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Spain Fund 31 Dec 2015

Old Mutual a better Buy [link] Africa-focused Old Mutual (LSE: OML) has followed the FTSE 100 down by 6% this year, while Aviva (LSE: AV) has fared better, adding 6% to its valuation.On the face of it, Aviva has been a better investment in 2015. The market is currently taking a cautious view of Old Mutual, thanks to its ownership of a large South African bank and its heavy exposure to emerging market currencies.These currencies have generally been falling in value in 2015, meaning that profits earned abroad translate into lower profits in the UK. There are also concerns about the strength of the South African economy, which has been hit quite heavily by the mining downturn.Contrast that with Aviva. The majority of its operations are in the UK and Europe, yet despite this, Aviva is expected to report flat profits this year. Meanwhile Old Mutual is expected to report a sizeable rise in earnings.Is it time to switch your attention from Aviva to Old Mutual? Let’s look at how the two firms compare on valuation and income.ValuationHere’s how the two companies’ P/E ratings compare: Old MutualAviva2014 historic P/E10.011.02015 forecast P/E9.411.02016 forecast P/E8.89.9Old Mutual’s share price has fallen by 15% over the last six months, while Aviva’s has remained broadly flat over the same period. While neither company looks overly expensive, the market definitely appears to be discounting Old Mutual for its heavy exposure to African currencies.DividendsInsurance companies are popular income stocks and both Old Mutual and Aviva offer dividend yields above the market average: Old MutualAviva2014 dividend yield4.9%3.5%2015 forecast yield5.3%4.1%2016 forecast yield5.7%4.8%Aviva’s dividend payout is still recovering from the cuts made in 2011 and 2012. This year’s forecast payout of 20.9p is still 20% below the 26p payout made in 2011. However, I’ve been impressed with Aviva’s newfound focus on cash generation and financial strength. As a shareholder, I’m cautiously optimistic that Aviva may finally be able to shed its reputation for regularly having to make dividend cuts.Like many financial firms, Old Mutual was forced to suspend its dividend payout in 2009. However, dividend payments were resumed in 2010 and have since grown to last year’s total of 8.7p per share. Investing in Old Mutual provides investors with a higher yield opportunity than Aviva, while still remaining below the 6% level commonly seen as risky.Best buy for 2016?Both Aviva and Old Mutual delivered solid performances during the first half of the year. We don’t yet know how each firm’s full-year results will shape up, but by this point in the year any nasty surprises should have become apparent and been made public.I continue to rate Aviva as an attractive long-term income play and own the stock myself. However, I’m tempted to say that at today’s prices, Old Mutual looks a more promising buy for its growth potential and a generous yield.It’s worth remembering that Old Mutual is less than half the size of Aviva and operates in one of the world’s least developed financial markets. For investors with a long horizon, Old Mutual could be a smart buy in 2016.

Greyinvestor 11 Dec 2015

Re: I had a buy target at 170 Yes, a real punishing period for my investments, especially this one. I'm feeling pretty bruised. The trouble is that all emerging markets are tanking, most down more than 25% this year. They should now represent a good entry point, but only if governance starts to improve. It's dreadful and getting worse. Having said that, I'm here for the long haul and I'm not exiting any of my emerging market investments; to do so would be to lock in losses, and I'm reasonably confident of getting good dividends while I wait for things to turn round.It's also true that any share that disappoints is now being hammered.In my view emerging markets and SE Asia are now good value. The trouble is that the S&P is monstrously overvalued, and if it blows, it will take world markets with it.From now on in, we're going to need strong nerves.A Hold for me.

Vosene 11 Dec 2015

Re: I had a buy target at 170 Zuma has fired his finance minister and replaced him with an unknown which has spooked all assets with SA exposure.

themanxman 11 Dec 2015

Re: I had a buy target at 170 It isn't a suprise. The South Africa down grade has significant implications for all sizeable finance businesses based in or reliant to some degree on SA. Look at Standard Bank Groups share price for example.I don't think there is much wrong with Old Mutual per se. It's a wider issue somewhat beyond their control. Of course the big thing also weighing on the markets is the general downgrading to Negative which implies that they do no see good news in the short term.South Africa isn't in great shape economically and until they turn that corner investing in stocks like this is going to be risky because you will be at the mercy of an announcement like the other day.

