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Good post Wexford! Sound buying 2CV_Driver. 30% is a big number but rare for good value to come around! Current SP levels are really odd, the break below 6.30 perhaps a final burn out by disillusioned small shareholders. The negativity around this share remains high in Ireland and apart from the fact that management should be doing more by way of transparency, maybe it is better that we lose the small guys holding onto a share they have stopped believing in. The Blackrock''s and Fidelity''s of the world play a strange game these days. I think they caught up in this all encompassing macro view of the world and presently European banks are at the bottom of the totem pole. Do you get any support from them where clear value exists...I don''t think so. So base your view on value play and for now that translates to a NAV examination. Just don't be distracted by players who can''t see value staring at them in the face...these are the guys that need to jump ship and leave the deck clear for believers!
Levels between 6.30 and 6.35 represent deep value (second bite at the cherry). Measured against NAV we are in and around 0.75:1.Income levels will hold brokers estimates (in spite of Tracker provisions). Examine the share looking forward rather than the inherent tendency to dwell on the past, including Tracker concerns and past management. The dividend is a given on 2017 results. Have a look at the net buy in from 6.42 downwards over past days! Don't look back in December and rue the opportunity now staring at you in the face!
As I read it BKIR comments re dividends (potential ect) are management's black swan event escape clause: bottom line they have provided on 3 quarters of results and are on track to finish 2017 on very good footing. To reverse their stated intentions on a 2018 dividend is now at a 10% probability....essentially irrelevant from the point of assessing and valuing the share. I would like to see management up the communication and obviously not find themselves on the wrong end of any funnies still in the pipeline. I saw the serious negativity of the shareholders at the AGM this year and was given a reality check on how deep the resentment of Joe Public (Irish in particular) was to BRIK and I imagine banks in general. This made me back off the more lofty highs I thought could be achieved on this share and in spite of a sound balance sheet, high income relative to its size and capital ect. Now I think it will be more impacted by the morass of European banking in general and until we see the sector as a whole regain real growth and Draghi removed (this arch liberal monetarist is only trouble now) so that interest rates can be realigned with the real world out there the best case scenario is a run at NAV of 1:1. Not great but if you are prepared to buy on weakness (NAV of 0.75 the other day was a good example) then there is good money to be made on a top of 1:1. Dividends will help the cause and there is no reason why this share should not seek to become a meaningful income generating share. Aspirations on anything outside of Ireland/England are almost zero and therefore get on with what is achievable. Takeover in this environment and given what they are offering is almost a zero chance.
Very good trading update. Solid income, solid capital ratios, provision of confirmed 2018 dividend for 3rd quarter and confirmation that their exposure to the Tracker issue is minimal (unlike other Irish banks). Sit back and enjoy the ride!!
Couple of posts since the one you mentioned, adjusting my view slightly on developments, particularly iro Brexit and the implications for BKIR. For now more inclined to examine the ranges around NAV, based off what the European banking sector is revealing. For BKIR I like the NAV range 0.75 to 1:1. Current buy level close to the 0.75 NAV. As a side note you may be interested to know that Central Bank of Ireland (Surveillance area) are investigating the deletion of share problem that we had prior to consolidation. The involved parties have apparently been identified. order books were being provided but deletions were of record apparently. We await the outcome!!
Yesterday's move (on small volume) was an emotional reaction to unsubstantiated rumors on Tracker accounts and offered massive value between 6.30-35. Build substantial positions at these levels. Broadly speaking the emotions on Irish banks is out of line (one can accept that there is a history to it) and is never helped by politicians utterances (why they comment when they are significant shareholder and having put one over the man in the street already with the valuation of AIB). Irrespective of social nicety (be it Tracker or any other sharp practise) earnings are going to be solid and substantial in BKIR. The initial dividend is provided for and booked and most likely will be added to. Moves to NAV of 0.75 are simple bargains as the weak holders and more socially conscious amongst us walk away. Keep building and expect an opportunity before yearend to sell off these buys at NAV of 1:1, 7.35 (0.245). Great trading in this share, just don't get married to it!!
