Member Info for WiganWarriors

I suspect the Budget is the least of our problems, given tonight’s futures trading. FTSE down 8.5% ! Oil down 25% !

HI Fred

Spread Bet is ok, just around £1500 in the blue at the moment. It wasn't a big trade, but I thought that there would be a £5K opportunity following company results, and then if I held maybe £15k after interims if Saudi trading not too bad after all.

NICL do seem to be quick to warn of any trading hiccup, they did this a couple of years ago when they lost the court case re swapping distributors, only for the share price to recover quickly. I traded around £30K on that one.

The 30 day rule was introduced by Gordon Brown to stop anyone crystallising loses just before tax year end via bed and breakfast trades. It used to be a way of offsetting loses against gains with only overnight risk . The 30 day rule intended to disqualify any of those overnight trades for resetting the share price artificially.

I am familiar with the HMRC calculator, as unfortunately I pay substantial additional tax every year on trading profits

Hi Tom.
There is no concept of book cost relating to the original price paid as you describe. Every time you buy shares in one company you are obliged to recalculate the average cost of those shares , giving you an average price paid. No matter how many you may sell then you must deduct the average price paid from the sale price and that is your potential exposure to CGT.

Therefore you couldn’t cash in the original £50k of shares bought, as they would be worth more than £50k because each share shares in the extra £25k profit.

For example, each of your shares worth and sold at £75 as opposed to £50 cost price has a profit of £25. If this £25 times number of shares sold exceeds £12k then you owe CGT.

Is this what you mean.

Typo £1.6 k CGT not £16k

Hi Tom. Your musing re transferring £20k in shares to an ISA. You will pay CGT , as the transfer transaction first sells the shares then re buys for the ISA. Therefore the sale exposes you to potential CGT. If it’s £20k the you are exposed for £8k @ 20% making £16k tax bill. It’s still the same if you “transfer” from trading account to ISA as a “bed and ISA” transaction. Bottom line is ANY sale of assets which attract CGT, you annual allowance are subject to tax.

As for Trusts, I’m afraid that ship has sailed these days. Very hard to gain any real tax advantage as you pay up front tax on loading into trust, and periodic automatic tax on assets in a trust.

However, one useful use of a trust is to control assists. For example if you have a daughter and want to leave her lots of dosh, but worry she might marry someone who then leaves and wants half her money you can use a trust to stop that. The trust always retains ownership of the assets, and your daughter would be a beneficiary so third parties can’t get at the cash.

You can still give money away, and if you survive for seven years it’s considered outside of your estate for IHT purposes, ie no tax.

Your pension pot is out side of your estate for IHT up to age of 75.

The formula doesn't quite copy over correctly. To put it another way, once the formula is resolved:

Intrinsic Value = 800,000,000 X (1 + 0.04125) / (0.05125 - 0.04125) then divide by number of shares.

HI Nige,
the formula below is often used to calculate "intrinsic value".

?Value?_Wimps=??CFFA?_0 (1+g)?^1/(1+WACC)^1 +??CFFA?_0 (1+g)?^2/(1+WACC)^2 + ??CFFA?_0 (1+g)?^3/(1+WACC)^3 +…+??CFFA?_0 (1+g)?^8/(1+WACC)^8
Where WACC is weighted average cost of capital, and g is growth. For example if Wimps pay 5.125% for capital, and growth is estimated at 4.125% and Cash Flow From Assets (CFFA) or sometimes termed Free Cash Flow = £800,000,000 . Then an estimated intrinsic value would be ~£8.26bn. Or, ~ £2.51 per share.

The next Capital Markets day is May 2021. As usual Wimps will then brief analysts, investors on their strategy for the following three years. Its a fair bet that Wimps will declare another special for summer 2021 later this year at interims, closing off the current three year cycle.

Hmmm, seems the Market is stressing over VLX's Chinese factories, and potential interruption to production.

Bound to be a little volatility, as those who want to get out after such a strong rise do so, and those institutional investors who want to get in for the long run do so. IMHO, I believe the market has moved on and the momentum is now positive for the builders. Best to avoid checking the SP every 10 mins and relax.

Just to point out, the new CEO will not arrive for a while. Then we will see kitchen sinking on a grand scale. Likely to get worse before it gets better. IMHO.

Not to mention that if kitchen sinking, then new CEO LTIP gets allocated shares at absolute minimum prices ??

Hi Fred,
Yeah. I have started to build a position via Spread Betting today whilst the SP is at a low point, and the spread has been around 20 (ish). After a few "back of a fag packet" analysis sessions, I can't believe that the tax increase in Saudi will have such a material effect on earnings as the Market is signalling.

I suspect that in worst case 2020 earnings might be flat, although on a less drastic appraisal I think they should beat 2019 earnings. We shall see. Either way, I think they will likely recover as the year progresses. Of course, I could be wrong :-)

Re diversification. As one Sage often repeats “... if you have all your eggs in one basket, just keep your eyes on the basket...”. Also, he often advises that you only need to find two or three good investments in a lifetime and you are made. Too much in the way of diversity generates too much noise and removes focus. IMHO, I agree with this as it works fine for me. It is a statistical fact that the more you trade the less you will make. Let the winners run ...

I would suggest that a little diligence required when purchasing NICL, as the spread can be very wide at times. However, I spotted it at only 10p yesterday for a few hours. No point buying when spread is 70 - 80.

Hi Terrace, re paying out all earnings in divi's.

This has been the Wimps strategy for the last three years, as they have decided to distribute any / all excess cash to shareholders. In this post Brexit market they don't think they can reinvest the free cash in the business to good effect. That may change next year, or so. Rather than have cash building up on the balance sheet, distributing it to shareholders actually helps some aspects of the balance sheet, as they don't have additional assets (cash) on balance sheet skewing some of the metrics like ROCE.

We will know at Interims if they intend to pay special for 2021, and then at the next Capital Markets Day (May 2021) they will set the next three year strategy which may or may not include specials.

Hi Tom, well these free BB's only take data feeds from common source and do not guarantee accuracy. Your trade may have gone through a different exchange, which LSE does not see. So it would appear after hours.

Easy to see your deal, just check contract note and it will tell you what exchange was used.

Hi Troubles, re second half weighting.

Well, they have just closed out one of the central London sites, and two more have just one apartment each to sell before closing out. The other developments are due on stream during the second half, so there will be a slight gap on revenue generation first half this year from the expensive units. (£1M+)

Also, there are only starting year at 240 sites, but expect to average 250 sites, so they will be "building momentum" during second half.

Also, extra £120M to be spent in first half as one off tax change to quarterly payments comes into force (£70M), and expected £50M called down from previous "exceptional" (leasehold or / and cladding provisions).

So, if you add that up management are just guiding that cash flow in first half will be less than second half.