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Gilt auction at 10am today, results of which will affect long bond prices and yield, plus GBP. UK inflation data out tomorrow morning 7am.

Https://supremecourt.uk/cases/uksc-2024-0157

Chid, I genuinely meant it when I said congratulations for calling the share price right. Albeit, IMO its fallen for different reasons, namely the market fallout rather than there being 4 shorters in the neighbourhood. Good momentum traders generally try not to close their positions too early. Besides volumes on this share has been so low, any attempts to close out meaningfully would lead to a spike in the price, some of whom would them struggle to retain a profit.

However, I take note of your point re the shorters, and when making investment decisions on this stock it certainly does need to be factored into the calculations that some investors still see value in maintaining short positions.

"Their fees are some of the lowest, if not the lowest, in the industry, at just 25% plus VAT of any refund amount."

"Their fees are some of the lowest, if not the lowest, in the industry, at just 25% plus VAT of any refund amount."

"Get Your Refund provides their service on a no win, no fee basis. Allow them to pursue your potential claim to its conclusion, and there’s no charge if your vehicle finance claim is unsuccessful.

Their fees are some of the lowest, if not the lowest, in the industry, at just 25% plus VAT of any refund amount."

So claims management companies will get 25%, Reeves will get VAT on that........ 20% on 25% = 5%:

With total car industry claims worth £30bn.....that's £7.5bn for the claims management companies, and £1.5bn for the chancellor.

Yes, agree.

But shares drifting down on low volumes and go up on even lower volumes. I think we need some news to reverse the downtrend, eg confirmation of sale of the asset manager, or a provision for the car commission compensation. SC unlikely to change anything other than perhaps say that the low / immaterial amounts of the upfront commission are ok to charge, which may be beneficial but only likely to shift the provision to the lower end of the market ranges (£400m - £630m).

Chid

You have been right on the direction of this SP - congratulations.

CBG shares have a Beta of 2.4. In the last 5 days the FTSE 250 is down 4%, and over one one down 5%.

On a share with Beta 2.4 (more volatile than the market) that equates equivalent drop 9.6% and 12%.

CBG is down around 10% and 12% respectively during those period, ie in line with the relevant market index, adjusting for its Beta. Have a look at the Capital Asset Price Model.

Far as a can tell, the current market crisis has two main factors:

1. fear of the effect of Trump tariffs = inflationary....therefore higher interest rates

2. Reeves NIC tax hike = inflationary (businesses try to recover tax on by raising prices) + recessionary (business cut back recruitment and investment because simply have no budget with an unexpected 2% hike in the wage bill).

Additionally, I'm reading and hearing that there is a Musk effect on the bond markets due to his UK politician bashing.

Changing the topic, sterling is looking steady this morning, US 10-year treasury also stable. Index futures are mixed but also steady.

As for CBG, Qube may well be correct to increase their short on CBG from a market risk point of view. As part of a diversified investment strategy, holding various positions, long, short, derivatives, futures options etc is all well and good, and does not necessarily imply they have a better understanding than those of us here who are constantly researching and monitoring the situation.

Some commentators are offering possible solutions to avert a crisis. One of which is to get the BoE to suspend quantitative tightening ie its own selling of Bonds. Let's see if Reeves has the courage to order this.

Hearing 1-3 April. Judgment probably before the summer recess.

It's down 1% under USD and JPY and over 0.5% against Euro. Gilt yields up again.

The car commission / SC matter is going to be a side show to the main economic event.

Chid

".......when far more will be taken off the s.p ONCE the court decision is announced"

The court decision, whatever it will be, is a red herring. Some form of liability is a done deal. The question is what is it. The moment CBG comes out with a provision, the quantification, visibility and removal of uncertainty will see the share price rocket.

The same could be said about a lot of things, including government economic policies.

It seems to be that bond market turmoil and stagflation will be driving share prices for the time being. Interest margin earners (banks) will be sheltered / beneficiaries, subject to the effect of economic no-growth / slowdown and recession on credit quality and bad debts and loan growth. Also chatter on news channels that Reeves is at risk of breaking fiscal rules.....more tax rises to come?

