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BARC sp action

lse:barc

#1

Hi

A statement of the obvious first, this keeps going down.
This does not seem wanted at all.

Directors/management, what are they doing ?

I was looking at potential support levels, came up with 169.5 then 165.0.
Did not want to look any lower.
Resistance levels of 185.2 & 194.00, they are looking rather optimistic currently, to put it mildly.

I am trading it, both long and short but each time I close a short thinking there will be a bounce up, it goes lower still.
So now net long by far, and wrong with some poorly positions.

Frustrating trade.

ATB & GL

soi


#2

Hi Soi,

I think you sum it up well. BARC has proven itself worse than average for a few years now. Calling it a dog share hardly seems harsh. Over that time resistance levels have dropped from 300+ to 240+ to 220+ & continue getting lower by the year. No prospect of a quick turnaround in sight.

Despite focusing on a fairly stable UK economy & the recently booming US, BARC’s IB division has under-performed chronically, even exiting all lucrative commodity trading due to very sub-par returns. Add to that the many failed promises besides the still poor, supposedly “progressive” yield & uninspiring leadership, & it’s hard to argue against the ongoing lack of confidence from markets. Even without Brexit some of those issues would remain.

Like most holders (I still have 1 tranche of shares & 5 leveraged longs), I deserve all I get for buying this back when I did.

However, will ride things out as no doubt it’ll be higher after Brexit uncertainties are resolved. Plus, over time, there’s always the vague prospect that it may merge with a bigger bank. The recent STAN merger rumour obviously came to nothing, but that still seems BARC’s best hope yet of seeing significant recovery in SP in any reasonable timeframe. - Regards.


#3

Have Been following the BB since Big Money days
First time posting
Can anybody see the bottom for Barclays
So that one could average down again
Belfast child


#4

Hello Elizdown,

Good question, difficult answer. Having been involved in trading markets a few years now I’m extremely reluctant to call bottoms in most circumstances, let alone one where a sector’s fortunes are heavily tied-up with still uncertain Brexit negotiations. Though I think mutual interest will see a reasonable deal agreed with Brexit, there’s also potential for still further chaos in that process. Not least with affecting the financial sector.

What we know for now is that a close of 169.46 on 18th September was BARC’s lowest for over 2 years. That level was tested again very recently & it’s so far provided support. So 169+ may be a bottom? But we can’t be sure for said reasons.

FWIW, I’ve averaged down with various stocks to VG effect, assuming one’s adding real shares, not leveraged positions, & one started buying well below L/T resistance levels. Patience & temperament to ride out any further downturns can also be assets.

Nothing easy about this game, so I wish you well with making the best decision for a VG outcome. - Regards.


#5

Hi elizdown

I think JD has nailed the answer, agree with him and little to add to his excellent post.
I have supports @ 169 & 165. Give or take.

I also assume you are invested with real shares rather than leveraged derivative positions.

A little thought to add on is if you are prepared to add to your holding, perhaps do so on a day when markets generally are depressed rather than on the up and if possible split the money amount you are prepared to add to your holding.

BARC does seem oversold but it is very tricky to guage future prices.

ATB & GL

soi


#6

When I last posted here 5 days ago SP was close to 175 & we’d seen support tested & holding at 169+. Plainly that’s now gone to pot with today’s close of 167.76. This marks another new closing low not seen for over 2 years. Very poor & disappointing, but it is what it is.

As I’ve said about some of my other steadily falling stocks on another forum, what seems very apparent is that markets are increasingly pricing in either a hard Brexit, a potentially very damaging “no deal”, or another early GE. In any of those 3 outcomes, probably fair to say that further downside seems more likely than not. Altogether very challenging times, financially & otherwise. - GLA.


#7

So the decline continues with today’s disappointing 165 close & another long-term closing low.

I recall that soon after Brexit happened a report stated that analysts considered BARC would be the most severely impacted of all UK banks by a hard Brexit or a “no deal”. Principally as it has huge exposure to both investment & corporate banking. Seems fair to say that markets are probably pricing in a poor Brexit deal.

In the event of a “no deal”, despite being a holder of this, I’d now expect BARC to fall through 160 by some margin. OTOH, a good deal would surely see the stock as well oversold, with buyers returning. Important few weeks ahead.

Once I take my gains from this outfit… most likely I’ll never buy it again! - GLA.


#8

Trying to keep 161 as I write. My earlier comment about falling through 160 in the event of a “no deal” was obviously over-optimistic. Considering how BARC’s SP has very little support at this point, in the event of a “no deal” it’ll be much worse than what I suggested.

Unless we see a Brexit deal, a very L/T hold here seems likely. - GLA.


#9

Maybe it will go down to 150 but I see that as a major buying opportunity. At the end of the day, Brexit is already somewhat priced in so the downside is not going to be massive from here. If you’re a medium to long term holder (like me) then BARC is an attractive proposition. Divs will increase in 2019 and as long as it keeps its nose clean (e.g. regulatory fines), then there is significant earning upside from here.


#10

@drylatt

Indeed, there comes a point for most falling stocks when they are indeed buying opportunities. For BARC it could be now if support at circa 162 holds. Or it could be closer to 150 if it falls well below 160. Truth is to many it’s been a buying opportunity since at least circa 200. Just another under-performing FTSE 100 share that one holds as one knows things will eventually turn, sentiment will improve & then more buyers return.

I agree much of Brexit is probably priced in, but I don’t rule out a severe sell-off if all hopes of a deal prove fruitless & we end up with a default “no deal”. FWIW, I think some kind of fudged deal still seems more likely, but getting it through Parliament may be another matter.

