Arbuthnot Banking Share Discussion Threads

[mikeja] 25/6/2014 06:25

Interims due in about 3 weeks.

[papy02] 23/6/2014 20:53

Thanks mikeja.

In principle of course ARBB should go up further, if the discount of their STB holding closes (*). But I can't see any drivers for the discount closing (other than Henry A should be motivated to make it happen if he holds ARBB). If anything, the reverse may happen (discount widen), as STB management's track record is much better than the balance of the ARBB businesses.

(*) But I haven't done the numbers on what the current discount is.

[mikeja] 23/6/2014 19:20

Papy,dont do it.You should not be short STB,once the market wakes up to the big jump in eps coming from the placing they will be up above their highs.

[papy02] 23/6/2014 17:00

Just closed my arb positions (long ARBB, balancing short STB) which I opened last July.

My Net Return after costs, wait for it, 1.5% :-(

So less than a B Soc account and just as boring. Luckily it was a small position, given the risk of a short squeeze on STB.

Congrats to those who were just plain long ARBB. I didn't want to be long a small UK bank, period, but events so far have proved me wrong.

The arb maths stills seems to be there, but I don't want to bet that ARBB makes better use of it's new cash than STB makes of theirs, after the recent share sale and placing (the iii ARBB thread was very interesting on that subject).

Any thoughts or calculations on the arb oppy now, anyone?

[mikeja] 23/6/2014 07:32

SKYSHIP,the potential is much bigger than that.The new placings etc make calks a bit difficult but I am looking for £25 when the 2015 figs are out.What I like is the predictability of growth.What the recent money raising shows is that the risk for earnings is to the upside.

[skyship] 21/6/2014 08:01

Mikeja - thanks for that. Surely suggests that as the analysts begin to cotton on then ARBB should break out of their 1100-1200 trading range; and recover back up to the 1400p+ level...

[mikeja] 21/6/2014 07:55

Had a most interesting discussion with James Cobb,FD of ARBB.I emphasise that any figs herein are my own interpretations.Essentialy ARBB is taking advantage of the changes in banking as the big banks close down activities,leaving a pool of experts in niche markets available.The money raised from the sale of STB stock will allow ARBB to build a further bank,best described as a merchant bank.
Given the big push to earnings given by the fundraising by STB there will be an increase in the profits coming from STB to ARBB.STB expects to earn 30% ROE on the new funds which would push profits for 2015 from £35m to £50m.
ARBB's share would rise from 67% of £35m to 53.6% of £50m,i.e. from £23m to £27m.
Allowing for 20% ROE on new funds from sale adds a further £5m,taking php from £32m to £40m and eps of 132p for 2015.These are all underlying figs not statutory.

[pvb] 20/6/2014 21:39

Maybe it's just my sentimental side, but I am quite surprised ARBB is prepared to 'give up' so much of STB (But they still own more than 50%). After all, they originally were Secure Trust Bank. It still says so on my ARBB share certificates.

[mikeja] 20/6/2014 21:36

Despite our grumbles re fees,this could be substantially earnings enhancing for both STB and ARBB.If STB can get a ROE of 30% it will add some £15m to annual profits when it is invested and ARBB will be able to take up new business opportunities in merchant banking.

[mikeja] 20/6/2014 13:39

Look oriel had to make half a dozen phone calls as well....

[skyship] 19/6/2014 19:42

Surely right to be cashing in more of their SBT stake, but I agree that £600k fee is a total and utter rip-off...what gives the City its bad name.

[gary1966] 19/6/2014 19:36

More liquidity for STB and money in the coffers for ARBB. Not sure what we are paying £600K for. Does it really cost that much to fill out a stock transfer form and sell shares at a discount?

[mikeja] 09/5/2014 16:19

Now that is what I call a move

[topvest] 08/5/2014 20:56

Yes, looks good as does the chart.

[mikeja] 08/5/2014 16:26

That got the share price moving

[pvb] 08/5/2014 14:38

Nice comments from Mr Angest to accompany the STB AGM statement.

Mr Angest can usually be relied on to say something fairly pointed. ;-)

[mikeja] 08/5/2014 14:13

Latest Numis note-ultra conservative as always-proposes eps of 134.7 and 166.9 for 2016 and 2017.The latter gives a p/e of 7 for 2017.For a business growing at 25% pa a p/e of 20 would look cheap giving a price of £33.Given also the high probability factor of the growth being achieved and continuing the forward p/e might look a little low.
AGM today,expect an RNS later.

[gary1966] 07/5/2014 20:26

Nice comments from Mr Angest to accompany the STB AGM statement.

[gary1966] 06/4/2014 20:13

Somewhat surprised that the best that Edison can come up with is £16.65 as that doesn't even take account of the STB stake. I guess it is a start though and gives the apparent undervaluation some publicity.

[topvest] 06/4/2014 11:36

Yes, it's all due to a holding company discount. Good solid company. Potential upside would arise if they decided to demerge the holding in Secure Trust Bank, but they need Arbuthnot Latham to be robust enough to carry on standalone first I suspect.

[mikeja] 06/4/2014 10:31

New note from Edison forecasting underlying eps of 90p for 2014 and 111 for 2015.SOTP valuation of £16.65."Materially undervalued compared to other high growth financial companies"

[topvest] 06/4/2014 09:23

Still very good value.

67% of Secure Trust Bank is worth £287m.

Market cap of ARBB is £172m

Arbuthnot Latham must be worth at least £30m as well.

So on a 50% discount to Secure Trust.

[mikeja] 25/3/2014 06:20

Hutton,there are 14.9mARBB shares and 15.8mSTB.It is correct to say ARBB owns 67% of mkt cap of STB but the smaller number of ARBB shares has then to be taken into account.