Member Info for Velo

" Velo, squire of the Shire, are we going with my expert macro SLP analysis of, “this sexy bishhhh has to rerate sensibly and break the seasonal anomalies at some point” right about now? :) "

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Hi Stoodio,

Looking like it after those November highs, isn't it?

However, the SP is just bouncing down from high relative strength that kissed the overbought border.

Nothing much bad comes of it in SLP's world (did you notice the windy draught of dropping out of overbought condition back in mid November from 80 down to 76 - over 6 or 7 days?

No? - Well that's SLP for you. Any other stock would sting much more than that (temporarily) but not SLP.

Anyway, it tried it again reaching that area on Thursday, so might be a penny or so drop next week before recovering.

So what of the so-called, flat, Kipper season? I'll update on that next in a separate post.

Concludes > > >

Summary:
. . . Net profit the same, but again overall - it's confirmed yet again, that this current year they have as the floor - and all subsequent years that follow are showing as y-o-y increases.

Only thing is that by year 3 all of them will still be below 2019's achievements.

But in a value seeking environment that's enough to qualify. So far BT has destroyed their Q1 & Q2 forecasts - so I'm counting on BT to do the same again, only this time, whilst value is in fashion, perhaps BT will be rewarded instead of ignored?

As I suspected, yes, a new updated Q3 and forward years analysts forecasts are out this evening (early for them).
https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/latest-consensus/btgroup-consensus-4-dec-20.pdf

However, try as I may, I can not in all truthfulness attribute much, or any of today's performance in the SP to their latest update. I will try and look at their forecasts from a different perspective though, as that may be now seen as a positive, especially as the main drivers supporting the Ofcom decision the other day, is more and more articles rabbiting on about the transfer into value stocks - 'Shares' mag from AJBell yesterday:

"Around the world there is a universal cry from value fund managers of ‘I told you so’, as they finally see the value rally that’s been predicted for what seems like a decade.

Previously unloved stocks, are moving fast, and retail investors are now having to look at a part of the market that they could previously afford to ignore (and for a long time).

Fortunately, it’s not too late to go hunting as plenty of so-called value stocks have yet to join in the party. Screening for them is relatively easy, the harder part is working out why they are laggards
– is it because of negative factors hanging over these businesses or has the market simply not awoken to certain opportunities?

Value stocks are moving higher on the basis that a Covid-19 vaccine will soon be approved and distributed to millions of people. That should help to . . . "

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So nothing to do with a bullish forecast update, because it isn't. They still have net profit in Q3 showing as in the £300+ millions, when both Q1 & Q2 actuals both declared net profits well over £400m++ !

Also they're still downbeat on a paltry full year in net profits in the £1,400m area.
I personally think the actual full year result will beat their year 2 forecast and possibly nudge year 3. (So I'm looking for £400m minimum in Q3).

Q3 concludes at this month end and the results will be published on the last day of January next year (most likely).

If the analysts forecast for Q3 bears any relevance, then it's a good job that value stocks will still be in favour at reporting time.

In essence they generally downgraded some headings by a tiny couple of single million and the opposite on others, by increasing by the same amount. Overall revenue shows that this year will be the floor and year 2 and 3 will respectively, cumulatively, increase y-o-y on each subsequent year. So a halt to continuing falling revenue. That's the positive I can make from it.

Net profit the same, but again overall - it's confirmed ...

Concludes > > >

" so if anyone was waiting in the wings to take over BT have they left it too late??? "

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If ( if ) there is anyone in the wings, then no they haven't left it too late IMO.

The word on the street has generally been accepted that the pension obligations and debt obligations, and full fast-fibring infrastructure responsibilities of the UK, would prove a poisoned pill to anyone seeking to acquire BT.

However, the ultimate question to anyone waiting in the wings is:

Do they have sufficient funding behind them, if their first offer was unsuccessful?

It goes without saying that the first offer is never the final offer; and the media has been speculating of a takeover price at a ridiculously low offer of 150p per share.

Now that IS ridiculous, but the media has convinced itself that was all that would be offered.

Any bidders know that such a low ball offer would fail, and so do most with a serious interest in BT.
So the question is: what if they had funding behind them to offer up to double the media's guess and they were prepared to have their arm "twisted" all the way up to 300p?

If they had that kind of money behind them, then no - not to late for a bid, as no one truly knows who the big buyers are behind this breakout of the SP.

I'm in the camp that the negatives far outweigh the positives for a takeover.

Besides, they only want to asset strip and sell off Openreach, and the govt via OFCOM would have something to say about that! More negatives. A take over of a company that has the government's meddling eye upon it?
They'd have to be mad, as well as having money to burn to accept government meddling too.

