Hydrogen Economy
19 Mar 2017
Not much new, seems to confirm Cumming left over the mergerHe said he was currently checking that the name of the new business “doesn’t mean something silly in Swahili or Finnish” before it gets the go-ahead. That doesn't auger well sounds like they plan some meaningless made up word. The way SP is heading maybe they could try "Sub-Standard and Poor". [link]
EssentialInvestor
16 Mar 2017
Re: Execution risk Beginning to get a little ugly here.How low can it go?.
de profundis
14 Mar 2017
Comparison Whatever chart you compare SL with it has performed badly over the last year.
LK Hyman
14 Mar 2017
Re: Thinking of selling anyone? JontyM,The co-CEO thingy makes it look like jobs for Gilbert and Skeoch and the sack for lots of other people. Perhaps the fear is that it'll be the good people who leave and the poorer performers will remain. I was perhaps a little hasty in saying that I didn't rate David Cumming, who left within a very short period of the deal being announced. On checking his investment performance (as opposed to what he has said on various Today programme interviews) it looks very good so, if he is going, perhaps he'll take some high quality m8es with him.LKH on the flybridge steering clear of SL and ADN
JontyM
14 Mar 2017
Thinking of selling anyone? its been disappointing to see the share price fall back after the initial uplift from the merger announcement. I have to admit that having held these shares since the initial float I'm thinking of selling and moving on. it's a bit of a worry to hear regular updates of net fund outflows from SL when the backdrop is of global markets at record levels. Similarly Aberdeen have had a rough ride on the back of rollercoaster emerging markets. Personally I'm not convinced that they will solve each other's problems.Any thoughts anyone, am I missing something?
Eadwig
13 Mar 2017
Re: Why the dip today? Bill,thanks again for a complete and comprehensive response. Its incredibly useful to have someone of your experience sharing knowledge. Much appreciated.Bill, "Yes, I agree - you can often get hold of transcripts, and often interesting."I believe it is now a legal (regulatory) requirement for US listed companies to a) have a web site and b) provide 'earnings call' transcripts. I couldn't swear to it, its just something I've inferred from comments made by some TV pundits who have given the impression the transcripts will be available to anyone who wishes to read them.Often the conference call is videoed too and sound recorded and both made available as well as the transcript on their web site. A few UK companies do this too but annoyingly some remove them after a month or so. The insight gained from a video about the confidence (or lack of) displayed by the CEO, CFO and even their body language when answering certain questions can be revealing in a way that doesn't always come over in a transcript. BUT, I would warn anyone not to place too much weight on such things unless they have seen the board members answering questions in the same situation previously.
Hydrogen Economy
13 Mar 2017
Re: Execution risk I don't rate Cumming. I can't claim to have noticed him, interesting that he went so soon, presumably he was agin the merger and lost the argumentTimes naturally style him Star Fund Manager as it bigs up the story, pesumably somewhere in the organization are the guys who really make it work and in many Co's their role gets overshadowed by the Prima Donna's so may fall victim to the false economy drive and see the writing on the wall, or the brown envelope. I have seen some silly activity from SL fund management of late like trying to get BKG to take over BVS on the basis they held chunks of both, shades of ULVR KH or Exxon BP, never a fit. Holding a modest chunk along with LGEN, PRU & RSA bought post Brexit vote - all up to various extents LGEN easily the best. PRU reporting tomorrow should be intersting to see outlook on their EM bus.H2
LK Hyman
13 Mar 2017
Re: Execution risk Hydrogen,"One of Standard Life’s star fund managers has quit"I don't rate Cumming. He appears from time to time on the Today programme and never fails to say summat with which I strongly disagree.LKH on the flybridge
Hydrogen Economy
13 Mar 2017
Execution risk There are plenty of risks in the merger, especially where the knowledge sits with key personnel. Just saw the piece below although from the 9th which only serves to emphasize that people are not fixed assets. Hard to know if and how this may be connected to the merger but should encourage Management to proceed with caution.H2Link is subscription but first 2 para's tell the story[link] of Standard Life’s star fund managers has quit only four days after the Scottish investment house’s parent company unveiled a shock £11 billion mega-merger with Aberdeen Asset Management.David Cumming, the head of equities, has left Standard Life Investments with immediate effect “to pursue other interests” but his exit after 18 years at the group is thought to be linked to the looming merger.
