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@ Robina. Not just daft, but utterly pointless speculation. For the last 18 months the SP has pretty much been checked in a £1.30 - £1.70 range because of inflation and interest rates. There is still no indication as to whether or not this will push economies into recession and it might be months more before we find out. If it does, we will look back and probably rue not selling out at the £1.60 mark. The DOW has given up nearly 5% in the last two weeks. Most of the other major markets haven't fared much better. If some good news doesn't come soon to arrest it, this global sell-off might gain traction. I'll keep my targets between £1.45 to £1.65 for the foreseeable!
@LWHL, BEO, Tophat & Razzledaz - Thanks for your efforts guys. I thought it was unlikely to be straightforward. It just seems an awful lot of money to throw at buybacks without any clear stated objective or target, not helped by the fact the SP seems to have fallen for most of the period of the buy-backs! Just have to grit my teeth and see when the buy-backs end and what the SP is at the time. Presumably, there will be an end target in mind - 12bn shares, 10bn, 5bn - who knows.
Using rather crude numbers, when buybacks started in 2021 there were approx. 17.4bn shares and the SP was around £1.82. When the latest round of buybacks is done it will have cost Barcs £3.95bn in total, to reduce the number of shares to around 15bn. My question is this. If the SP was a hypothetical £1.50 and everything else in the world stood still, how many shares would Barcs have to take out of circulation (or how much would they have to spend in buybacks) to take the SP up to £2. Or doesn't it work like that? I am trying to gauge what the Barcs board are seeking to achieve. Or is it simply a cost saving exercise because reducing shares in circulation reduces dividend cost, if the pence per share dividend remains static.
I think the biggest driver for today's fall was that it was a good day for a sell-off with the SP having gained 10% in a week last week. Last nights FED comments and todays BOE comments have been interpreted negatively enough for traders to bank recent profits. I went the reverse. Sold a tranche at £1.60 last week and bought it back at £1.54 today. I am hoping it is only interest rates / inflation concerns that are dragging on the market and BARCs SP for the foreseeable. If so, I am hoping for a gradual rise over the next month above and beyond £1.60. Fingers crossed.
@Boonie - Thanks for sharing this Boonie, though I had to wait to the very last line to see what I wanted to see - "and we believe more of this should be returned to shareholders to better address the share price weakness as opposed to another strategy review,"
@MCMLXV11 - Snap! Sold 10% of my holding at just over £1.60. If it rides on into the distance, I can live with it and look to sell the next tranche around £1.80. If it falls to low £1.50 i'll buy back, bank the profit, reduce my average and go again. But it has been a funny week. There have been definite indicators of bad news (GDP coming in lower than expected, US CPI coming in hotter than expected, China blowing hot and cold and such like) but the FTSE in particular has not just taken it in its stride, it has positively blasted through it. I am still tipping that next week UK CPI will come in hotter than expected and that Bailey will stay true to form and trash the markets like a bull in a chip shop - but I am little less sure than I was a couple of weeks ago!
The inflation / interest rate saga feels like a creeping death on the SP of Barcs. We knew there was an issue with inflation when we missed target back in May 2021, though Bailey and his 'transitory inflation' crew, didn't feel compelled to do anything about it until December of that year, by which time it was in runaway mode. Ever since the SP appears like its been trying to climb a greasy pole. Markets went up today with the news that our 2021 GDP was far better than we understood it to be. By Monday the markets will probably interpret that to mean we've been in a recession we didn't know about and fall back! I don't know what's due out before then globally, but our next CPI read is due to be published on 20th September. As things currently stand (and it might change for me) if the SP gets anywhere close to £1.60 before then, I think I will be selling a sizeable tranche. Because my gut feeling is that the CPI print will be above analysts predictions and disappoint and it will be back down the greasy pole for the Barcs SP.
@JamesYoung: When did you buy into Barcs James and what is your average if you don't mind my asking? I suspect you are a recent investor harbouring a current and modest paper loss. How do you and Warren Buffet interpret someone like me who invested 10 years ago. Am I a patient or impatient investor? Because I can tell you that if 10 years classes me as a patient investor I am yet to see the wealth transfer Mr Buffet is referring to. Indeed, after 10 years my paper loss is around £32k. As for dividends there will be scores of analysts and investors talking about Barclays 'juicy' 8% returns when the SP hits £1 which undoubtedly will leave a sour taste in the mouths of LTI's who bought in years ago at £3 and who for years, as well as suffering severe capital depreciation on their investment, have been significantly deprived of any meaningful income return on it.
Having reached the dizzy heights of £7 back in 2007, the SP is currently trading at around the same level it was back in 1993 - thirty years ago - and the trajectory still suggests a continuing downward trend. A takeover is the only thing that will bring value back to shareholders. The Barclays board are incapable of resurrecting the SP, even if they of the mind to do so, because they don't have the honesty to recognise their own failings, that has put the SP where it is.
