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LLOYDS is going to FLY

lse:lloy

#3618

@PrefInvestor1 Hi - Had a few mins take a look at Pref Shares and try to find out more on what moves the price other than things we already mentioned.

Using GACB and RSAB as examples:
a) do you know what caused the large swings in price at end of March 2018 for these?
b) the decline down to end of 2019 and subsequent rise was down to?

I note that the BoE base rate has been 0.5% for years until it got to 0.75% in Aug 2018… and it’s still at 0.75% today.
So was all this price movement down to speculation on interest rate adjustments? And of the BoE base rate in particular or are other world rates involved?


#3619

I now suspect that it is because they are going to write down 10s of millions of HBoS debt. Small fry really. Also, RBS has had a similar rise and then fall so I still don’t think I know the answer


#3620

Hi @J_Westlock, Well the dramatic fall in March 2018 was due to the Aviva cancellation threat, as per my previous post. When Aviva backed down I suspect that wasnt the end of the concern for the asset class and people sold out (I know I did). It wasnt till the air had cleared a bit and prices had dropped to ludicrously low levels around the end of 2018 that I put my toe back in the water, buying a few of the lower priced offerings. Since then there has been a general recovery as you can see on your charts.

So nothing to do with interest rates etc. IMHO all to do with fear of the cancellation threat. Thats how I see it anyway…

ATB

Pref


#3621

@skiking37,

A few headwinds affecting confidence in UK economy looking further ahead, but some of today’s falls seem part of a general sell-off.

If concern over China’s Coronavirus turns into something more serious, which seems likely if it mutates & becomes more contagious, we can anticipate cheaper buying opportunities across the board. But little is certain regarding this virus.

For LLOY, support at 57 still intact. However, today’s 57.40 close marks the lowest since 8th November.

I still plan to re-add a 4th tranche for another longer-term hold, but for now I continue biding my time. - Regards.


#3622

Ah yes. thanks. I had it in mind that the Aviva threat was a few years earlier but it was actually pretty recent.
OK… in that case it makes sense.
Will have a further look tomorrow.

Your idea of buying on XD date is what I might do for a couple of these… some XDs coming up in Feb and Mar.


#3623

We also had the ECB announcement that they are keeping interest rates at record low level.
That certainly affects European banks and I assume also influences the BoE.

Risks all around but we also had news like UK corp tax receipts for the financial year to date being 3.4% lower than at the same point a year ago, the sharpest annual drop for 7 years.
Brexit driving companies to use EU state legal entities plays a part of that.


#3624

Hi Again @J_Westlock, Yes I think that buying on the XD date works well, you get more shares for your money AND then usually pick up the dividend amount simply through recovery of the share price.

When I sold my HSBA it just so happened that GACA went XD that same day and so I bought those with the proceeds at about 145, they are 155.7 today. Can’t guarantee it but it has always worked well for me. The spread is so large on all prefs that it quite often takes a while to get into profit, in this case as I recall I was only 1-2p adrift after the buy but it can be much more. If you DONT buy on the XD date it can take quite some while to get into profit as then you are totally reliant on the share price appreciating.

Yes there are quite a few prefs that go XD in March thru May paying about a month later and then do so again in Sept thru Nov. There are a few that don’t fit that pattern though. Like all stocks prefs go XD on a Thursday and the exact date can move around by the odd week from year to year. These days the best way to find the exact dates for this year is to use the dividendmax website eg

https://www.dividendmax.com/united-kingdom/london-stock-exchange/nonlife-insurance/rsa-ins-pref-7375/dividends

The event may also be RNSd but not always in my experience.

Good luck if you decide to invest - but I can offer no guarantees obviously.

ATB

Pref


#3625

JACK

I may top up tomorrow

Sell-off Friday

Best time to buy for a 69p sell later on


#3626

Yep… maybe best the Friday after though… probably be 45p then.


#3627

As posted on the Lloyd’s LSE site

Last time Lloyd’s been 45p was 2012

BLIMEY o’reilly


#3628

Hi Guys, Lots of negative thoughts being posted here (selloff Friday etc) but IG has both the FTSE and the STOXX 50 up ~0.6% ATM (23/1 @ 22:20), US markets closed up (with the exception of the DOW which was down a smidge) so I reckon tomorrow is quite likely to be an UP day…?

Mores the pity cos I was hoping a few things were going to crash and burn so I could buy them a bit cheaper…

ATB

Pref

PS Still hoping for some more downside myself…sorry !


#3629

Hi @J_Westlock, Just one more point on pref shares, particularly the Aviva and General Accident ones AV.A, AV.B, GACA and GACB. While Aviva has now said that it won’t cancel its pref shares it has said that they won’t count as regulatory capital from 2026 (many firms use their prefs to provide some of their Tier 1 or Tier 2 capital). And they imply that they will still want to retire their prefs if that happens BUT have said in such a case they would pay “fair market value” (given that one would expect this to be at least the current market value plus some allowance for loss of future earnings this might even be a good deal - but exactly what they would offer is unknown at this time).

I hold both GACA and GACB at the moment but due to the above I am planning to sell these and replace them with one of the following issues SAN, SANB or NWBD. These all go XD in March or April and I am planning to do the trades then.

This is probably just me being ultra cautious having been burned before. But as GACB is one of those that you said that you are looking at I thought I should explicitly point this out. Up to you what you do obviously.

ATB

Pref


#3630

Hi @frog_in_a_tree, Couldnt help but notice that Marstons have been thumped today after their trading update, down to 109.6 at this instant (from closer to 120 lately). I used to hold these as good dividend payers and they used to oscillate between 95 and about 110ish.

They always had too much debt and their best feature was their extensive property ownership, but of course that wasnt really the main thrust of their business - and that never shot the lights out. They got their big leg up (it seems to me) from the Green King sale and everyone thought “Marstons is next” and piled in - but it hasnt happened.

Maybe it’ll bounce back. But thats single stocks for you isnt it ?. Never mind its a good day on the markets otherwise, I doubt that you’ll even notice what your Marstons does…

ATB

Pref


#3631

Hi All, Well stand by your beds when the UK PMIs come out at 09:30 this morning. A good result will likely mean no BOE rate cut and the GBP will surge - probably. A bad result will likely do the reverse.

Either way it has the potential to be significant…not long to wait now.

ATB

Pref


#3632

Words are cheap.


#3633

Surely its the confidence that the bank of England are about to cut rates in a vain attempt to offset the Brexit damage?

A quarter point cut wont do much for the economy, but it will cut what LLOY gets for every pound held by 33% and reduce its ‘spread’ profits on other business.

Not rocket science is it?


#3634

Yes understood. Thanks for that.


#3635

Positive PMI’s, but not enough to keep the GBP rally. The rate cut is looking favourite, although I personally think they’ll try not to cut at Carney’s last meeting. The markets don’agree with me though.


#3636

Hi @Eadwig, Yes the PMI figure of 52.4 was pretty good, and the GBP was up for a while there. But as you say it has fallen back now. What does it mean in terms of rate cut - in the lap of the gods at this time. All financials (including the big banks) well up this morning though so looks like the assumption is no rate cut ?. One or two pref prices down by a gnats whisker which also tends to support that view, they have been slowly rising of late - anticipating a rate cut I suspect.

ATB

Pref


#3637

I tend to trust the fx markets and the last 12 hours speak volumes. The peak was 09-30, the time of the PMI figure release. It looks pretty eloquent to me.

Perhaps big funds are moving the whole index on the back of these figures and the shake out with individual stocks is still to come taking into account what a rate cut and a lower GBP means for them?

Obviously a rate cut traditionally is positive for the index as a whole.