Member Info for LordAdam

SLA increased it's buy back rate recently as the SP fell ... at least that seems sensible in terms of traditional investment thinking ... but don't hold your breath. Assuming they don't run out of money, which of course they would, it would take about 5 years at the present rate to repurchase the whole company ... and use £5-6 billion of cash! At the previous rate it would take between 10-15 years.

And of course, even then, you wouldn't own the company outright, as I and others would be holding onto our 'golden' shares!

I'm on record and still say, buy backs are not a good idea for us small investors ... they are a sign of a inward looking and self-serving board ... at least here in SLA they are maintaining the dividend rather than sacrificing it on the altar of self gain, but in reality of course they could be increasing the dividend, guaranteeing it for future years, or even, as they should be issuing a return of capital via a special dividend.

My one, and only, complaint about the chat filtering system on the LSE site is that there's no provision to filter messages based on content.

Mercifully, I now don't see what that timewaster Exstatex posts ... I have all the postings filtered out by the site ... but sadly I still see folks replies to him, many of which actually mention him by name. Now if I could filter by content as well, then all mention of him would disappear from my life ... oh, and wouldn't that be bliss?

iWeb charge a fixed £5 per trade and no ISA fees or annual charges ... cheaper than HL who want £12 per trade (drops to £6 if you trade enough) and want an annual percentage of your ISA for a fee. (Apologies if I've not got the HL fees correct)

But, if you're thinking of daily trading ... be warned, most private investors, retire from the field having made a net loss.

Mike

Some times you just have to look back into history ...

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Picking stocks? Sometimes the decision is a no-brainer

Shell is paying out pretty much all its profits to shareholders

Extract

When Shell announced an 80pc drop in profits last week, its shares rose by 6pc, making it one of the best performers in the FTSE 100. That might sound perverse, but it makes complete sense when you consider that the oil major had become what I call a “one-decision stock”. That’s a company for which the decision to invest is so dominated by one consideration that anything else is academic.

In the case of Shell, the consideration was very simple. Would the company maintain its $1.88 (£1.30) dividend? Shell’s shares have fallen so far in two years – from a high in May 2014 of 2,592p to a low last month of 1,278p – that holding the pay-out would provide a new investor with an income yield of almost exactly 10pc.

With the monetary policy committee at the Bank of England now unanimous on keeping interest rates at their 300-year low of 0.5pc, a sustainable 10pc income is as close to a no-brainer as equity investment can provide. By the time the results were announced Shell’s shares had rallied a bit from January’s low point so the yield was “only” 9pc, but it was still firmly in “one-decision” territory.

Shell’s chief executive Ben van Beurden was never going to guarantee the dividend in 2016 but he could hardly have been clearer about his intentions. Cutting capital expenditure by a quarter, shedding 10,000 jobs and selling assets worth $40bn is a set of measures with only one aim – to ensure that he does not go down in history as the first Shell boss to cut the dividend since 1945.
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... and that's from Feb 7 2016 ... 4 years ago almost to the day. They didn't cut then, they won't cut now ... every share bought back, if not bought back would fund the dividend for 10+ more shares, plus there's always script dividends and lots of folk would bite their hands off for them. Back then oil was £35 and there were more shares in issue.

Mike

Just been looking through the trade lists for the day ... now there's an interesting activity for you!

Firstly, two things that most will know, but I will re-iterate for the newer members ... market makers have the option to delay posting the trades that they do when the release of the information might influence/distort the market. They do of course use this for their own purposes and delay posting buys or sells preferentially depending on what suits them!

The second thing is that the trade lists show the price of the deal, but not whether it was a sell or a buy -- that's a matter of interpretation and many sites produce a guess based on whether it is above or below the middle of the bid/offer prices.

Put these two things together and you get things like a listed buy of 11,090 shares at a price of 200.386 at a time of 12:34 (when the price was really more like 188) ... which was in all probability a *sell* of 11,090 shares at 200.386 at something like 11:03, maybe 11:04.

Trawling through the lists I can see that the rapid fall in price at about 11:03 was the result of a large amount of selling at that time, almost certainly triggered by limit orders at ... would you believe it ... 200p!

The moral of this story is, if you are going to use limit orders yourself, then set them for 199.95 and not for 200 ... that way they go to the front of the order queue for dealing!