" - so I was thinking about that & therefore ask the question.... is 11 years enough? "

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Not my concern Aus. I focus on price trends and that means one thing only
- focussing on sentiment.

I am in the church of belief in that its sentiment that propels the SP.

So if sentiment is bullish in 11 years time, whether 11 years have proved inadequate or otherwise, then there's no need to introduce angst if the SP is still performing to trend expectations.

Back in town now, and catching up fast :)
- - - - - - - -

Aus @
"In an environment like this, what can a chart or chartest tell you? Are all bets off at this point? "

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- Only what you see. (I see no clouds in the sky tonight) - see latest trend updates below -

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BT currently -

Price to 200 day ma trend .= BULLISH
-
Long term trends . . . . . . . . = Bearish
Medium term trend . . . . . .= BULLISH
Intermediate trend . . . . . . = BULLISH
Short term trend . . . . . . . . = BULLISH
Ultra-short term trend . . . .= BULLISH

Only long term trend to go - there's been only 2 changes -
(Both medium and ultra short term trend went bullish earlier this week)

Medium trend has been narrowing tightly for some time, but as it had not broken out decisively, so I left out 'suggesting' that it looks imminently on the point of doing so, as when I've jumped the gun on previous occasions, events have transpired to change things completely.

Incidentally, if you examine the drop from the recent high point from around just after mid November to the last trading day of November, the momentum was all bearishly downward.
- Hence the Ultra Short Term Trend was having none of the bullish labels stuck to it. In fact the last I posted, I think was Dec 1st, the relative strength was ambling along ('middling') quite bored with itself at bang on 50% strength.

But that very day closed with quite a bullish change and ever since the relative strength of the SP has motored back up to its prior highs. It's really strong tonight, a bit 'spiky' but entitled to, after Ofcom told all the complainers of BT to 'do-one' for the next 11 years LOL.
(Been reading they are mounting another complaint now, this time against OFCOM and intend appealing to get the 11 year decision overturned and ruled unlawful or something, at the next appeals procedure).

Got 2 issues with long term trends and the 200 period average. Didn't want to mention the 200 day issue as it would add unnecessary complications to what I'd already posted; but am hoping it will right itself once it terminates dropping. It's at low 14 tonight and looking to drop to 13 either tomorrow or by Monday latest IMO. Expected anyway and 'helps' the SP at the moment. Will post on that 'issue' another day.

Every time the SP of BT moves in an exceptionally large way, either up or down, like today; a one day 7% gain - in a FTSE100 company?

- ( Have I accidentally clicked on to an AIM stock, LOL?!? )

I always double-check if there's been a consensus forecast update yet to be publicly published.
Before checking up on that, the OFCOM thing flashed up explaining all, but still, I AM expecting an analysts consensus update either tomorrow evening after the markets have closed or Saturday morning, just to confirm my suspicions that an upbeat, latest forecast is floating about in the background today. Not suggesting illegal insiders dealing, but a more innocent version of it.
(Analysts involved with their Chinese walls cannot divulge the consensus view of all the brokers houses until publication day) - but they can speak personally of their own view in isolation.
What a coincidence if such a report surfaces in the next day or two?

It's unarguable the OFCOM announcement will have impacted strongly today, but additionally, I still expect to see a new forecast update in the next 24/48 hours.

Just a suspicion I have :)

Sidebar:

Whilst truly great news, do bear in mind the removal of sticky-finger-in-the-pie govt control is to all intents and purposes - only temporary as it's 'only' 11 years freedom from OFCOM interference, and not permanent.

After that, OFCOM step back in - after BT has fully installed the UK's entire fast fibre infrastructure - and they can start meddling, again ie.,

" Melanie Dawes, Ofcom’s chief executive, told the annual FTTH Council Europe telecoms conference . . . . . . We don’t expect to introduce cost-based prices for fibre services until at least 2031” she said, adding that the regulator would not intervene in a way that would discourage investment."

- Whatever 11 years is more than enough to make hay.

The SP closed on Monday yesterday, @ 116.8 despite what is shown above.

The major 200 period average is steadily falling but slowing, and is now @ 114 so the SP is dallying with a critical area. On the rare occasions the SP has encountered the King of major trend lines it has always ended in the SP sinking down below it to continue bearishly.

This occasion, the 200 trend line is reaching event horizon and in the coming months should finally, after nigh on 5 long years reach a platue, a level playing field - it truly is looking to pack it in from continuously falling year after year; it's tiring fast.

If ever there was a chance for events to all come together and have a serious chance of at least a commencement of recovery
this surely is that occasion?

