

I would view the current short volumes as a predominantly short term strategy not necessarily directly related to CBG. Just consider they did not pre-empt the CoA ruling, so why would they effectively double up on an unknown for the SC at an already bearish price level ?

Who is still holding a short position in the week before the case (which will rule at the end of the 3 days or the week after) will be very interesting indeed as it will be an indication as to how high the shares will gap or not go down very far because they have already put the short on......

Think about it from the aspect of if you thought the court case was going to rule even more bearish and you put a massive short on well ahead of the ruling, who is going to sell even more shares to push the price down further after the price has already been pushed down ? More importantly who is going to sell you the shares to close your short out. This is all based on the perspective as to the current share price level being reasonable for a given payout expectation.

A lot of unknowns and when there are unknowns the price as a rule falls below fair value, but only to a certain point because that also creates another unknown.

CBG appear to be a very conservative lender, so I would imagine the commercial side to fair better on an underperforming loan basis than the main banks with much higher volumes. As they said in the previous market update they turned down business, which would have been a risk based selection process and that would also help in the current perspective.

End of the month is half year result

Centrica was during the time of the massive supplier exit, which had dragged margins down and completely distorted the way the market worked (supply and wholesale). Centrica ended up with more cash in the bank than the share price/market cap, which was completely illogical. On top of that BoA had accumulated a massive long position, but it was in swaps so again a massive distortion effect.

CBG are in an odd sitation due to the prior anti growth regulatory clusterf... and a court ruling that has more holes in than swiss cheese. The net effect will be similar to Centrica in some ways as the low level of compensation may be distorted towards some participants who (like in Johnson case) were making excessive margins and the compensation is likely to push them out of the market. That leaves a situation where the remaining participants end up with a larger market share and potentially higher margins as a result. To gain that market share the capital build that CBG are doing may well play out nicely. As Martin the wise one Money tips reflected, maybe the FCA and CoA decisions will have much greater negative longer term effects for the consumer, but positive effects for the remaining companies involved. Who could have guessed the law of unintended consequences.....

A double edged sward at the moment is BT, because the 25% share holding has quite a high swap element, which can have a short type effect on the market in the near term and also a credibility factor as to if those swaps are going to be executed and the capital put in play. Thats how the prior owner was flushed out, no credibility to deliver the capital which left the shorters open to pushing down. The flip side is also the pension fund liabilities, which I have not quite been able to fathom in enough detail to have enough confidence of £2 plus in the near term (see swap dates for timing perspective). Takeover probability is the throw of a dice more dependent upon the government geopolitics with India.

Looking at others, but nothing that I have looked at so far stands out with as much certainty. Tends to take a lot of time for adequate research for just one company and about one a year pops up.

To me, what is more certain is the arrogance and ignorance of Reeves is very likely to cause a Truss 2 and a host of spending cuts brought forward. This may well create some short term opportunites, so watching the slow motion train crash with a bucket of popcorn from the sidelines....

If you have to check the share price every 5 minutes you should not be holding the share. End of the day, do your own research, never go by anyones advice without your own research. Get comfortable with your decisions and remove all emotional attachment to the shares you hold.

Bear in mind the whole "unsophisticated" element arose due to Hurstanger involving a complex finance structure and not a simple interest rate calculation. Hurstanger also made a point of once you did the same deal more than once you may no longer deemed unsophisticated and taking out multiple car finance agreements over time therefore makes you no longer applicable to be able to say you are unsophisticated. Just on this implication it's a stunningly flawed ruling.

This is where the case is also being massively misrepresented and offensive as it implys that even with basic math skills learnt at school you are still deemed unable to work out basic interest and are therefore exempt from your actions.

The curious issue arrises when HMRC is then challenged by the very self and same "unsophisticated" tax payers who are deemed unable to work out their own self assesments and therefore not liable to any fines or mistakes.

Just noticed....

Intervener(s)

Financial Conduct Authority (PTA Intervener)

Black Horse Limited (PTA Intervener)

UK Finance Limited (PTA Intervener)

Come on Chid, read the document and explain why Black Horse are involved and how....

176. .... "There are tensions between Hurstanger and Wood which we have not found it easy to reconcile, though we have done our best."

....and the critical point....

"Both those authorities are binding on this court, and therefore we do not enjoy a free rein to start again from first principles."