Spain Fund
13 Mar 2017
Offers little upside and substantial risk. From Digitallook:Berenberg has downgraded Standard Life to 'hold' from 'buy' and cut the price target to 400p from 416p, saying the merger with Aberdeen Asset Management offers little upside and substantial risk.Earlier this month, Standard Life and Aberdeen announced that they had agreed the terms of an £11bn merger that will create one of the largest active investment managers globally, with £660bn of assets under management.But Berenberg reckons the benefits, if any, rely more on a major change in fortune for Aberdeen’s funds than they do on any cost savings, and said the level of disruption that could be caused to Standard Life’s business is high."The strategic rationale for more scale at lower cost, product breadth, wider client coverage and greater diversification is reasonable in the context of a challenging market place for active fund managers."However, Standard Life Investments arguably already had reasonable scale in many core areas and a renewed focus on costs. It had invested much time and money in building diversification and its organic growth strategy in areas where it was underweight had shown early signs of bearing fruit. Continued disciplined execution of the existing strategy would have paid off, in our view, and carried less risk. Patience is a virtue that seems to be lacking in Standard Life’s boardroom."Berenberg pointed out Aberdeen has seen worrying net outflows in the last three years, particularly in funds with high margins.The bank's base case assumes net flows will gradually improve, but Berenberg said this may be optimistic.In addition, it highlighted concerns that the integration phase will bring about unwelcome distractions, loss of focus and likely disruption of fund flows at both companies.At 0915 GMT, Standard Life shares were down 1.3% to 375p.
Bill1703
12 Mar 2017
Re: Why the dip today? "Being far more of a marketing man myself, I tended to assume the above happened quite often, especially when initiating coverage on a new company... It does rather add caveats to my theory of using broker coverage as a possible future catalyst for a stock price. Probably very much limiting it to certain companies with a lot of private investors involved."Eadwig, yes, the business is all about marketing - but 99% of the time in a direct PTP sense. Press releases are too blunt an instrument to be useful - and remembering that the vast majority of broking 'advice' is not aiming at the PI market, quite explicitly so.I doubt many stocks over here at all have an influential level of private investors - I think the UK average is still only 20% or less. Not seen recent figures, but it has always been a much bigger level of direct participation in the US, some 2-3x this figure... so it might be a more fruitful exercise there? As you do indeed infer elsewhere... "The fact that an increasing amount of financial sites track the numbers of brokers covering a company and the current consensus view... suggests many people take notice of what limited info there is in the public domain."Yes, I look a plenty of sites myself. The issue is consistency and reliability... eg. the FT site is not bad, but even then, it's not clear how often it's updated, and whether you can trust all their inputs (with most financial sites, you simply cannot). So I suspect it'll be hard to make meaningful conclusions without shelling out for a Bloomberg subscription, which I suspect is not an economic prospect for pretty much any PI - and even then it's not 100% trustworthy or complete (a couple of leading brokers withhold their information from Bloomberg). "But then USA has a much more open culture when it comes to information available to the public, E.g. certain info must be released to everyone (analysts and public) at the same time under their regulations." Given the greater involvement of private investment in the US market, it is inevitable that broker views - and how they are followed and interpreted by Joe Public - are more influential there. FWIW so many of the stricter rules and regulations governing broker research (ie. Spitzer and subsequently) have emerged because of the potential for the public to be so influenced, and potentially misled, by institutional broking practices. Over here, I doubt regulators would've ever bothered so much, it's much less of an issue - at least historically. "I find one of the very best ways to pick up details is the Q&A session after the earnings report(s) when analysts get the chance to ask the CEO/CFO direct questions and the process is available for all members of the public to hear - and in USA they must be published. I don't think that is the case in the UK, although some companies are doing it more and more."Yes, I agree - you can often get hold of transcripts, and often interesting. Of course, the REALLY interesting questions - and answers - are then ones which analysts ask privately, on the QT. It is fairly standard that analysts will think twice before asking a really juicy question, if they fear they are giving away a competitive edge by revealing their line of thinking.And even more so, the same goes for the questions asked by shareholders, in private conference... if there ever were a way to access that sort of discourse, it would be REALLY useful...
Eadwig
11 Mar 2017
Re: Why the dip today? Bill, "speaking from experience, some broking houses might issue some sort of PR release to publicise a particularly high-profile report"Being far more of a marketing man myself, I tended to assume the above happened quite often, especially when initiating coverage on a new company. We have discussed this before, yes, but the question about how the releases get into the press that you have just answered was never responded to specifically. So I thought I'd put it again.It does rather add caveats to my theory of using broker coverage as a possible future catalyst for a stock price. Probably very much limiting it to certain companies with a lot of private investors involved.On the other hand, I've found some sites that chart price and news stories (not necessarily changed coverage from brokers) so when I get time I hope to be able to look at some historic examples and see if I can find correlations. The fact that an increasing amount of financial sites track the numbers of brokers covering a company and the current consensus view and what changes have been made in the current and previous weeks/months, suggests many people take notice of what limited info there is in the public domain.Maybe, like much T/A (in my opinion), it becomes a self-fulfilling prophecy at some point. This is especially the case in USA it appears (where I have many investments) and beating or missing Wall Street [analyst's] consensus targets (for EPS, revenue, new customers, like for like sales - all kinds of metrics) without question impacts the share price every quarterly earnings 'season'.But then USA has a much more open culture when it comes to information available to the public, E.g. certain info must be released to everyone (analysts and public) at the same time under their regulations. Its certainly the case it is much more difficult to find detailed info. in the public domain on UK listed companies, so possibly press releases from brokers may have a greater impact here. I don't know. I'll report back if I can find anything that seems worthwhile.PS. I find one of the very best ways to pick up details is the Q&A session after the earnings report(s) when analysts get the chance to ask the CEO/CFO direct questions and the process is available for all members of the public to hear - and in USA they must be published. I don't think that is the case in the UK, although some companies are doing it more and more.
