Member Info for Meconopsis

"They should have bought much more yesterday am"

It's great to say that in glorious hindsight, but buybacks have to be undertaken at arms-length (hence the use of a broker) and in a way that doesn't distort the market. If you have a look at the RNS for BDEV's buyback, it lists all of the trades and shows them being spaced out over the day in surprisingly small dribs and drabs.

Following the LGEN is s*** as it down "-13% over 5 years" comment yesterday - and not wanting to actually do the work I'm supposed to be doing the is morning!...

I thought I'd look at the investment return on money invested on 20 March 2018; 20 March 2013 and the longest holding period that I can easily get share price data for - 20 March 2006. For fun, I thought I'd try 20 March 2020.

Calculated gains until 20 March 2023. I have fully reinvested the dividends at the price on the payment date. As we are not yet ex-dividend, the currently declared dividend isn't included in the LGEN return calculation.

5 year performance - LGEN +24% | S&P500 +45% | NASDAQ +59%
10 year performance - LGEN +226% | S&P500 +173% | NASDAQ +275%
17 year performance - LGEN +247% | S&P500 +179% | NASDAQ +385%

Including the dividend and assuming a "normal" trading price for LGEN of around £2.60 then the LGEN 5 year return +39%. The S&P and NASDAQ returns will also improve if the prices were moved to "normal" ranges, but not by as much as they've not been as affected by the turmoil.

LGEN clearly loses, but total return isn't negative over 5 years. Over 10 and 17 years, LGEN beats the S&P500 and is beaten/trounced by the NASDAQ.

HERE's the FUN BIT...

3 year performance - LGEN +93% | S&P500 +72% | NASDAQ +70%

And 5 year(ish) performance:
- six months earlier on 20 September 2017 then the comparative returns are: LGEN +44% | S&P500 +57% | NASDAQ +81%
- six months later on 17 September 2018 then the comparative returns are: LGEN +46% | S&P500 +36% | NASDAQ +48%
- on 3 December 2018 then the comparative returns are: LGEN +51% | S&P500 +41% | NASDAQ +57%

I'm pretty sure that if I play with the dates enough that I'd be able to get LGEN to beat both the S&P500 and NASDAQ in a 4-5 year period.

What I hope this shows is that returns are PERSONAL, not a matter of "fact", in that they are extremely sensitive to your personal holding period. It's why every investment professional tells you to "pound cost average" into an investment.

“As of end of trade today legal and general share price is down 13.5% over 5 years.”

As a discrete 5 year period. Yes.

Over a 5.5 year period you’d be nicely up on both share price and dividends.

Over 4.5 years you’d be up on dividends.

People’s calculations below exclude dividend reinvestment, which has a nice ratcheting effect.

The only assessment you can make is individual.

I’m up 25% over my 2.5 year holding period.

"Or would dividends be taxed etc?"

Dividends are taxed at 8.75% if you're a basic rate taxpayer; 33.75% if you're a higher rate taxpayer; and 39.35% if you're an additional rate taxpayer. They are taxed in the Apr-Apr Tax Year in which you receive them and regardless of reinvestment.

Capital gains in excess of your Capital Gains Allowance are taxed in the Apr-Apr Tax Year in which they are disposed of. The capital gains tax rate is either 10%, if you're a basic rate tax payer, or 20% if you're above. It's important to know that your tax band is calculated by adding together your income and the capital gains - so if you earn £10k a year and make £110k capital gain then you'll be taxed at 20% for the portion of the gain that is taxable.

"Is the IFRS loss not a red hearing and the real value from these results is the cash generated from new business?"

Yep. That's (sort of) the hypothesis.

They are also aiming to extract significantly more cash from the closed book businesses they acquire through having the scale to be able to able to invest in efficiency. That was the significance of the strategic alliance with TCS that was on RNS a few weeks ago.

@Porsche1946 - nice to see you being your usual cheery self :)

...or oncoming train?

S&P500 and NASDAQ both in positive territory.

Just posted on RNS...

One of the non-execs has bought 107,427 shares at 602p each.

That's a significant vote of confidence.

"Gary, this is a game of majority sentiment.

The majority sentiment here is quite clearly to buy, you can see that from every other post except yours."