The "this court" is reference to the CoA, which can't address the issues with Wood and Hurstanger, only the SC can. Because the CoA recognises faults and conflicts in one or borth of the cases. The cases is all framed upon Wood and Hurstanger, to which the fiduciary duties arose out of a pre-declared specified and agreed engagement fee that created the fiduciary obligation. One of the cases was entirely based on the fact that the broker forgot to tell the client the value of the commission (which was declared in detail in the contract).

The SC case all appears to be narrowing down to the interpretation and application of Wood and Hurstanger.

Critically it also tries to make a case that contractual wording in a document is not applicable (i.e. not enforcable to uphold the legal standing of the contract) if it is "burried in the small print", which fundamentally is offensive (even stated as such by one of the CoA judges in the hearing). Even the claimant admitted to not reading the contract, which in itself should have invalidated the claim because you can't claim to draw upon a contract to which you have not read (the "insufficient" aspect of the case).

The written contract is a fundamental principle of contractual law and to uphold a case that validates any breach of such is a very slippery slope to go down and damages the validity of the UK courts as a whole. If the terms of a commission can be invalidated, why stop at that and invalidate the entire contract by virtue of some terms being more legally incomprehensible by the layman (the "unsophisticated" argument).

Apply this to any consumer facing contract - outside of finance. That is what the case is also about and it's mind blowing as to how the CoA went down this rabbit hole. All based on faults in the application and conflicts between Wood and Hurstanger.

I'll stop at that for the moment.....

Chid, I give up, I have a choice of watching paint dry or shouting at the rain. Both are just as productive as responding to a completely contradictory argument and a very much laymans view of the market (including tin foil hat). 8th Jan. MW decreased 0.1% and QB increased 0.1%. Please explain in your logic the reasoning.

FangKat : Over two months (before the court case) is a very, very long time in the markets. Watch Reeves capitulate in the comming weeks. Remember the time involved with the Truss letuice. The China trip will massively backfire as it riles US relations and offended the bond market. Arrogance and ignorance in perfect harmony. No, shorters do not work together as that would create some legal issues (cartel, manipulation, etc.), however they can be like minded at times or not (8th Jan, MW and QB for example) which may appear as colluding. If they could make money out of each others wrong positions they would (MW and QB for example).

With Reeves / Truss 2 in mind, some shorts may be holding and watching and some may also continue to close (MW) as they may see the risks escalating on a buyer shortage (14th Dec market halts in short squeeze). To think they have mystical powers and greater information available to them is a fools errand.

I would like to offer up again, if you have the time and really want to have a perspective and truly understand the implications within the court case, then read the documents.

Just a simple view, but imo, some posters bluff and bluster completely contradictory rants.

Not entirely sure the independence of the BoE allows the Treasury to instruct the BoE, which is the slight issue, hence Reeves is up s... creek... The bond markets will slowly, but surely, force Reeves into bringing forward a lot of spending cuts. The BoE halting QE does not necessarily resolve the issue. The higher yields are more an indication that the global markets don't trust the UK government. The budget has other issues.....

Why the child abuse scandal has many sides, look at the compensation scheme and the hole in the budget that would create - that is the other issue around the scandal, asside from the ................... [would probably be sensored, arrested or banned if I wrote what I thought with a non-crime incident]. That is also why they are avoiding an inquiry because it would force the whole situation, rather than can kicking down the road.

All of the headroom and then some would dissapear, self declared budget rule shattered, Reeves looking a fool (joining the club with the FCA, lol.).

Maybe it's time for a Reeves budget climb down letuice ? Special issue, only once a year.

GBP under attack,

Gilts nearing 5%,

Reeves flies off to China.... with FCA and BoE officials.

Prime item in the briefcase a nice cap, ready to hold out...... please sir can I have some more....

Bank tax threats with HSBC in mind as part of the deal/negotiations....... ? Who knows....

I guess the “iron grip on the public finances” may well just be a firm grip on the brief case. Maybe just scared of flying... lol.

"Wait till only bears and one post a week." - Hillarious because that will actually be more likely when the share price is way too high. Think about it.

MW continues to slowly exit.....

QTR may still have some position exposure, although adding a 0.1% short to only gain a 10p drop in the share price.... which recovered by 5p the next day.... ouch. And that is with the help of the Reeves attempt at Truss 2. That would possibly be ringing alarm bells as a trade if it was a naked short rather than a leg in a hedge play.