However, once I’m out of this at a profit & the last of my longs closed, I’ll remove BARC off my portfolio as a stock to watch & trade. Global investment banks will always meet new challenges & uncertainties, so in future I’ll avoid the sector altogether. - GL.


#11

For those who don’t know, BARC’s Q3 update out tomorrow. LLOY the day after. I’m cautiously optimistic for a fairly positive market reaction that may see the stock as currently oversold & a small bounce. - GLA.


#12

Seems like Q3 is broadly positive. BARC’s SP may well see a decent bounce, though how long it lasts for due to current macro-factor uncertainties is another question. GLA.

https://www.ii.co.uk/news/3rd-quarter-results-rnsLSE20181024070002_13839865/


#13

Jackdawson - What is your average btw?

I think the results are quite positive. The IB has been positive and the rest of the business is doing well with impairment costs coming down. Strong capital position, divs increasing for 2019 and ther pref redemption will also save a fair bit of money. All main obstacles to a re-rate are external so fingers crossed.


#14

Hi Drylatt,

I agree. No question here that it’d be far higher on today’s Q3 if not for Brexit uncertainties weighing down on this sector.

As for my average, frankly, it’s an ill-judged mess. After ample profitable trading here & some dividends booked, I got trapped with the last of my shares at 198.85. Also 5 longs at 193.58, 202.50, 207.81, 209.66 & 210.81. Last trade in August. All in this thread:

I never averaged down after that as with leverage both losses & profits can snowball rapidly. Key thing with leverage: always ensure ample margin for worst-case scenarios to avoid crunching losses. Just in case. For as bad as things may seem, they often can & will get far worse before things improve again. Experience has taught me enough lessons in that respect.

Why so many longs at that price? Well, BARC had recently seen 220+ & a breakout to higher levels seemed doable after a report about a possible merger with STAN. Unfortunately it proved another false rumour.

Plan since then has been basic enough. Hold doggedly in the firm conviction that this will be much higher again later, pick up yield, until all positions well in profit. But I figure circa 220+ may well do me.

The above is an example of poor mistimed trading caught up in a period of ebullience a few months ago. No excuses for it. - Regards.


#15

Completely understand. My trades aren’t leveraged but I significantly mistimed my trades over the last 2 years and currently sit on an unappetising average on 210. I have been tempted to buy on the dips recently but keep remembering that my last attempts at buying the dip have actually got me into this position. I am not overly negative about it as I am still convinced that BARC will re-rate at some point and am happy to take a longer-term view.


#16

Hi Drylatt,

Thanks. Undoubtedly many people will be in a similar position to us. Not that it’s any consolation. But I agree with you. BARC is making steady progress on a few fronts with increasing profits, cutting costs, addressing legacy issues, de-risking, et al. Beating forecasts again suggests more progress lies ahead & a bigger yield in real terms.

But for now UK’s economy faces major headwinds that no-one at BARC or across markets can control. The only thing we as holders can control is when to sell, or whether to buy more. I decided long ago that I’d dig in & not be shaken out by further SP falls governed mostly by negative sentiment.

Sentiment is transient. It changes from bullish to bearish & back again in cycles. It will improve again for this sector in future. I’d not be surprised to see the SP over 200 again sometime next year as that’s still well below longer-term resistance of circa 220 intraday, a level tested a few times back in April & March this year. - Regards.


#17

Hi Jackdawson,

Could not have summarised the picture better.

I think one key driver of BARC and the banking sector is of course interest rates and the yield curve. The recent flattening of the curve has definitely put a dampener of on the sector as can be seen by the recent sp falls in the US banks. This is definitely a headwind that I don’t see improving soon.

David


#18

Hi David,

Thanks. Valid observations. Agree it’s a significant factor & one of a few major headwinds affecting this sector. That said, I’d only be seriously concerned about BARC’s recovery if the challenges were more so stock-specific. When they’re sector-wide, it gives me more confidence that things are more likely to improve as macro-factors gradually change.

We also know that this sector more so than any other frequently falls in & out of favour due to a range of unpredictable, volatile global events that can play out at any one time. Hence the extreme volatility in SPs going back years, even for those banks with strong underlying fundamentals.

I’d add that despite the recent dip seen across US banks, their major banks haven’t done too badly at all since 2008’s crisis. By contrast, some large UK banks, not least BARC, have had a really torrid time over the past few years. Just one reason why I think they’re oversold.

But once all legacy issues & heavy burdens like PPI are over, these UK banks remain highly profitable businesses which surely present excellent value at recent & current SP levels.

SP touching highs of 174+ earlier today, though fallen back a bit since. IMO, that still seems cheap. But at least it’s more tangible progress after recently testing closing support at 162+. If our government succeeds in negotiating a Brexit deal that’s favourable to UK banking, this could easily jump 15p to 20p in a couple of days as used to happen frequently before Brexit.

Developments over the next few weeks will be key to the timeline of recovery here, as for other UK banks. I remain optimistic that strong mutual interest will see a reasonable deal & a good bounce here.

Regards.


#19

One thing that can be said about the sp is that it has been remarkably unvoltile. Considering the volatility we have experienced pretty much everywhere over the last few weeks, BARC’s sp has hardly moved. This is pretty much indicative that all* bad news in already priced in. * Brexit is really the next catalyst for the sp and until some clarity emerges, it’s quite likely that the sp will remain steady and at current levels.


#20

Hi, it’s also worth keeping an eye on the Italian debt situation as a catalyst.