@badjob: Hello Badjob. IMO 'fair value' is a meaningless term. And I dismiss all those who continually argue this stock is 'too cheap' and that by the end of the year it will be £3 and so on. I originally bought in many years ago at around £2.70 - because I was a big enough sucker then to believe all the hype that the stock was 'too cheap'. Even in 2015 when the SP was at £2.60, McFarlane was so embarrassed that he challenged the company to double the SP in three years - he actually managed to pretty much halve it. You do not need TA to see the trajectory of this share. You have a 15 year history that lays it out for you and the reasons why the collapse. And because the bank doesn't change, neither will the trajectory. Sure it will entice those believing the SP has reached a floor and believe it too cheap to resist. Equally, over the years a lot of investors have had their fingers burnt and vowed never to go near this stock again. I am an unintentional LTH and your assumption that I would sell just because of my negative view of the board and the trajectory of this share, is flawed. I don't intend to sell my holding and crystallise something like a £30k loss. I am selling tranches when the share has had a good run - I sold a tranche recently for about £1.60 which I had bought for £1.38 and banked the profits. If, when I sell a tranche, the SP falls sufficiently, I may buy back that tranche. If, when I sell these tranches, this stock continues to soar to the £3 that a remarkable number of investors seems to think it will do in the near future, then I will undoubtedly miss out and will have made a loss. But it won't be £30k and at least I will be out of this stock for good. As for this banks stock having not recovered since Brexit, I am afraid if you look back far enough, it has continually fallen since 2008 and trifling periodic £750m buy-backs (which is the only change made by the bank in the last 3 years - and offset by the calamitous over-issuance fiasco, and calamitous acts never changes with Barcs) is not going to change things one jot - IMO.
i couldn't disagree more badjob. barclays are paying boston consulting a reported £10m to find out why the sp is doing so bad - they already know why, they just won't admit it to themselves. here are some key reasons:
1/ untrustworthy and unethical: the board pride themselves on continuity of leadership. but it is simply continuity of untrustworthy culture and behaviour that goes back to the 2008 crash. it is the same greedy self-interested bankers that caused the crash. wise investors stay clear of barclays. every ceo since the crash has left the bank with the sp in a worse position than they inherited it. a new broom to sweep clean is required - a board with integrity whose first job is to put downward pressure on executive pay, link bonus to sustained improvement in the sp and for them (not shareholders) to be the first port of call to absorb costs for conduct and litigation issues and the scandals and ****-ups the bank is renowned for. provide a charter for trustworthiness and ethics and stand by it, or foot the cost.
2/ a business model without credibility: remember when mcfarlane proudly boasted that africa was where it was at and huge amounts of capital were thrown into it, only for the africa business to be quietly sold off in a fire sale a few years later. its investment bank is the same. barcs are the kid on the sidelines waiting to be asked to join in the big mans game and it never happens. all the investment bank is doing is swallowing huge amounts of capital and picking up all the negative headwinds from the us (never the positive ones) because it prides itself on being a 'transatlantic' bank. i can guarantee that at some point the stubborn board will come to realise it is a little fish that can't swim in the big pond and sell-off the investment bank to an american bank in a fire sale.
3/ treatment of shareholders. i have argued this umpteen times. treatment of shareholders over the last decade has been scandalous. i can guarantee most lth's like me are trying desperately to work out an exit strategy and rue the day the ever got themselves involved. it is 10 years, when the sp was hovering around £3, that barcs sought to raise £6.5bn in a rights issue, where i and other investors had little choice but to part with more cash to protect our existing holding at a discounted price of £1.85. ironically, the sp was around £1.85 when the share buy-backs started some three years ago. at the first buy-back we were told it was worth 15p a share - how? now close to £4bn of buy-backs later, the sp is in the £1.40's. i have many a time challenged the supporter of buy-backs to explain their benefit. one indicated the number of shares it would take, for buy-backs to have an effect and at the current rate, that would take 13 years! believe in buy-backs if you want, but we are entering into a new phase where the continuing downward trajectory of this sp will find a new average between £1 and £1.50 and buy-backs are certainly not going to
The SP is pretty much exactly where it was on 20th June, 2 days before the last BOE monetary meeting. After that meeting the SP fell by 5p on the day. Markets have priced in a 0.25% rise. But Bailey is still hiding behind the words of Jeremy Hunt and I would not be surprised at all were he to raise it by a further 0.5%. If he does, I think the SP could go into the low £1.40's.
....and there you go. Back down to £1.55 as I write.
Interim div 2.7p and £750m buy-backs.