Alternatively the exit strategy may well be an expectation of a bond vigillante rampage.... Truss 2 here we come ?

tuan6 - very true, the markets are like quantum physics heisenberg principle such that anything correct invariably changes the market behaviour, resulting in a permanent quasi chaotic state. AI models may make the markets unviable for the average investor due to the complexity of hedges, derivatives and speed.

harry91 - I think there will unlikely be a divi this year, interim zero probability. Reason being is that I think it would be far more prudent to take the reinvestment opportunity and or also to buy out the 11% contingent bond (possibly another one of Sainsburys mistakes). Would make for a much better long term return than a short token dividend payment.

"they KNOW the court case will not be favourable" - no more than anyone else, judging from the positions I would say less so because they did not change after the Barclays ruling appart from possibly MW slowly exiting.

"far more will be taken off the s.p ONCE the court decision is announced." - Completely disagree. You don't understand uncertainty effects, the FTSE 250 exit play, nor any of the court cases. Zero. Nada. Zilch.

Well that was quick...

"Treasury forced to intervene in market turmoil"

https://www.telegraph.co.uk/business/2025/01/08/ftse-100-markets-latest-news-uk-bonds-borrowing-reeves/

“Over the coming weeks and months, the Chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people.” - They will discover soon, hopefully, we have moved on from the stone age....

Reeves has done the most basic of all errors and backed herself into a corner that allows the market to take advantage. To openly state your not going to do anything for a year (Budget) while heading into a deepening recession, what do they expect ? Gordon Brown getting rid of boom and bust was akin to saying he had removed summer and winter. Finance ministers quite frequently have no idea as to what they are doing.

I would have a fair guess that the markets will flush Labour into making choices far earlier than their own bubble world envisaged and be brought closer to the real world again, Truss style. The real question you should be asking is if we have a Truss 2 moment and the BoE intervening, Reeves would have to either raise taxes or cut spending. Raising taxes from a bank tax for example would be taxing the funding source that is causing the lack of buyers of more aptly named "guilts". Raising taxes at this point would destroy credibility and provides a key attack point for the next election. Spending cuts would have to be brought forward, which in turn ridicules the governments stability mantra with forced action, although less damaging for election prospects. BoE intervention would just draw lack of credibiliity parallels to Truss and her "One of the things that really ruined my sleep is the markets. That sort of thing is trying." side kick, who also had no idea.

UK is in a recession, just depends on Reeves as to when they figure out they were disastrously wrong to get in and talk of black hole, to which they have now fallen into. I they have indeed crossed the event horizon, they just dont accept it yet.

CBG is just along for the ride and being a smaller football with day traders to flush around, higher volatility as a result. Makes no difference at all to my long term perspective. Remember to remove the emotions.

Chid, you have a grand perception that the average poster on here would have any significant influence on the share price at all. Hugely amusing that you can't post without the Lloyds bandwagon follow up - I stopped reading at that point.

QBA, I see where you are comming from. The Hopcraft case only has one element of commission, the fixed 3% (£183.26). This is what should matter for the court payout perspective and at the time the agreement it was also done before CONC 4.5.3 2014 came into effect as the contract was signed 10 Jan 2014. CBG have not disclosed the extent of interest commission related to any other DIC deals 2014-2016, however from Hopcraft the case indicates no interest commission (some or all prior 2014 deals ?) and only the fixed £183.26. The 2024 DIC statement also does not indicate if or what share any upward commission was. The Barclays instance was 100% of the upward interest share was full commission (more likely to breach Plevin 2014 and CONC rules), which I do not see the commercial reason as to why Barclays would have allowed that finance model arrangement. The DIC for CBG may have been betweed 2014 and 2016, otherwise it was undisclosed in Hopcraft and I doubt the legal team would have been party to such an act as it would put some of the lawyers up for prosecution. The DSM model is allowed or acceptable within the Barclays ruling perspective because it falls within a normal commercial selling outline of a headline price and then offering a discount. Not starting with a price and ramping it up as high as the customer will bear (DIC model). A lot of people seem to be treating all of the deals for the whole time the same way and in the same manner of calculation. The claims are also all based on the flawed basis of the CoA fiduciary (which someone elses prior post referencing a detailed legal opinion also pointed out quite well as to the flaws).