Bill1703
10 Mar 2017
Re: Why the dip today? "I did ask a question on another board which I think you missed. Is what I call above the 'headline' info. from brokers we see reported every day a press release from the broker themselves, or journalists with access to the reports simply reporting the small amount of detail that they are allowed to? Do you know?" Eadwig - we've had this debate before I think, elsewhere!I can't speak for all brokers, but in the vast majority of cases AT LEAST, they do not issue press releases with reports. It would be impractical, of course, with even smaller brokers producing several thousand reports a year... but more so, because they have no real wish to advertise their views beyond their client base. Most research-producing brokers deal only with institutional clients - and indeed, there are demanding regulatory issues and rules restricting any activities which could be seen as offering advice to private investors.Brokers are spending an increasing amount of time actually trying to restrict access to their reports, and with impending regulatory change, this will only accelerate. For many, this extends to press/media, though doubtless they will still have access to at least some published research. So what you see on the wires MAY be based on sight of an actual report - but just as often it will be third-party reportage from market contacts, etc. Which is why it is inherently unreliable... and even when it is accurate, the wires tend to focus on merely the price target and recommendation (because that is all they have time for, not because they are not allowed to say more), rather than the basis for the view and/or the underlying analysis, which can be immeasurably more valuable... sometimes!There is the odd exception... speaking from experience, some broking houses might issue some sort of PR release to publicise a particularly high-profile report. But this will inevitably be after the event, perhaps some days later, and will only ever be occasional - for a tiny fraction of 1% of the reports they habitually churn out. And other broking houses simply never do it, as a rule.
Eadwig
10 Mar 2017
Re: Why the dip today? Bill, "I've never been convinced that broker notes have too much lasting impact... even when I was writing them myself! "Very much agree it is a short term impact, Bill. In fact I thought I had included that in my post, but checking back I must have edited it out.The company I mentioned that I very much like for the long term that i expected to drop on broker notes, has actually had positive re-affirmations with price target increases, so far. That appears to have had the impact of arresting the expected drop and even reversing it so far. Not one would have expected from looking at the results highlights and current price level - so very much underlines what you say about what is in the rest of the note is more important - no doubt they have talked about what I also believe I'm seeing over the longer term.I expect that to work out of the price quite quickly ... unless there is a ladder of new releases every few days. That can then add up, maybe move the price through some technical point which gets a whole different group of investors attracted. This is the type of thing I meant when talking about checking the position of brokers before making a buy in a company in which I believe I see a catalyst for it approaching.The above paragraph is a bit theoretical and I haven't done any great research on it. However, as I said in my previous post, if you see an unexpected price move (either way) on no apparent news, if you then check there is almost always a broker note that correlates with the price move (up or down).Coming from that angle (only checking when there is an unexpected price move) and almost always finding a broker note I think the theory at least has some merit for investigating further (as much as any technical analysis, really) and it seems pretty undeniable with some companies (or brokers, possibly) that you do sometimes see 2-3% moves beyond that day's sector average, which often spills into the next day at least too.Whether or not that is due to customers of a broker taking action based on the whole report, or others (presumably amateurs) taking action based on the 'headline' [Buy, Hold, or Sell, /upgrade or downgrade / new price target higher or lower than previous] it doesn't really matter if you want to try and trade the move. Another area I didn't mention that I've read can make a big difference, is analysts initiating coverage on a smaller company. Presumably this is because their customers may be having their attention brought to the potential (or lack of) a smaller company for the first time. That can help build momentum in either direction.Its all just an angle / theory that I'm trying to work to see if I can identify any kind of edge and very much appreciate your comments as you have valuable insight into the process having actually worked in the industry writing these notes.I did ask a question on another board which I think you missed. Is what I call above the 'headline' info. from brokers we see reported every day a press release from the broker themselves, or journalists with access to the reports simply reporting the small amount of detail that they are allowed to? Do you know?
LK Hyman
08 Mar 2017
Re: Why the dip today? Bill,"There are exceptions, where an analyst comes up with a meaningful new angle which the market has hitherto overlooked"Or sometimes a journalist does likewise. I was thinking of plunging back into Aggreko after yesterday's sickener, but there's a first rate piece in Lex today which is gonnae make me hold off pro tem. I commend it to you (the Lex piece) if you like the idea of diesel generators stuffed into containers and shipped to countries with no money where it's all gone pear-shaped for one reason or another.LKH on the flybridge