@baldybig - I would love to be proved wrong, but if I had to stick my neck out I would say the results miss analysts expectations, big provision for defaults, investment bank bringing poor returns, stifled business on M&A's, ultra-cautious on economic / profit outlook and as usual, waving two fingers to shareholders in pathetic interim return on capital, culminating in approximate 6% drop and back to low £1.50's.
....and gone down like a lead balloon. A reality check for all those believing the Barcs SP is imminently powering to and above £3.
IMO market reaction to the Q2 results will almost solely be determined upon return on capital. There has to be a significant and immediate improvement and a convincing commitment going forward. Without it, huge numbers of investors will see it as the last straw and the SP will tank again. Again IMO, and assuming buy-backs are still on the agenda, I think they need to lift the interim divi to 3.5p and an interim £1bn of buybacks - minimum.
Decent rise today. I just wonder if the markets will use tomorrows inflation data as an excuse for a sell-off. Sold a small tranche today to hedge my positions - just in case.
@DrPatience: You are quite right it is BCG -I'd seen Jeffries referred to in the same article I read and confused the names. But I am afraid I am more cynical than you. I firmly believe that the BCG report will in general, argue that the bank is on the right path in its business model and share buy-back programme and that in time, it expects the SP to improve. I think it nothing less than a PR exercise to seek to appease disgruntled shareholders, with the bank trying to show it is taking SP concerns seriously. In my view the SP broadly reflects a key combination of 15 years of scandal upon scandal, misdemeanour upon misdemeanour and incompetence upon incompetence. Take for example, the over-issuance fiasco. Shareholders were hit with a double whammy. Over a £bn lost that could have been distributed to shareholders together with yet another collapse in the SP. What action against those that were to blame for this? You can bet BCG are not going to suggest that part of Barclays employees and board pay should be set aside to cover future conduct and litigation issues, but that is what is required. Couple this with the cynical mistreatment of shareholders over the years - the 'pocketing' of the Covid divi at 48 hours notice to cover losses that did not materialise - for example. Trust in this bank and its board has been so eaten away over the years, that it is nigh on un-investable on a long-term basis. This is I know, how I and other LTH's feel, because they have expressed it many times over the years. But do you think for one minute, the Barclays board are going to pay eye-watering sums to a firm, for that firm to publicise 15 years worth of the banks dirty laundry, to show why the SP has been hit so badly over the years - which after all, would be the simplest of tasks to perform and would show with great accuracy, the causes of the SP collapse? Do you think that the board are paying eye-watering sums to a firm, for that firm to show them, that despite the hundreds of millions of pounds they pay themselves, the board have been getting it badly wrong for the last 15 years and now needs this firms advice to show them the right path to follow? I do not. I fully expect a vanilla report, devoid of any criticism of the board, which supports the banks current position and business model and share buy-back programme. To prevent it looking like a whitewash, there will be a mutual agreement that the report will contain some 'tweaks' to business, which ultimately, the board will pay lip service. It will be interesting to see if this report is to be made available, in full, to shareholders.I suspect not.
The best we can hope for over the next 4 weeks is I think, some 'picking up off the floor'. BOE MPC doesn't meet again until August, but, ignoring the US for the moment (I recognise the FED rate moves and comments and US CPI data is important) the next UK CPI data is released on 19th July and Barcs half year results are announced on the 27th July. What can shareholders expect as an interim return? Last year the cash dividend was 7.25p for the year (2.25p interim and 5p full) and 1bn of buy-backs. If, God forbid, the 2023 cash return is the same, then if a LTH had acquired their stake at a modest £2, they would (as of now) have seen their investment reduce by over 25% and have an income return of 3.625% - compared to the +5% you can get on a bank account. So what are Barcs going to do in July? You can bet that they will again use the current economic situation to promote caution - increasing default provisions that won't materialise to the extent provided for, and be cautious with shareholder return. I expect the same predictable £500m (possibly £750m) interim sum for buy-backs. And probably an interim divi of 2.5p with a an expected final divi of 5.5p - giving our £2 shareholder a 4% return on a capital investment - now worth what? However, with interest rates as they are, what they need to do, to stave off investor revolt, is to provide at least a 3.5p interim divi with an expected final divi of 7.5p. There are of course, many investors, like myself, whose investment averages well above the hypothetical £2 stated and indeed, anywhere between £2 to £7 (mine is around £2.20) and who have been rawly treated for 15 years or more by this institution. Notably, the bank has hired Jeffries (at what eye-watering cost I wonder?) to analyse what is going wrong with the SP and how to improve it. They could of course, get that information for free from investors - but the Barcs board cannot handle what we think. But I guarantee what we think it will be nearer the truth than the diluted nonsense they will get from Jeffries.