Anyway, from what I can see, today's fall was triggered by amateur profit taking, followed by a little bit of panic selling as folk saw the 200 highs being retreated from.

I'm not a chartist ... being more of a chicken entrails man ... but I wouldn't be surprised if this didn't reattempt a climb through 200 in the next few days if the market is reasonably positive.

Mike

IMB have a very long history of maintaining a progressive, increasing, dividend policy even through the 2008 period when everyone else was cutting dividends IMB held to their steadily increasing pattern. At times this has resulted in very high yields when the sp has dipped. But the same is true of BATS as well.

Looking at the director's holdings ... the CFO has a fair wack in there ... about £4,000,000 worth!! So there's a guy with a real interest in maintaining both the dividend and the share price! (Afteralll he's getting approximately £400,000 in dividends each year.) Plus of course as CFO he really does have power to influence how the game plays out.

The next time that I have cash available in the ISAs I'll be seriously thinking of topping up here!

Mike

It's difficult to see how PAS and Chris Wright have any real credibility ... after extensive searching I can't find anyone else other than CW and the other (silent) director of PAS, Beshlie Anne Wright who's posted anything or done anything associated with PAS (and BAW only appears on the companies register).

Further there's a significant bending of the truth in some of the information posted on the PAS web site ... PAS was formed in 2012 and was dormant until it posted accounts for the period ending February 2018. (https://beta.companieshouse.gov.uk/company/07963033/filing-history) Yet on the PAS web site (registered by CW in 2014) we have this statement posted in 2015 ... "PAS represents the interests of tied tenants and has been actively engaged with Government for several years ... we are a recognised stakeholder and we fight our members corner to deliver fairness. We are also supplying pubs code support services as independent professional advisors." Seems a tall order for a non-trading, dormant company.

There's also some insight there into what I think is the ultimate motivation behind all this ... money ... CW is charging £1,000 a year to pubs to sign up for his 'support' etc. Clearly PAS had no takers prior to their year ending 2017, for they filed dormant accounts for 28 Feb 2017 ... but then one year later posted live accounts ... with rather amazingly a full set of historical figures for 28 Feb 2017! Seems someone doesn't know the rules for dormant companies, and certainly doesn't play by them.

I also can't find any prior existence for this man in the industry although I can find several companies that are either dissolved or dormant in which he and BAW (previously known as Beshlie Anne Grimes) were/are directors.

All in all, my conclusion is still the same, this is a character who is trying to generate a business by selling snake oil support for a problem that doesn't exist (but he's rather hoping to create!).

Experience suggests that we should have nothing to do with him, and the less of a platform/forum he has for his troublemaking ideas the better off we will all be.

Mike

I've waited a while before contributing to this ...

There seem to be two different things to get our heads around ... firstly, how this all started. My understanding is that Mr Anderson became embroiled in a dispute with Marstons about the rent review for some tied pubs for which he was the tenant. The rent had been set in a fashion that he didn't agree with and he and they ended up at arbitration ... an extensive report on the arbitration was produced (which I ploughed through). One minor issue amongst many that Mr Anderson raised was the question of the amount of beer lost to sediment in a particular type of beer.

Following the arbitration new agreements were drawn up and the original matter of the rent review was resolved.

Some one of the press got hold of the idea ... what, there's a fiddle going on, sludge in the barrels and all that ... and that article was bashed out headlining the issue as though it was something new and outrageous (more on that later).

Had folk not dwelt on the subject it would have largely gone away by now ... because this is in reality, a non-issue ... that's how Marstons themselves are playing it and effectively no one is really involved in either creating a case or defending against one.

Sediment in the barrels is nothing at all new ... if you have live beer, real ale, you will have sediment ... the two go together, you can't have one, without the other ... if it's live beer. If it's carbonated, commercial beer, which is dead then it can be crystal clear from day one. The ultimate question, and one that is always up for agreement is how much sediment is in the barrel and what allowance is given to the pub when it comes to selling it etc. It's a matter for negotiation or agreement and that's all there is to that one. Retrospectively it may be that some would have wished the figures to be different, they can argue the case after the event if they like, but a PPI situation it is not.

Now for the second thing ... have you had a good look at the Pubs Advisory Service?

Formed in 2012 with a registered office at a farmhouse, the company was dormant until at least 2017 ... filed its first accounts in 2018, with a value of about £7,500 ... its next accounts are due by the end of this month. The company has two directors, Christopher Wright and Beshlie Anne Wright.