Look for your answers from the Brexit debacle that moves from bad to worse. The reversion to fake news on Sky to sell the Tory position to the masses is demeaning and is viewed in astonishment on the Continent. Their entertainment of Corburn is symptomatic with the belief that even his leftist lunacy is a better end game to the Tory madness playing out in the destruction of a country! Factor in a current account that will end the year at the highest negative in G20: a BOE balance sheet that is at par with the Fed; a borrowed position that approaches 100% of GDP and a collapse in real wages and various asset categories and you have nothing but a disaster looming.The UK is junk status now, they just don't get it!! Any lender buying the UK now will stand to half their Capital inside of 3 years. The movement up in interest rates is a sign of weakness, nothing else. Sterling will sell off on this move. Throw BIRG exposure to the UK into this mix and sadly you have one big negative. You cannot sell the weight of 25% of your asset base in a positive fashion when the country you are in is looking to sink into the North sea. Understand this and accept that there is little upside in the SP. Having said that there is not significant downside either, just weakness. You are not going to book Capital Gains anytime soon on this share.
This has to rate as one of the scariest conversations I have seen .....for someone actually in the market buying shares!! Is there really hope after this?
As good a set of results that you will get in this environment and within the capacity of BIRG on the platform it plays on. The bank has performed, management has produced and the stage is set for ongoing income generation. Costs can be managed and contained going forward to provide liability kick and the dividend must be started and thereafter ratched sharply higher to reflect the income producing nature of this share. It is very unlikely that BIRG will offer a growth picture that warrants a premium rating (moving offshore is the only options and that is not going to happen after the events of 2007-09) and therefore it must offer the shareholders the only other option, income. Before this becomes a reality you have to shake out your current shareholders. The macro funds (Blackrock and Fidelity) find themselves in their current positions, perhaps on the back of the shock and awe tactics of the Wilber Ross years and the State in a remaining position of 15% which was enforced upon them and which they have little reason to remain in from hereon. So the share has unwanted and effectively toxic shareholding of approx 28-30%. The macro view from the Institutions (in particular Blackrock) on European Banks is that legacy holdings and limited growth in the sector (some view banks as obsolete) do not warrant NAV on this sector trading above 1:1. They use their holding to enforce this view (don't forget they measure themselves on a relative basis so if no one else can can get one up on them in any sector this is good....screw the small guy and the institution). The European bank sector has traded between 0.8 and 1.0 NAV for the past 18 months....this is when all this started. AIB off course didn't have this institutional holding at the time of the IPO. So the State, using the wiles of the local boys and Irish institutions slipped out at a NAV of 1.1-1.2....great sale. They refused entry to the destroyers of BIRG and in doing so showed them the finger! Where to on BIRG. Well step 1 is to get rid of the non Irish institutions. Step 2 is to move the State's stake...they are not negative but simply have no role left in the game. Step 3 is to keep the income running hard, capital levels around where they are now (too much is negative), a dividend that is higher rather than lower and new management to give a new look at the whole thing. If you follow the logic of NAV in the short term the today's NAV calc at 7.50 (old 0.25c) is the top of this SP...and to get there in this environment BIRG is going to have to work as if it was chasing a 1.25 ratio or 9.37 (old 0.3150) target. Hard hard work guys but keep buying and sell the story to the Irish boys with your pension monies!!
Looks like some of the shorting scum washed out in past two days! May the trend continue and the consolidation bode well for the future. RIP penny stock!!
The past couple of months has been an eye opener in terms of manipulation and non compliance by the bookmakers and appointed players to the AIB IPO. Totally condoned by the Central Bank and the ISE, both of who have been approached on numerous occasions. The proposed pricing for AIB leaves it still leaves it significantly overpriced relative to BKIR. The exercise will be to obtain Irish institutional takeoff for no better reason that demand from elsewhere will be very, very low due to the valuation of the IPO relative to its peers. They will be the ultimate suckers, left holding an overpriced security. Have you noticed the complete drop in volume traded in BKIR since the pricing range on AIB came out. It is now in a closed period and therefore the deletions, false selling and manipulation has to stop....at least till AIB is floated.
