Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
When Anthony Jenkins was CEO the dividend was 6.5p per year and the share price was above £3. Things were being turned around for Barclays but there was a dispute at Board Level around what they should be doing with the investment bank. Anthony Jenkins lost that dispute when the new chairman joined who incidentally promised to double the share price whilst bringing in the current CEO - Jes Staley.
The next thing to happen was Barclays cut the dividend by more than 50%. In fairness the dividend at the time wasn't being paid out of profit, it was being paid from the banks reserves so it could be argued that was a sensible move for the bank. This put downward pressure on the share price - and we've not seen that level since.
Then the Brexit vote happened, and not wanting to start a conversation on Brexit; the share price in all companies crashed significantly, especially with the banks. This has led to constant pressure on the share price. So anyone who said the shares would soon be back above £3 before these two key things happened should be forgiven. There was no indication the dividend would be cut (having only been restored in the previous few years) and the Brexit result was also a surprise. At the time, to claim the shares would be back above £3 was reasonable in my point of view.
The other pressure on the shares is that since Jes has been there they have being diluting the shares consistently. They had a scrip dividend running whereby any dividend taken as shares has been paid by issuing new shares. The more shares in issue the less they are worth.
Since then, the bank has restored its balance sheet. It can now pay dividends from profit and is expected to raise the dividend to 8.5p this year. In addition, they are going to stop the share dilution and actually put that in reverse by doing share buybacks. All major litigation and legacy issues for Barclays are in the past. PPI is due to finish in August and these should have a positive impact on the share price, pushing it towards £2 and above as the year progresses. There will be eyes on the performance of the investment bank so don't take my word for it but these shares are cheap.
As we move through the rest of this year we may see some clarity on the future of Brexit. For UK Banks this is the biggest thing. If interest rates rise again, as they are expected to, then this is also positive for banks. The banks first quarter results were a good set of results. The bank is in a healthy position and I'm confident they will be able to continue to raise the dividend over the next few years regardless of some of the current unknowns. I think that those people who've invested long here can still be rewarded for their patience if they've invested at any level post the credit crunch. There is light at the end of the tunnel.
All the banks have dropped back again. I think Donald Trump's tweets yesterday RE China has impacted on Global Stock Markets as he's reverted back to threats when it was looking like the USA and China were going to strike a deal. I'm sure they will strike a deal and markets will pick up again.
Of course, we still have Brexit in play. The unknown is making investors and business leaders nervous. I'd say for banks this is the single biggest reason why prices are so deflated. The sooner this is dealt with the sooner we'll see Barclays back above £2 and then heading towards £3.
@Chris - I posted this the other week in relation to Smart Investor. It gives a bit of background and Barclays have acknowledged the poor delivery.
"As a former Smart Investor victim I couldn't agree more. It took me 12 months to finally get off the platform (in stages).
I did have the opportunity to speak to someone senior who moved into Smart Investor after its awful launch. They basically admitted that major mistakes were made with the launch and they were stuck with it. For regulatory reasons they had to stay with the new platform or make the old one compliant. It would have taken longer to make the old system compliant and they would have missed the deadlines. They were already developing the new platform in the background but lots of functionality/development had to be dropped if they were going to launch on time. So when they launched it was with a product that was a far cry from what was the original scope of the replacement platform. They lost a lot of clients and a lot of money. I’m off the platform now but I think they focused on stabilising the basics and they’re going to add additional features over time. It was refreshing to hear that mistakes were made, and that it will take time to recover from that.
I had similar experiences with Aviva when the ‘upgraded’ their platform. I’m no longer with them either. Interestingly both Aviva and Barclays did their platform upgrades with a 3rd party called FNZ."
I've not had chance to look at the results in detail yet as I've only seen the headline figures. But it's clear the market hasn't responded well. I invested my spare capital elsewhere yesterday despite wanting to average down here. For me to break even on Barclays I need it to get to £1.89 - which isn't a far stretch in my opinion in the future.
Many brokers share my view in that UK banks are very cheap at the moment and the reasons, as most will probably agree are down to:-
a) Brexit uncertainty
b) the increasing risk of a Corbyn led left wing nutter Labour party getting into Government (which would probably lead to the full nationalisation of at least RBS and be devastating for all banks)
c) China/USA trade war risk
But I think that todays prices are a reflection of the above - i.e. it is already priced in and as some of these issues are resolved then the share price of UK banks should rise accordingly.
As I'm in for the long term I'm not too worried about the future. I feel for anyone who has money tied up in the banks that may need/want to access their capital sooner. If you can wait I personally think you will be rewarded. If you have spare cash to average down I would recommend you do so. I have some decent dividends due over the next couple of months so if the share price stays at this level then I intend to further average down.
In the meantime, good luck to anyone who has/is making money on shorting this share but beware that if the issues I mentioned above are resolved in a positive way this share could literally take off. However for those exposing themselves to shorting this share the issues won't be resolved overnight and there will be plenty of time to close out any shorts as and when those issues are resolved - so fill yer boots :-)
Thanks Asperger. I love reading your positive notes/predictions. With Lloyds making up the bulk of my portfolio it would be nice to see the below prediction come in. I topped up with another £15k yesterday and will be using my divi to get more in May.
Barclays is the worst performing share in my portfolio - although tbh I'm not that concerned about that either.
_________________________________
Barc pre tax £1.5bn . . . Down on last year
Lloy projected results 2019 - all expected to be up on last year
Q1 Underlying £2.5bn Pre tax £2bn post tax £1.5bn
Q2 Underlying £5.0bn Pre tax £4bn post tax £3bn divi 1.2p?
Q3 Underlying £7.5bn Pre tax £6bn post tax £4.5bn
Q4 Underlying £10bn Pre tax £8bn post tax £6bn divi 2.4p + £2.5bn buyback?