The registered office has moved several times from one farmhouse to another. Surprisingly there's quite a web presence for the PAS ...

Call me cynical or what, but the way I read this is that here we have someone trying to create a "cause celebre" out of this issue in order to get some free publicity for the company that they've decided now they want to make a go of.

I see no evidence of Mr Anderson, the original plaintiff in all this, or anyone else for that matter, taking this forward. Quite the opposite, from what has gone before Mr Anderson has a new agreement with Marstons and is getting on with it.

The less said about this the

Well I'm a long term holder ... my whole portfolio is based on long term dividend income ... normally I don't care about the share price, up, down, stay the same, makes no difference *as long as the dividend is maintained or increased*.

I have a couple of exceptions but on the whole what I've just written is true. So overall I'm not bothered by the ups and downs ... if you're going to hold to the other side of the grave, the SP doesn't matter a jot ... but the income does as that's the bit I'll be spending.

So the last thing that I want to see is a dividend cut, hence a BoD that thinks it can cut the dividend, just because the falling price has made their yield seem high has got it wrong from my perspective. They should maintain the dividend as long as the cash flow permits ... the SP will take care of itself in the longer run.

Mike

OK ... being pragmatic about it ... assumming that arbitrage makes them equivalent value when the two markets are both open, there's an identifiable match at 14:55 our time, 09:55 their time.

And at that point the factor is 37.71 ... ie multiply the US price by 37.71 to get the UK price.

That will be close enough! So the US market closed at 57.11*37.71 = 2153.8 more or less the same as ours.

Mike

Does anyone know what the conversion factor is for the US market (NYSE:RDS.B) to the London market (LON:RDSB)?

I'm trying to guess what the opening price might be tomorrow based on the closing price in the US. But it's not a straight dollar conversion rate, although I'm sure that's a part of it, there seems to be something else to adjust for the ADR type of thing.

Someone out there must have already done this ...

Mike

Share buy backs are a smoke and mirrors scam that swaps the absolute certainty of a capital distribution by means of a dividend or capital return for the vagaries of a possible, if you are lucky and if the market is going that way, increase in the share price.

You know where you are with a dividend, you can bank on it, you can invest it, spend it do what you want with it. When the money disappears into the black hole of a buy back all bets are off, there's no guarantees, and at best you have to sell something to get your hands on any of it (incurring costs of course!).

You'll have deduced that I am no fan of buy backs!

Mike

SWLC ... you're right ... I should perhaps read more carefully and think more before I post! The voting percentage has remained the same, so as IAPR suggests, they've 'loaned' the shares (for a consideration of course!) which implies that some one is taking up or increasing a short position. Which in turn adds weight to _your_ original idea that the RNS note explains the decrease in the SP over the last few days. So apologies! Collectively though I think we got to a better understanding of what was going on there.

As for owning 2% ... as you say, if only! ... sounds like IAPR and I are kindred spirits in the sense of being income driven investors. Which of course meant that the old GFRD was attractive, post split it's not so sure yet how it's all going to work out for us!

Mike

SWLC ... you need to read and think a bit more before writing ... the holding RNS was for selling, it was for a total of 0.1% of the shares, ie 110,000 shares over a period of time in a daily volume of 2-4,000,000 shares. I hardly think that warrants your interpretation.

Chunky, thanks for the numbers, really helps to put a handle on what's going on and how the dividend might pan out. My interpretation of the "3x" is that the BoD were expressing their desire to 'rebase' the dividend from the 2x sort of figure that they'd had in the past. By any measure 3x seems rather conservative ... I'm expecting a dividend that is somewhat to the bottom of the range so that they have room to pat themselves on the back in subsequent years! (Based on a 53m profit it could be as low as 16p to give them a 3x figure.) Let's hope I'm wrong,!

Mike

One of the fundamental problems of share buy backs is that it swaps the certainty of a capital distribution (special dividend or return of capital) for a vague idea of the increased value of the share which is entirely controlled (or not controlled) by the market place. As Jatw says there's profit in it for the 'boys' ... and the EPS goes up (on paper, real earnings stay the same of course). But for us smaller players there's nothing guaranteed to replace the missing/stolen money.