Consistent deletion of trades, mostly sale trades every day. Always significant size, some up to a day later. I have been around the block in many markets and have not come across this process before. Error yes, manipulation no. It takes two to tango, so yes the manipulator is pulling the trigger but there has to be a broker/trader/bank that is prepared to cancel the trade at the same price. The intention has to be clear to both parties because the consistency is there, day in day out. This points clearly to a suppression of price by parties to be defined. Anyone understand something else on this? Maybe a word into the ISE would be merited!
PGee has some valid observations. This is not about CET (going forward a bank that is going to run its capital levels at 12% is going to battle to make a return....they have to trade capital to the bone not have it as a luxury); not about profitability (BKIR is producing in the top 5% in Europe); not about the pension fund (it is being largely hedged against currency moves and is now only realistically exposed to credit spread between the AAA curve and the Corporate Credit curve, which happens to move around a bit at present); not about Stg vs Eur (the business in the UK is funded in Sterling and therefore the only currency exposure is the profit/loss flow from this book). Management has closed down all the obvious leakage and risk and seek to maximize the P+L statement from growth in mortgages and interest rate spread. This is all factual and yet the capitalized value of BKIR is at 50% of its most obvious peer, AIB that happens to be owned 99% by the State and is seeking to offload 25% of its shares in an IPO. There is skulduggery going on, simple manipulation that is being condoned by the State and perpetuated by those firms that have been appointed by the State to oversee the sale of AIB. Surprise, surprise!! One other point to make on this would be the likelihood that Irish institutions have been hoodwinked into retaining funds for the upcoming AIB IPO. For better or worse based around pure valuation these institutions are going to throw investor money into a share that is trading at close to 100% premium to its cousin share, BKIR. In holding back funds now they remove themselves from allocation of any sum to BKIR, when value is at its highest!! The fraud is coming out of the UK where the mandate is sitting and allocation of funds is open for business. Having dropped into the AGM of Friday I have to say there are a couple of points to be made: 1) the residual anger by what I assume is a minority of current shareholders to the original collapse in BKIR back in 2008-09 remains high. Sad to see but it is deep seated. 2) Management are highly defensive regarding the payment of a dividend. Their reasons for not paying on 2016 results are abysmal. My original read that they failed in their duty and had to have been influence by some other external factor unrelated to the well being of BKIK remains. 3) I appreciate that Boucher is exiting and I can't fault him for his role in the bank from 2008 on wards but right now something is badly wrong. He did not utter a single word at the AGM, not one. He was completely spaced out. Now we can all appreciate if something new on the medical front has come down and we thank him for his time and service but come on, you cannot be contributing zero to the group and remain on. Hand the reins over to Kane (who is not short of words or savvy) on a temporary basis and step down. For me it was a sad spectacle.
Sorry, posted twice in error
Good posting from johnmcclean. To my mind BKIR has also been to closely linked to other European Banks, perhaps particularly the British Banks in some arbitrage link concocted by resident financial gurus. For the most part they appear to have been on the sell side, perhaps a function of their shares in issue, their relative liquidity and the share borrowing ability. This has resulted in abnormal price decreases and volatility for the past couple of years. The quality of the BKIR balance sheet, its income statement and its capital levels have essentially been ignored in this mad dance of financial arbitrage. The reverse consolidation now planned by the Bank should offer some respite as liquidity decreases as well as share lending. A continuation of income performance and dividend commencement will add to this. The time will come when the share is recognised for what it has become, a very profitable, Irish Company, high up in the performance stakes of European Banking. A very fine asset to be in. This share is a huge buy, now and up as high as 28.5c during 2017.
