The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
As I checked the news in this 36c south east Asia heat, it seems the leakiness of our exec board continues.
I think we have to take this as true as the ship is not tight at the top. My thoughts:
This is the safe choice. Murray’s an astute operator that the city likes and has been a stable force in his role as CFO. He set out his ‘financial stall’ and hasn’t deviated, even when pushed by analysts to up divi’s or allocate more consistently to buybacks he’s comfortable in retreating to his plan and seeing it through.
Although he won’t, I’d like to see him do a few things to support the share price.
1. Refine our messaging on the wind strategy, the market doesn’t understand this and it’s taking $bns of capital to support
2. Tweak the capital frame to allow for special or higher divi payments if certain metrics are hit - I.e. don’t just blindly allocate excess cash to buybacks
3. Continue to support the growth engines with capital required as he has done so to date
All in all, as an employee I’m happy with this choice although he presents a more introverted personality than looney, I think this is exactly what we need. We don’t need someone to shout and schmooze - we need sound business judgement, a steadfast belief in the plan and the financial nous/ connections to solve the SP issue
Anyway, back to that 36c weather - hope the UK isn’t suffering too much in the cold!
Well then why did you chose to invest in EU majors?
Hindsight is a wonderful thing, its up to you if you think there will be continued divergence between EU vs. US oilers, or if the gap will close. Thats the fundamental investment decision in this sector.
It really does depend on your perspective
These things go in cycles - there will be a time where diverse energy portfolio is rewarded, there will be a time (today) where only drilling is rewarded
This is still a company with world class assets with optionality to grow O&G production should we see fit whilst growing a position in large growth vectors - arguably a more attractive play due to our value gap vs. peers
A reduction in divi will compound matters on the SP, let a lone a major restructure of spending plans. if you're disappointed in the SP now why do you want the most material driver of it to be reduced? makes no sense
Agree meoryou, think the general trend here is upwards - only an oil price slump would cause this to trend downwards towards £4.00. With Saudi and others realising the gains of keeping oil steady around 70-80$, the continued program of buybacks, new CEO bounce and US seemingly heading for the infamous soft landing I continue to be more bullish than bearish here so I am keeping cash invested here and picking up divi's whilst I wait for the above to mature.
Joker in the pack is the China Econ as it was through 2023, however the govt steps up stimulus everytime so this just chucks more liquidity into the global market which means higher asset prices overall.
Hopefully we get a backwind into Q2 as inflation tempers in EU/UK. The ever increasing role of Iran in the middle east troubles should build a risk premium in too
at £4, with the cash we generate currently, I will finally admit that a merger may be on the cards - a $85bn/$90bn market cap makes us extremely attractive considering what Exxon just bought for 65bn in the US alone.
Enjoy the new year all
Theaky, MarkGo
As I previously posted there is very little chance of getting an external in. Board has signed off on the strategy, language since BL's departure has been the strategy remains. What CEO is coming into a new company hamstrung by the board?
Exactly meoryou - the only shares I get as a G is what I sharematch/sharesave - I do stand to benefit from the reinvent plan, but as i said yesterday, after tax this only equates to 2/3k net, per year of the vest period. Suspect Fs and above are on much more substantial share awards
The jump from 21-22 is caused by a large £250m share award to all employees after the big re-org. Not sure how large the share packages went to senior levels, but I’m just below and it’s not very generous once you consider tax
Looks like my 488/485 entry point was misjudged - couldnt forsee us falling back to the 450's with the money we are generating. Looks like I'm sitting on them and taking the divi until we get a catalyst (new ceo, perhaps?)
Here's one for you M&A experts... if we're seeing increased acquisition activity in the permian, does this make the assets that bp holds there more valuable? Could we see a re-evaluation of our position based on fair market value?