Mike

Good, back to playing the ball ... I think the problem is, and your example suggests this, that you see it from the BoD's point of view as though it were their company and the £1m was their's. It's not their company, it's our's, the shareholders and the £1m is our's, not their's. Therefore when they choose to invest it in buying their own shares, they deprive the real owners of the company of the money which belongs to them.

The BoD are there to serve the interests of the shareholders, not some moral viewpoint, not some self-interest, not some self-preservation instinct, but the financial well being of the shareholders. As such the choices are ... retain the money as reserve, use it for the growth of the business, or distribute the money, pro-rata to the shareholders (who then choose what to do with it) either via dividend or a return of capital.

The idea of using the surplus to repurchase and cancel shares is an accounting subterfuge which just artificially, numerically, raises the EPS for no real growth in company income.

And to cap it all, the £100,000 pa which it appears to save ... is fictional ... the BoD get to decide exactly what this figure is, they choose the dividend, and we approve it at the AGM.

Mike

Ps. and thank you for replying; whilst I'm sure that we both feel strongly about our viewpoints there is almost certainly much that we can learn from each other!

Well today is a red letter day for me ... I've invested in SSE shares, off and on, since 2015 and today, with the exDividend spike I've made it back to my average buy price.

So technically I'm level again, but I've also had the equivalent of 21% of my investment returned to me as dividends over the period ... and as I'm an income investor that's both significant and important.

Long may the dividend growth and continuity continue!

Mike

LTI ... I see you're one for playing the man rather than the ball.

Some reasoned input to the discussion could have moved us collectively forward, your comment does not.

Mike

Thank you for the thoughtful reply ... as you say we will probably have to agree to disagree, but there's some ideas and insights in what you write that I'm thankful for.

Debt and Equity, yes they are equivalent ways of financing a company ... but they do have significant differences. Debt incurs a contractual interest rate, equity an optional dividend rate that the company gets to set as it sees fit. (Although equity does involve in addition a 'capital' stake or share in the company).

Normally if an investor buys a share they get both the dividend income stream (which can of course be valued) and a slice of the company in terms of assets etc. At some point in the future if the investor so chooses they can sell the share at the market price to either gain or lose on the share price itself, and of course they get to keep the dividends in the meantime.

When a company buys its own shares, there is a nominal gain in the sense the dividend is no longer paid on that share. But there is _no_ investment in the capital side of things. Rather the opposite, the share ceases to exist, the dividend saving is made but the capital element is lost and is magically transferred in accounting terms to the remaining shares. What the market makes of this is completely unpredictable and uncertain. ie it may or may not support, increase or decrease the share price.

Two other things seem different here ... whilst Debt and Equity are equivalent when financing a company, here we talk of what to do with a surplus that a company might have rather than the raising of finance. I've mentioned that the dividend rate is entirely within the control of the company this is not the case with debt.

The second thing is that I can't agree with your calculation of 13.6% rate of return ... when the share is bought at £20 it ceases to exist. As such the only cash flow attributable to the purchase is now the saving of the dividend at some 10% per year at the present level. Any EPS is, together with the capital element, redistributed across the remaining shares.

(I have long held the belief, that this nominal increase in EPS is the only guaranteed effect of buy backs and is the true reason why they are done.)

As you say, we will probably have to agree that we have different ways so looking at things ... but I did welcome your viewpoint, and it did serve to make me look at some things differently.

As an individual who's investment is 'income driven' I will always value a distribution of surpluses either by dividend or genuine capital return over the smoke and mirrors (which I see it as) of share buy backs.

Mike

Ummm ... bit of dodgy maths here me thinks ... "£2 Billion buyback would save £200 million in dividend payments. This saving EVERY year could go towards debt reduction".

£2 billion ... that's 2,000 million .... would save 200 million in dividend payments each year for the next ten years and then we would have broken even. Nope, the maths is perfect, it's the financial planning that is dodgy.

Me thinks that if the BoD came up with a £2 billion project with a 10-year payback they would (or at least should) be sacked!

To think that buy backs save dividends is a mistaken idea ... if you need to save dividends use the cash surplus to pay for them -- you could do that for upwards of the next ten years and _still_ be in pocket.

If you're interested in reducing debt then use the whole of the £2 billion now to pay some of it off.

I've said it before and I'll say it again, buy backs are a sign of an inwardly looking, self serving board that has its own interests at heart at the expense of the shareholders.

Mike