MrMeerkat 11 Dec 2015

Re: I had a buy target at 170 I bought at the beginning of the year at around 190 and was feeling quite smug through to April. Since then, it has been rocky but OK - until the last 2 days, which have been gut-wrenching. The volume is massive too (nearly 15m already today), so it seems unlikely it's the MMs. I like the story on the company (always dangerous!) but am perplexed by the recent SP moves. Is there some bad news out there? Currencies are always fluctuating, and broker notes don't actually change the operations in a business. So what's new? Or is my near-namesake offering a great buy opportunity?MM (not an MM!)

Akis1999 11 Dec 2015

I had a buy target at 170 I was lookign at this share only a few days ago, along with the other banks, I have an Excel sheet where I collect basic data for the stocks I care about, anyway, OML stood next to the other banks and insurers, and my notes at the time were "exposure in africa good financials (by banks) highish P/E" - the last company statement was "all good" - now that's rare, when do you hear "all is well" statements from CEOs these days, and then I looked at the chart trying to guess a reasonable "opportunity" entry price, and I got 170, why? Because on the 3 year chart there had been no less than 3 approaches to 170. In conjunction with the fact that the financials have not really improved over the past 5 years' accounts (all data from Hargreaves Lansdown, no login required).Imagine my surprise then when I saw yesterday OML dropping like a tone, and then I thought "why?", oh just an RBS downgrade, who cares, but then it said SA political troubles, rand hitting 40 year lows, huge exposure to the SA currency ... Still I thought the bank says they are doing fine, a rare phenomenon, where most other companies are selling assets like in a fire sale to prop up their balance sheets, and cut dividends, but luckily I held off the "buy" button, to see where the dust settles.And today another opportunity, another 9% down - now surely we should be expecting a comprehensive company announcement.This reminds me the huge drops in SBRY, when the management was saying "challenging but fine" (unlike Tesco who were saying "oops we have been cooking the accounts for 5 years and now we need to sell off in Asia" however the market had different ideas, and guess what the market was right.

Greyinvestor 14 Nov 2015

Still adding I'm still adding these, yes there is a risk of a market fall hitting fees earned, but there is good padding in this price......

Warren Buffoon 09 Oct 2015

Re: Modest first purchase Hi Grey,Like you, I've bought into OML this week. For me, I think they're a good (bargain??) buy. I like to buy and hold for the long run although I owned these shares back in 2009 and then sold after a year because the dividend income didn't match my criteria.Maybe I'll be able to keep them longer this time !!!

Greyinvestor 04 Sep 2015

Modest first purchase Made a first purchase of these today, at £1.88. Seem like good value.....

MrMeerkat 02 Sep 2015

Re: Question re Dividend? The last divi I received was in my ISA on 29 May. The next one is not due until 30 OctA good general resource for dividend ex- and payment dates is [link]

amolad 02 Sep 2015

Question re Dividend? I have two holdings in OML, one certificated and one in a SIPP.I received a bank credit of approx. 4.47p per share on 26th August 2015 for the certificated shares but not for the SIPP shares. I note from the dividend section that no dividend was paid around that time. Has anyone else received a similar payment or can otherwise shed any light?Amolad

MrMeerkat 06 Aug 2015

On a high What a great set of interims. Roberts must be delighted with his last set of results. Am just hoping that it doesn't all unravel under his successorMM

Bear and Bull 15 Apr 2015

Ex div date iii has this as 16 Apr but it should be 23 Apr. Could anybody confirm this, please?

albent 06 Apr 2015

Established income payer with robust financial health and growth potential. Any thoughts on Old Mutual [link]

weblogic 18 Mar 2015

Re: Thursday's most followed: Certainly seems to be making good progress so far this year...

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