Sure know where I'd prefer to be
Barclays is scheduled to post its first-quarter update on Thursday and Proactive Investors reports that Jefferies expects the company to report pre-tax profit of £1.5 billion for the first quarter, compared to a £236-million loss a year earlier when the bank had to pay $2 billion to settle a lawsuit in the US over the sale of mortgage-backed securities in the run-up to the financial crisis. The analysts further forecast broadly flat total income of £5.4 billion with the investment bank falling to £2.4 billion income from £2.8 billion.
Dinoken - Just looked up WRES - I can see why that would be a major issue for you. That's really poor you're being quoted to 4dp but the limit order is only to two.
I'm using Interactive Investor and haven't had any issues. It's gives access to a wide range of funds and I've been able to do currency conversions with ease, buying shares on the DAX and NYSE.
It's not perfect and they keep improving things - they've launched a mobile app which needs some work but I still do most of my trading on my desktop.
Price wise, it's really good value for money. Rather than paying a percentage of my portfolio I like that they have set fees.
gravy train for this one. Just bought 7,7808 shares today. I expect it will drop the full divi price tomorrow but shouldn't be too long for it to recover. If I end up in here long term I'm ok with that.
@Kamikaze - I'm not advocating 80p but I am hoping to see some upwards movement from where we currently are. It's gone as low as 19p back up to nearly 40p in the last 5 months. So there could be a few opportunities to move in and out over the next month or two.
If they can control their costs tightly, steadily grow the business and survive the Brexit outcome then I think there's a future business that can start to pay down the debt.
As a former Smart Investor victim I couldn't agree more. It took me 12 months to finally get off the platform (in stages).
I did have the opportunity to speak to someone senior who moved into Smart Investor after its awful launch. They basically admitted that major mistakes were made with the launch and they were stuck with it. For regulatory reasons they had to stay with the new platform or make the old one compliant. It would have taken longer to make the old system compliant and they would have missed the deadlines. They were already developing the new platform in the background but lots of functionality/development had to be dropped if they were going to launch on time. So when they launched it was with a product that was a far cry from what was the original scope of the replacement platform. They lost a lot of clients and a lot of money. I’m off the platform now but I think they focussed on stabilising the basics and they’re going to add additional features over time. It was refreshing to hear that mistakes were made, and that it will take time to recover from that.
I had similar experiences with Aviva when the ‘upgraded’ their platform. I’m no longer with them either. Interestingly both Aviva and Barclays did their platform upgrades with a 3rd party called FNZ.
I've bought a few tranches. My starting price was 30p, then more at 27p then 25p. I doubled my holding at 23p to average down. I've got 71,225 shares now with an average price of 25p. Whilst this company isn't healthy and there's some obstacles on the road ahead I do not think this company will be a casualty this year and I'm hopeful things will start to look up. Any kind of improvement in outlook should see a quick recovery from this current low, which means profits to be had. But beware, this might be outside of your personal risk appetite and the bottom could be as low as 19p where it might stay for a while.
Richard - you are right - the price and markets will react to whatever deal is eventually agreed.
As a shareholder that is planning for the long term I think Lloyds will prosper either way. I, like many, am suffering from Brexit fatigue. I just want it over - because then business's will be able to plan accordingly. The unknown is the worst part of all this.
Mickey - I don't believe I'm the custodian of the board and I agree that Brexit is very relevant to most topics.
I've seen a lot of well thought posts on here relating to Brexit and the impacts on the finance industry. In fact it's hard not to comment on Brexit when discussing the share price or the potential impacts to the future.
The debate on Brexit itself has caused me some frustration and I've thought I'm not the only one that should lighten up. But point taken.
I certainly agree with that Bruce. The dividend yield is good here - I think it will be just over 5% return on my holding over the 12 months.
Barclays is currently the worst performer in my portfolio - 15% down. But I'm still confident that will recover.
The next few months could be bumpy. PPI is finishing soon so hopefully no more last minute surprises there.
I come on here as a Lloyds shareholder. If the Brexit conversation is in relation to Lloyds or the banking sector then it is relevant. But a lot of it is not relevant to either and is just Brexit SPAM to the point that very little conversation about Lloyds has any chance. And there's lots of insults flying around which aren't pleasant to read.
With regards to bragging - anything below 63p I'm losing. If it did get to 83p I would be sat on a nice profit. The chances of that happening this quarter are remote - and this year? Who knows.
I wish the Government would get busy leaving so the word Brexit can be consigned to history and people can get on with living their lives again.
Thank you for posting about Lloyds. I'll encourage everyone to report Brexit SPAM as Brexit SPAM as it has no place on this board.
Anyway, back to Lloyds - if we see this upside I'll be sat with a tidy profit.
___________________________________
Lloyds Banking Group PLC 32.8% Potential Upside Indicated by Credit Suisse
Posted by: Charlotte Edwards 4th March 2019
Lloyds Banking Group PLC with EPIC/TICKER (LON:LLOY) had its stock rating noted as ‘Reiterates’ with the recommendation being set at ‘OUTPERFORM’ today by analysts at Credit Suisse. Lloyds Banking Group PLC are listed in the Financials sector within UK Main Market. Credit Suisse have set their target price at 83 GBX on its stock. This would indicate that the analyst believes there is a potential upside of 32.8% from today’s opening price of 62.5 GBX. Over the last 30 and 90 trading days the company share price has increased 4.69 points and increased 6.37 points respectively. The 1 year high share price is 69.69 GBX while the 52 week low is 49.52 GBX.
_______________________________________________
I see Lloyds bought back just under 12 Million shares on Friday. The buyback has begun.
It's bad when I have to title a post on the Lloyds board as "Lloyds"
I think everyone should start to report Brexit related SPAM so we can get our board back.