Alliance & Leicester Share Discussion Threads

[lonrho] 06/7/2008 16:21

A&L s loan book is rock solid,no buy to let no self cert,they have two problems,one is treasury write downs the other is increased cost of funding.These will probably wipe out profits in the first half but assuming treasury write downs are subsiding second half profits could be 200million giving earnings per share of 35p.Iwould expect this to be about the level of dividend as they expect the write downs as opposed to the SIV write offs to reverse in future years.At these prices it is an absolute gift to somebody.

[jazza] 06/7/2008 15:47

Forwood,

You have to laugh at these journalists.

A dividend yield of 13.7% is "normal".....PMSL.

The market is pricing in more like 10-15p..CSM may well be right about no dividend but I'd probably go for them paying the divvy in shares for at least half a year.

[elssworth] 06/7/2008 15:43

The Prof has today initiated coverage of AL. with an "OUTRIGHT SELL" note to clients, with a Level 4 target of £1.40

I hope this helps
Thanks
Th Prof..........updating Level 4 before the BANG

[lonrho] 06/7/2008 12:08

they will probably cut the dividend and encourage the major investors to take the dividend in scrip form thereby saving well over one hundred million in total.In practice the dividend will be decided at the board meeting prior to the results announcement when they have the june results.

[forwood] 06/7/2008 11:41

On the contrary, this provides a level of certainty that will help underpin the shares.

If we really thought we could get a 20% return by investing in the shares, it wouldn't have fallen to this historic low! The reason it is here is doom and gloom uncertainty with the likes of BB's capital raising disaster, falling house sales, lower mortgage demand, building companies going to the wall, etc, etc., all fuelling the panic. What if AL needs capital? What if there's more losses to come? What if they cut or pass on the divi altogether?

At 255, a dividend of 35p is a yield of 13.7%, more than enough to tempt any investor. It is a painless way of preserving capital, and will help to reduce if not remove suggestions that AL. will need to raise capital.

Historic yields on other major banks are between 6% and 18%, with the median at 12% (Barc, Lloy, Bank of Ireland). How many more of them will be reigning back on the dividend before the year is out? I suggest you have a look at the expectations for future divis on Digital look. AL. will still be market leading, which improves the likelihood of share price growth relative to peers.

I have to assume that this reduction is enough - that £80m is all the company needs to get it through these troubled times. If that is the case - and if you go through the pain of a divi reduction you may as well get it right first time - then it's very good news indeed!

[gbb483] 06/7/2008 09:32

80m is nothing compared to billions that RBS and BARC are going cap in hand for. i.e. they'd be better of keeping investors happy by leaving it as it is - they won't gain enough back to make it worth the ill-feeling it'll generate as a result.

[maxk] 06/7/2008 08:23

From The Sunday Times
July 6, 2008

Alliance and Leicester aims to save £80m on dividend

Iain Dey




ALLIANCE & LEICESTER is plotting a savage dividend cut to shore up its finances in a move expected to save the mortgage bank about £80m a year.

Its shares plunged 12% on Friday in reaction to the emergency bail-out that Bradford & Bingley was forced to agree with four of its biggest shareholders.

A&L is widely acknowledged to be in a more secure position than its troubled rival. It has a more conservative mortgage book, but it is being crippled by higher funding costs.

The bank secured its funding to April 2009 thanks to an expensive loan deal with Credit Suisse.


David Bennett, the chief executive, is said to have begun considering a dividend cut shortly after the bank revealed its full-year results in February.

Although no final decision has been taken, the move could be announced in three weeks, when the bank reveals its interim results.

A&L shares are trading on a dividend yield of 20%. A cut from the present total dividend of 55.3p per share to about 35p would bring the ratio back to a normal level. The shares closed on Friday at 255p.

[jennyj] 04/7/2008 11:52

By far the biggest subprime unit by a significant magnitude is HSBC in the UK. This makes me believe that what is going on is the creation of a new reality to serve a specific purpose.


In March 2007, a December 2006 interview from TheStreet.com's "Wall Street Confidential" webcast stirred controversy after it appeared on YouTube.com. In the video, Cramer described activities used by hedge fund managers to manipulate stock prices; some illegal and some debatably legal.[16] He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures." He also encouraged hedge funds to engage in this type of activity because it is "a very quick way to make money." Cramer claimed that everything he did was legal, but that illegal activity is common in the hedge fund industry. He also stated that some hedge fund managers spread false rumors to drive a stock down: " ...it's important to create a new truth, to develop a fiction."[17] Cramer said one strategy to keep a stock price down is to spread negative rumors to reporters he described as "the Pisanis of the world". "You have to use these guys," said Cramer. He also discussed getting "the bozo reporter from The Wall Street Journal" to publish a negative article.[18] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."

[jennyj] 04/7/2008 11:07

Another short attack on MKS, will cost me 5K to average down on it. MCR has now fell 50% so will average down costing 2K.

I get the feeling by the time this bear market finishes (when ever that happens) I shall be a very happy bunny.

[tricky1992000] 02/7/2008 18:47

jennyj

any plans to top up with mercator gold?

Oh, and i also noticed you on the mks board while i was researching, mks are a quality company at a cheap price now, do you relise if i were to buy mks we would both be share holders in 4 different companies, great minds think alike.

what is your take on mks supplier? northern foods? tasty dividend, and a long history, 1937, they own brands like fox's biscuits and dalepak.

[jennyj] 02/7/2008 18:37

time to top up.

[d1gg3r] 01/7/2008 19:03

Bigface - I agree AL. is certainly not immune to this panic selling even though their lending portfolio contains a lot less buy to let property risk than compared to others like B&B suggesting a good buy opportunity awaits.

[bigface] 01/7/2008 09:39

AL. wont be immune from the Liquidity CRISIS caused by the US sub prime market and and the property crash which is why the price is collapsing - they are all falling knifes and for the brave

[loganair] 30/6/2008 13:59

Out of all the banks, we hear virtually nothing coming out of AL. Whether for good or for bad we've heard plenty from B&B, RBS, HBOS, Barclays, HSBC and Standard Chartered even the Nationwide.

Is this a good sign or not??????

[bigface] 30/6/2008 10:24

Probably the two were going together the bb problems causesa rethink. The worry herer is whether AL wiull need aRI

[andrewlewis] 30/6/2008 08:16

Jennyj

Have you heard the story that Resolution who has backed out of B&B is looking at Alliance and Leicester. Interesting concept which seems to be right for that big monster!

[mike456] 29/6/2008 23:54

Before anyone gets too excited about inverse bubbles maybe they need to think about where all of the unaccounted sub prime exposure could be.

Everyone knows it's out there, and it must be residing with the banks, but they all claim that they don't have it.

Somebody somewhere must be telling porkys, and I very much doubt we will see an improvement in the financial sector until all the unaccounted for exposure starts to come out in the wash ... maybe the next reporting season, or who knows, even later.

[jennyj] 29/6/2008 13:09

Yep STAN are invested in much higher risk lending in developing countrys ;-)

PUMP or DUMP phase

[loganair] 27/6/2008 09:37

The important thing to remember with Standard Chartered is they are not involved in the Mortgage market or really in the UK at all.

[csmwssk1] 24/6/2008 23:41

thats not what is says

[jennyj] 24/6/2008 23:22

signs of a inverse bubble on bankstocks.