Good posting from johnmcclean. To my mind BKIR has also been to closely linked to other European Banks, perhaps particularly the British Banks in some arbitrage link concocted by resident financial gurus. For the most part they appear to have been on the sell side, perhaps a function of their shares in issue, their relative liquidity and the share borrowing ability. This has resulted in abnormal price decreases and volatility for the past couple of years. The quality of the BKIR balance sheet, its income statement and its capital levels have essentially been ignored in this mad dance of financial arbitrage. The reverse consolidation now planned by the Bank should offer some respite as liquidity decreases as well as share lending. A continuation of income performance and dividend commencement will add to this. The time will come when the share is recognised for what it has become, a very profitable, Irish Company, high up in the performance stakes of European Bank. A very fine asset to be in. This share is a huge buy, now and up as high as 28.5c.
Well it took a while for the debate to kick off on AIB's SP but it had to come. The comments from the KBI guy are correct: The State is not going to pawn off an overvalued entity into Europe and the US, that they should/could have moved to a correct valuation over the past year. If they strong arm the Irish institutions into take a piece above NAV you can rest assured that there will be flipping in favor of BKIR, post IPO. The future of AIB is not magical and vs BoI I would put my money into BKIR any day. Big moves can still happen. Once the geniuses of the financial world realise they are holding a dud they have one of two options: Strong arm domestic institutions to take one for the boys or two pull BKIR up to a NAV on par with a further adjusted AIB NAV. That ratio trade is the question: 1:1 is achievable, 1.1:1 is a possibility in the Irish bank space. Anything above this no way. Not 100pc clear on the current valuations but I think a 1.1 NAV on BKIR puts it up around 0.25c. Nothing great but then that's where European banking is at the moment.
Way of the mark, these banks....generally clueless and 18 months behind the curve with their forecasting. Euro/Stg is fair value around 0.9325. Downward pressure on Stg to 1.18 against USD and upward pressure on Eur to 1.10 against USD. The odd pull back in Stg while Brexit is in play might see Euro/Stg touch 0.875 but this will be transitional. Meanwhile the games being played out on the AIB IPO and affecting the Bkir SP will come to nought! AIB will be offered no higher than a 10% premium to Bkir. So at current valuations AIB has approx 40% to fall or Bkir has 40% to rise. Take your pick....line of least resistance! Can the brokers con the fund managers into owning an overvalued AIB (without them breaking for Bkir) or do we all meet in the middle, NAVs at 1.3. Bkir at 0.30 and AIB at ???? (I don't follow them much). me, I would be out buying more Bkir!!!
I acknowledge the comment by Johnmcclean and note the value argued by PGee but can't put a sense to them. If AIB is valued at 2X the value of AIB and the State owns somewhere close to 95% of them then why would you sell off BKIR in any scenario? AIB will come to the market in some amount this year as the State reduced its holding. Once they do that the share will free up and will be valued along the lines of any other market held share. Noonan already warned the market about 18 months ago that the value of AIB was inflated (significantly) due to the State''s holding and the composition of the capital structure. The market cannot sell AIB at this time because of the shareholding of the State. The two bank run an identical business in mortgages, BKIR more exposed outside Ireland. If AIB had a free float today it would roughly half in value, given the valuations placed on European Banks at present. NAV of top banks coming in at 0.85 and 1.00. Any offering of AIB shares at values in excess of this criteria should not be taken up by the market, indeed they would be idiots not to buy BKIR and sell AIB!! The better option would be for all interested parties in BKIR to push the SP higher, not lower. Only with a higher SP in BKIR can you drag greater value from a holding in AIB....not the other way round. Still view the decision on no dividend as wek, pathetic management and an insult to shareholders. Move on management, you have had your time!!!
I think describing it as annoying is being very generous! I am not surprised that the SP has done nothing this morning (good comment PGee comparing the morass at RBS with BKIR). If management cannot understand that the market were demanding a dividend to build this SP for the next year they do not deserve to remain in position. Every single ratio was an improvement and as johnmcclean commented if a billion can''t do it then I am not sure there is good reason to believe that anything will do it. I think this decision will go down as one gigantic blunder and it should cost top management their jobs. Clearly they know something about bank rescues but absolutely nothing about running a business that has come right and producing more than all but a handful of ALL European Banks. Shocking decision!!