Knot - re: commissions (2)

In other words, there are two sets of commission: -

(1) the "£183" (which in my view, being a small percentage of the total loan, will be seen as not material and the SC will overturn).

(2) the commissions coming from the total loan interest. This, in my view, is on shaky ground and CBG will very most likely have to take a P&L hit, and to which I think the estimates of £400m - £600m relate.

However, the P&L hit will probably be dragged out over two, three or four financial years.

Also on the positive, the company is making good margins and is trading at a big discount to NAV even assuming a £600m hit. As other posters have pointed out fundamentals are good, and eventually could be a takeover target if the share price does not recover.

The recent share price performance relative to the market has been a disappointment. I'm doing this analysis and posting because I'm long and currently underwater. I find that doing the research and analysis helps with maintaining conviction on an idea (or working out if the original idea was long). Early last year I was holding Lloyds at 43p when the news of this car commission FSA thing came out. Unfortunately, I fell for the fear mongering on chatter and lost out on the 50% gain Lloyds subsequently went on to make. I'm determined not to let this happen to me again.

Knot - re: commissions

From the 2024 annual report:

"Overview of Commission Models Operated1 CBMF has operated in the motor finance market for over three decades, during which we have sought to comply with the relevant regulatory requirements. Prior to 2016, CBMF operated an Upward Difference in Charges (“DIC”) model. This allowed the dealer or broker full discretion over the customer rate and the commission earned on point-of-sale finance, subject to a hard cap on the amount of commission. Under the DIC model, commission, if any, was paid as a percentage of the total interest paid by the customer. From 2016, CBMF introduced a Downward Scaled Commission (“DSM”) model, which capped both the interest charged to the customer and commission paid to the dealer or broker. This meant that CBMF set the headline rate for the customer and the dealers could only reduce this by decreasing their level of commission. Under the DSM model, commission, if any, was paid as a percentage of the loan size. From 2021 onwards, CBMF introduced a Risk Adjusted Pricing Model which set the rate for the customer and adjusted the rate according to the customer risk profile. Dealer discretion was removed entirely. Under the Risk Adjusted Pricing Model, commission, if any, is paid as a fixed percentage of the loan size."

Okey dokey, Nicktims, all the best. I did, incidentally, notice that the share price ticked up a little with your message that you are leaving the CBG board. Admittedly, that might have been just coincidence.

"Market capitalisation: £342.21 million. the estimated compensation in the event of bad news is far higher!"

Thanks very much NickTims; the moment that message appeared I saw the share price drop 2p.

I am long here. Could you please next time post something positive....eg. Net Asset Value £1.5bn, in the event of good news, that is 4 x the current market cap.

Thanks in advance.

The 30 year yield is today above 5.2%, well above the Truss et al saga.

UK 10-year gilt now at 4.62%, up from 4.20% on 4 July 2024. Congratulations to our Labour government for getting good growth on the 10 year government bond yield.

CBG had a loan book of £2bn in 2007, which has grown to around 8bn in 2024. It's possible to come up with all sorts of figures based on assumptions of what percentage of the loan book was for car loans, what was the introduction commission, and what was the typical uplift on the loan interest for the extra commission for the dealers. From what I've read the current market range on what might be the liabilities is around the £400m - £600m mark, so I'm not seeing this as new news.

What I have worked out from the Hopcraft case is that the upfront fixed commission was £183, the loan was £8,280, and the loan interest was 5.5%; the loan was taken out in January 2014 and repaid in September 2016 ==> i.e interest payments lasted for about 21 months. Assuming 2.5% was the "commission interest" that should be repaid to the claimant, I calculate that to be £207 per year, or £362 for 21 months. So in a good outcome for the claimant/ bad outcome for CBG the compensation due to the claimant, according to my calculation is £362 + £183 = £545. plus interest at 8%pa, so say about £700. I suppose we will find out eventually at some stage towards the end of this year after the SC has had its say.