The SP can descend to +/- slightly below or above the major trend area without undue malice as long as the SP doesn't stray too far below the 200 period average (114 and gently dropping, but slowing somewhat).

Relative Strength in the SP has descended to bang on 50% so is comfortably ambling along neither bullish nor bearish, but instead middling.

All previous encounters with the SP breaking out above the 200 trend line have ended in failure. So this upcoming encounter is more than interesting.

The 200 period average is close to levelling off in the next month or so and a thus a new page begins. The SP 'can do it' now beforehand, if the market is so minded. Not a lot of strength required to pull it off.

Never been a better opportunity for a recovery in the SP in 5 years IMO. The next upcoming battle should confirm a lot of assertions about the past 5 years - either way.

Ommission in final sentence:

'Not quite left the "bearish" ultra short term trend just yet.'

Thanks for the supportive post Trenders. Appreciated.
- Time only to post late at night (if able to) until late next week, and only catching up with market events just now.

As far as I can tell, the US DOW and S&P500 both closed today at new record All Time Highs! (Not the Nasdaq though). Futures right now are bullish, including the FTSE so at least tomorrow Wed should be off to a good start.

A dramatic increase today for the SP. It's nicely out of overbought condition and is in the very top half of strong bullish relative strength. So, go with what you see. Bullish.
(Not entirely out of the question, if demand is uber strong, for the SP to smartly re-enter overbought condition more than once in such circumstances).

Just looking at the intraday action and huge dramatic strength for BT stock in the last full hour today, I see. So looking bullish for tomorrow?

If this bullish return of the SP continues then it can only be due to determined confidence by buyers in BT stock. At face value, as relative strength is so high, I could easily envisage the SP whip-sawing back into overbought condition such has been the strength today (above average volume too, today).

However that's going with what one sees on the surface. The SP is strong. Some powerful trends to the underneath of the price in the mid teens, so excellent support, so let it play out to see if the recent weeks strength in BT stock, is of made to last stuff, or not.

All stocks that exit overbought, first deposit themselves in high relative strength - it takes a week or two, to fully settle (on average) and determine whether continued bullishness is to be at a more 'sustainable' pace or a meandering, lesser performance. Not quite left the ultra short term trend just yet.

RNS states that the chairman's wife has just transferred 1 million shares to her husband Jan Du Plessis.

Don't get that.

- For taxes and other benefits it's handy to have assets in your wife's name. So, don't know what's going on there.

Have the MM's treated it as a sale-effect, thus knocking the SP down to the 119's in sync with the RNS release?

It doesn't say if the chairman paid monies to his wife for the 1 million shares.

Puzzling.

Typo!
" but maybe just a reverse out of *o/sold* condition. "

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o/sold???
Tsk! - O/BOUGHT!!!

Although the drop on Friday appeared alarming with a sizeable % one-day retrace in the SP for a FTSE100 company, it's not on account of specific bad news/serious downgrading, or directors selling etc.,

So am taking it as read, that it's all tied-in with exiting a technically oversold condition (temporary buyer exhaustion) and as such - it's not necessarily back to where you were, before this rise started, but maybe just a reverse out of o/sold condition.

Unless the market informs to the contrary via the price action, am taking each day as it comes next week (posted Monday's pivot point supports below somewhere) but with the first support at only 120, that's not the end of the world if the SP ends the day there.
But still a chance (if there's panicky profit takers in the air) that the SP could move towards the next support at 118.

Whatever, THE most authoritative of all trend lines - the 200 period average - is sitting nearby at 115 as of Friday close, and one of the minor but key trend lines coincidentally is sitting below that, but close by, at 112.

Viewed on a larger timescale, the two on screen appear to meld into one the further back and the longer the time frame you look at BT's SP.

So sticking my neck out, all in all - my expectations for next week is, if things do continue to sour, then I fully expect the combined might of those two trends to blockade any transgressions by the SP below the mid-teens to just slightly lower-teens - as a worse case scenario.

Your view may differ :)

Concludes > > >

. . . But BT's gearing level? Initially at 190%+ when net debt peaked. Way above the 50% 'recommended' guidance level.

Jansen saw it and once Gavpants departed he spent the entirety of 2019 all over the place selling as many assets as he could, selling subsidiaries in Latin America etc., redundancies galore (10,000 I last read) he did a sterling job selling off accumulated assets and earlier this year, gearing was coming down fast, and today stands at 157%.

Still far too high, and by all accounts the 'bump in the road' that all high net debt companies fear, appears to have bypassed BT, with Covid lockdown only taking a small bite out of net profit - which investors mostly made up for, out of their own pockets by temporarily foregoing their dividends. So all well, debt-wise.

