The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
It's a "falling knife" stock. European Bank index goes up, LBG goes up less than index. Index goes down, LBG falls more.
Objectively this is an undervalued share compared to both assets and future cash flow. Some is perhaps explained by lack of clarity of the dividend strategy which may be classified the next few months. BUT the company has a massive lack of experienced and proven managers at several top layers of the company following years of AHO's autocratic and micromanaging leadership style (check out his latest scandal at Credit Suisse). Politics and pleasing AHO was everything plus intense focus on "diversity". The new CEO is also unproven and far to inexperienced to run a balance sheet as large as LBG. Best way forward at this stage is to sell everything that is not UK retail and mortgages. Whatever "growth strategy" they may come up with there is nobody there who can implement. I do not understand why institutional shareholders do not revolt?
Have also added the last couple of weeks. One has to be patient with the low liquidity....
Left wing authoritarianism spreading fast all over the West.
You must think right, speak right, eat right, medicate right, stay home when told, not travel when told.
The Chinese don t need to invade, the west conforms to CCP's norms by itself. The white flag is on its way to the top of the pole.
As potentially positive it is to hear "expansion" from Lloyds after a decade of cutting and consolidation, with parallel development in the long suffering share price, I remain sceptical about these plans:
- Becoming a landlord is putting more eggs in the same UK basket with potentially more problems than benefits. Lloyds is already the biggest mortgage provider...
- Expanding the Private Bank business. I have been a client of Lloyds private bank for 20 years as well having worked as an MD for the commercial bank and there was never any appetite to build new products/services or sell anything else than current/savings accounts and loans. The private bank employs lovely people but it is a lost cause. Now, when living abroad, they can t even offer me a term deposit...
- Investment Bank? Lloyds do not have an investment bank, they have a commercial bank which, apart from a few years of excellent leadership by a previous manager who was forced out by AHO, has been cut cut and cut. They are number 3 in the SME segment and 4 in Mid Market and do not have the scale or the ambition to build market share.
- US. The US proposition has always been a bit of a joke.
In conclusion, as relatively big share holder I wish them all the luck. BUT, the culture in the company is so corrupted by internally focused "government style leaders", social justice metrics and extreme focus on lending, lending and more lending. For a large company to change focus to develop fee based services requires such major changes it is unrealistic.
Better to sell off the commercial and private banks and focus exclusively on UK mortgages and basic retail banking.
AHO was a authoritarian micromanager who spent 99pct of his time in his office penthouse with security and 750I's waiting below. He did stabilise the company and returned the bank to private hands but should have left after that. He never built private banking or commercial banking and the share price was a disaster during his tenure. Now he is doing the same crap at CS...
This was my impression working 6 years with LBG. They do not care about the shareholders but only for misguided "social justice" metrics (read fire straight white men, preferably over 50), internal fake presentations with no visible financial or qualitative benefit for the company or its customers and UK societal issues that they perceive as virtue. When a bank starts planting trees you know they have lost the plot... Shareholder accountability Zero. Now, as AHO chairs Credit Suisse, we see the same crap there (my partner works there). Everything woke goes to sh**t.
Many thanks! I need to start following other REITs too. Cheeers,
Good morning, is there anybody who can shed some light on the background of the unusually large turnover today and the perky price?
Many thanks for this!
In my view Alex and Henry did a professional and transparent investor presentation today. I added to my holding during the session. At the end they expressed a bit of frustration about the share price which perhaps signals their view that it is under-valued.
Buy. Target 68P.
Good summary Aspberger! thanks!
Praise the Lord!
Thanks guys!
I empathise with the perspective on interest rates and agree the rises would have massive positive impact on the LBG balance sheet. I don t value technicals on individual stocks as I believe the overall market and peer performance may overrule any formations.
BUT I think we have a massive problem in the US and the UK (probably also in Europe) with inflation because of insane government spending. At the same time Governments unparalleled interference with free markets via vax mandates, increased taxes, increased regulation of energy, big fossil fuel interventions and generally a new anti-meritocracy culture will lead to stagnation.
This stagflation scenario will prevent the central banks to raise rates, feeding the fire, until they have to act with force like in the seventies. This paints a bleak picture for overall economy because when rates are radically hiked people and businesses will go bankrupt hitting all credit institutions.
If recent history is a guide central banks are not good at tapering or adjusting their response to a crises and with a new generation of bankers and government officials with no knowledge or experience from the seventies, plus an unusually pathetic group of Western leaders, I suspect risks are very high.
The fact that 25 thousand buffoons is showing up in Glasgow to discuss the weather is typical for an elite that has lost any connection with reality in the midst of an international security crises with China, a pandemic where nobody has been held accountable, a supply chain crises, a self-made energy crises and a western confidence crises incapable of standing up to the autocratic geo-political threats of the world.
Now this was a great conversation! Analysis + perspective + humour!
Thanks!
It feels like this was a big week for Lloyds SP after weeks and months of malaise.
Good volume on up days, positive momentum from speculation about PRA approvals of returning capital to shareholders and discussions about BOE raising rates.
I am starting to be somewhat positive about LBG relative to other European banks but note this positivism has nothing to do with LBG strategy and the new CEO... We still need to see some action there!
Lloyds is like Sterling. The risk is always on the downside explaining perpetual premium for 25 delta low strikes.
The stock's strategy is one of geographic and product constrains which in theory should make it "safe" and traditional high dividends coming from the massive balance sheet. Unless there is a big re-pricing of European bank stocks LBG will underperform. Its future is 99pct tied to the success of the UK economy, the interest outlook and importantly the restoration of an attractive dividend. Hence slow on the uptake, fast on the downside.
On the Wealth side this is a very logical step and I always wondered why AHO never did anything else then starve the Lloyds Private Bank. Execution however is Lloyds weak side but we can hope they finally hire a few top class bankers to build this.
I know many wealthy people that only use Lloyds to borrow money from but then do their private banking with Barclays, GS or UBS....