I didn't take Gary's comment as being "don't buy" - I took it as "we're not at the bottom yet".

"Any shares Aviva buy back now is less dividend to be paid."

Not quite. The annual report states that the dividend will be held in cash terms - i.e. regardless of the number of shares in issue. That means the buyback should feed directly through to the dividend.

Another bank, Signature Bank, was also taken into "resolution" on Sunday by regulators.

ALL depositors in both SVB and Signature Bank are "being made whole" (i.e. they will get all their money back). Lenders to these banks and shareholders are not being bailed out.

This is well worth a read - https://www.grid.news/story/politics/2023/03/13/the-fdic-decision-on-silicon-valley-bank-isnt-a-typical-bailout-but-its-not-a-typical-bank-resolution-either-heres-what-just-happened/

Overall, this is a market-calming as is possible.

Has started. Certainly no hanging around and the board must be sat on an existing mandate...

1.6m shares bought on Friday (Av. not me!) - on RNS.

Boring in a good way.

Apple News link to The Sunday Times - with apologies to those who don’t have Apple News…

https://stocks.apple.com/ApEsP2JvKQYSQ2MHi-dRCMw

The key bit that I’d missed…

“ In addition, Aviva has pledged to pay out about £915 million in dividends for 2023 and it said that the cash cost of its dividend would grow by “low-to-mid-single-digits” from 2024 onwards.

Its previous payout guidance had been on a dividend-per-share basis. By switching to a cash-cost forecast for its dividend, Aviva has stripped out the impact of stock repurchases on its share count, thereby upgrading its guidance for the size of future payouts.”

"the more profitable one includes a bit of work and effort."

@MPO818 - I broadly agree with you. And/but...

The problem with any comparison like this is that it's all very sensitive to your personal holding period.

For example, why choose 29 Jan2021 when you could have chosen 12 Oct 2020 when you could have bought at 190p? (I actually managed to buy at around 180 around then.) That adds 60p to the gain and brings me back to your 110p+(ish) profit with far less risk and transaction cost.

I'd agree with you that a well-executed trading strategy will beat "buy and hold". But these things always look much better with perfect hindsight. It takes time and absolute conviction. Trading costs money and isn't frictionless or without risk. Missing 2 of your 7 trades because you had other things going on in your life takes 20-30p off your profit. Transaction fees take a chunk.

I'm not saying you're wrong. Just maybe being too optimistic about the size of opportunity.

I'm with Buffet - buy quality when it's cheap, hold "forever" and let compounding do its magic. But then, I'm in entering the decumulation stage of my life and there are limits to how much of my free time I can or want to dedicate to managing my money.

If it works for you, though, then it works for you. And all power to you :)

“ I hold lgen, but I would hardly call this a safe stock given this major fall today. …
Clearly the market thinks lgen is majorly exposed to the shock events we have seen play out in the US.”

It’s less about being “majorly” exposed than it is about it having a US business in the financial services space and having more exposure to the US than other UK “safe” stocks like Aviva.

What we can expect to see next is the fallout of how much depositors have lost.

The FDIC covers the first $250k. For most banks in the US this fully covers 90%+ of depositors. For SVB a staggering 96% of depositors are NOT fully covered. Some of those will have lost some money.

We can expect company treasury departments to be working out whether they had parked money in SVB.

My share trading is so wildly successful that I can afford fresh tomatoes!!

The FDIC (the bit of the US government that guarantees banking deposits) has stepped into SVB in the US. And the Bank of England has initiated the “resolution” process for the UK entity (resolution = the orderly untangling following a failure).

It’s also the weekend - so there we have two days for the markets to consider the implications for the wider market.

Most US banks are up in after hours trading.

Oh, and @Gary59, who says that the rest of us don’t all live in large country mansions?!!!!!

:)

@Gary59 - you are correct in saying that the bottom support level of Av. is at 360.

The question is whether yesterday’s shock is big enough to send it there, which is the personal judgement thing.

The FDIC (the bit of the US government that guarantees banking deposits) has stepped into SVB in the US. And the Bank of England has initiated the “resolution” process for the UK entity (resolution = the orderly untangling following a failure).

It’s also the weekend - so there we have two days for the markets to consider the implications for the wider market.

Most US banks are up in after hours trading.