End of the day if people want to buy or sell CBG I don't really care. I have the time to wait for all the distortions to clear. It eventually becomes quite apparent that shouting at the sea when the tide is approaching really does make no difference. I can equally stand and try and tell people how the tide operates and the direction it may well be moving as a result. Yes, I admit I have a mystical secret motive, which I am communicating with alien species 10378alpha as they are interested in aquiring a Ford Focus on finance. You have me Chid.

Why am I really posting ? Why do you vote at an election as one in many millions of other voters ? We can all make a difference, however I don't want to sit and watch the world burn.

Looking at todays moves within the banking sector, specifically Barclays and NatWest when compared to CBG will put some of todays activity into perspective. Barclays dropped 2.64% and NatWest 3.49% with no specific RNS or significant individual news related to either. The move today is just part of an overall market perspective with Labour increasingly looking like they are flushing themselves down the toilet and pulling the market with them.

What is possibly more interesting is the intraday pattern as it is the intraday patterns that sometimes give an indication as to what is going on under the surface. Today CBG looked like riding along a narrow 226-228 channel, which could be seen as programatic buy volumes placed around 227..

How do some programatic trades work ? If you had say 5m shares to sell out you either have to find a buyer for them all or liquidate them into the market, however if you were to just try and dump them all in one go or quickly you would hit all of the bids and go through the bid volumes and soon find nobody to buy from you or opportunistic massively out of the market chancer bids. So, what can happen is that a program is setup to say place 10k shares per hour into the bid or offer stacks at a programatically defined price. If you sell / buy through that 10k of volume you just wait for the program to place more volume back into the stack. Todays channel potentially looks like a low volume programatic buy, which would appear as a support, but it's just a buyer who is buying in a particular manner. The afternoon drops with Barclays and NatWest were decorrelated from CBG, which is part of the picture.

My aim with these posts is to educate and try and help people remove some of the emotional noise that comes with holding shares, if you know what is happening it is then out of the unknown zone and hence less fear.... Chancers rely on fear to flush people out.

Well, I would place I "huge" (not) value on a broker/trader valuation sheet for a stock. Especially a stock that could shut up shop, liquidate everything and payout to shareholders well in excess of todays market price.

QBA : Hopcraft had zero interest commission in the CBG case, no idea why you think CBG does. The CBG aspect in Hopcraft (and related in Barclays) is more to do with FCA CONC 4.5.3 2014 "where knowledge of the existence or amount of the commission could actually or potentially:" .... "(2) have a material impact on the customer's transactional decision." - which brings about "commercially sensible" levels of commissions (Barclays), which under 4.5.3 (2) 2014 would at the time not have required notification. i.e. 3% £180 odd pounds to arrange finance with zero interest commission component, which is I would argue entirely commercially sensible.

Todays drop (all banks - e.g. NatWest and CBG falling the same % today) - general market reality slap in the face courtesy of Reeves financial illiteracy. Keep CBG moves in prespective and relativity to the market peers, don't think CBG is always moving entirely on it's own accord.

Have a look at MW now closing out thier short after increasing on the 20th... roughly at the same price point for the 0.1%. Looked possibly like an end of year position shorting for book value or testing low liquidity days, which is now possibly turning sour or an exit strategy in play. Who knows. This may also be the dawning realisation as to where the Supreme Court case is going. Possibly very slowly exiting the short. I know nothing for certain and this is just my guess.

The current price activity appears to be derivative related (end of day close delta very small). The current lack of price movement will also be reducing volatility and making some options and derivatives cheaper to buy, so it could be a strategy of existing derivatives create a sticky price level, reduces vol as a result, buy in out of market calls for example (say 450p) that could be very cheap. Sit back and wait for the climb back in to the FTSE250.

The comment in relation to the cash from the business sale, it is not the cash that matters it is the closing of the deal, as it would remove uncertainty around the proceeds (buyer backing out risk).

This is just my guess, it's not advice in any way.

It must be remembered that Marshall are a hedge fund and the very basics and deffinition of the "hedge" part of the name is that positions are very rarely naked (vanilla long or short) and more rather tend to be in a correlated or decorrelated overall position that maye be with other assets or time based. This makes for any interpretation of one leg of a hedged position near on impossible to understand and have a true objective view on.

Always read the label comes to mind....