And that's why my answer to you, is that any funds would go straight into net debt reduction.

By the way, the liquidity measures for BT are still exemplary. Net debt is high but is entirely manageable. The only downside I can see is that of a lowered credit rating meaning that BT pays a higher than in previous years, interest rate repayments. But with such low interest rates, BT isn't complaining.
(But that's another unforeseen 'bump in the road' to put on the list of concerns
- what if interest rates soared due to some worldwide event?)

" So what would you suggest they use any Openreach funds for ? IF they manage to sell any of it "

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First off, I agree with Fleccy. Doing a sale and leaseback thing would be business madness to sell off Openreach. BT is at it's lowest price range valuation in 5 years. Everything is seriously undervalued within the BT area of occupancy. Acquisitors would be getting a pure gift. The media reports that the UK stock market is at its lowest valuations since the 1970's relative to the rest of the world's markets. British stocks are ripe for foreign acquisition.

Virtually everyone is aware that BT is grossly undervalued. And that's on current performance - not its potential in the future. Not just a value stock but a deep value stock. The absolute wrong time to sell the jewel in the crown
- and acquisitors know it.

Wouldn't be surprised if acquisitors real motive was to spend a year dressing up Openreach in a pretty frock whilst in private ownership, and relaunch it selling it on, for several times what they paid for it (ie., asset stripping).
Also, if you read the early responses to reports of Openreach being acquired, it's as a JV (joint venture) not as an out and out sale, per se.

But to answer your question as if an Openreach sale was as done deal, IMO the resultant funds would be used for one single purpose only - net debt reduction.

Net debt is leveraged to an undesirably high gearing level. BT can easily meet it's debt repayment obligations as it has easily acceptable liquidity metrics (better than VOD's) and better than a whole raft of other disparate companies. But the net debt issue is one of governance and housekeeping. A high amount of leverage is inescapable because BT is tasked with fast-fibreing the entire UK. But in doing so, that debt is exceeding internationally good governance metrics levels of acceptance.

There is such a thing in business as that old axiom of:
"If you can't measure it - you can't manage it".

And measuring net debt does have such metrics - for all businesses. Net debt is needed in most businesses and particularly so in BT's case. But that internationally accepted level of good governance is touted as being 50% gearing.

Many do exceed that level. Above 50% gearing is viewed as undesirable.

At 100% it's viewed as a red flag concern.

The reason? Like losing your job and suddenly being unable to pay your mortgage, 50% is the cut-off point beyond which if the unexpected happens, those with high level of debts, could find themselves in liquidity problems due to a drop in trade/cashflow. And that came with Covid. Those with big net debts were viewed with suspicion. No slurs have been laid at BT's doorstep because liquidity metrics are truly admirable.

But BT's gearing level? Initially at 190%+ when net debt peaked. Way above the 50% 'recommended' guidance level.

Continues > > >

" deficit funding plan"?

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To be clear - 'deficit-reduction, funding plan'

" I think the reason..... is to bury the pension liability once and for all. It's a millstone."

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Why bury it twice?

It's already in the process of being "buried" as it's at the beginning of a decade long plan (£900m payment per year, so just under £1b per year, every year, for a full decade to 2030) to reduce the deficit "once and for all".

The pension deficit is an issue until then, but it's not a problem.

The general finance media analysts think it is, at least the ones who omit to acknowledge the existence the decade long funding plan, do.

Strangely, most US media analysts in their deliberations, nearly always mention the actively running, deficit funding plan - the UK ones almost never.

Currently not holding any BT stock.

I will hold for longer term only when the long term trends turn bullish (see table below).

Unfortunately, they've been solidly bearish for nigh on 5 years - (with 2 brief exceptions) this is a clear opportunity to break that stronghold over the SP.

Sentiment has shown over the past fortnight it's up for it. If this attempt fails it won't be the last.

I'm sitting high on a hill eating my sandwiches and drinking my pop, watching the battle down below rage over the years.

What I have been doing (some half a dozen times) is pick up some stock (short term) whenever the SP goes into periodic oversold condition, but only ever short term as don't like going long whilst the long term trends are bearish.

Running total? Still in profit, if it can be called that now (barely in profit). It's declining after each foray into going long.

PS.

The pivot point itself for Monday is 124p

So if checking on Monday and the SP doesn't do much, but only travels fractionally slightly above 124p - then that's loading the probabilities towards the bulls for Tuesday.

The reverse, bearish, if the SP remains below 24p.

Slight probabilities around 124 only. Not a definite.

( IMO )