Aviva Share Discussion Threads

[anthony100] 13/6/2021 12:22

Just seen a report discussing AI firing a number of fund managers.

Excellent.

The Heads of this and that do nothing as useful as picking a stock.Global Head of this and that only set up useless meetings between themselves and fill out expenses claims.

Subcontract the lot to Schroders or Blackrock and take a percentage of the profit.50 million profit on this operation is pathetic.

So called transformation costs in this unit must come to a billion pounds over the last 20 years. Add in all the costs as compo for front running and we are talking serious dosh.

[jubberjim] 13/6/2021 12:13

Aviva roumoured to be sacking fundmmanagers

Responsibility lies at the top though there are many on this board who disagree

I would start at the top and cut a swathe through those overpaid directors who sanctioned the withholding of the declared dividend

That in my opinion is the main reason why Aviva has underperformed so badly

As I have stated trust has been destroyed and the culprits are looking to shift the blame away from themselves
They should be held to account for their servile behaviour and betrayal of thousands of small investors and cash strapped pensioners

It was and is indefensible behaviour

I will continue to condemn notwithstanding the ab cheerleading squad

[dr biotech] 13/6/2021 11:09

Pay down £3bn debt, pay a special of about 100p (£4bn) - assuming the share price drops by about the same amount (to 300p) we then have a solid company paying around 7% with a low PE.
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Seems cost cutting is already underway. Not sure where the future is for funds. I hold several, but they are mostly smaller companies where I think a manager can outperform the relavent index

[whatsup32] 13/6/2021 11:06

£8.70p is a valuation given by cevian ,

Kenmitch, I haven’t checked Whitbread but presume buy back was a flop as it was in many other cases , however that doesn’t mean it will be a flop for Av. I maintain if share price is say 40% below value then there is good reason to use excess cash to do a buy back. Benefits all.

Microsoft have been buying back for past 15 years and it’s proved a great success for all concerned.

As someone looking to get out (held 2 years now) I understand a special div will give an instant boost to share price and give me an opportunity to get out. So that suits me fine.

However correct decision for management is a buyback .

[kenmitch] 13/6/2021 10:47

cjac39

The same question.What about that Whitbread (one of so many similar) example/s in post 8808?

The theoretical case for buybacks looks strong, and most fans of them focus on the theory and ignore the facts.

[cjac39] 13/6/2021 09:59

A much debated topic. In difference to many on here I think buybacks for aviva do make sense up to 20-40% over book value as it’s demonstrably a good investment of our shareholder funds. 8.70 is not a valuation I’d recommend as a target and was more a marker for how to get to the cevian price. However is it worth more than its current and a decent premium to BV, for sure. From memory I think Buffett does the same thing with BRK up to 140% of BV as that’s an accounting baseline.

Note also interests are skewed. Income funds who are large holders of AV get no benefit from specials but greatly enjoyed enhanced forward divis from buybacks.

[kenmitch] 13/6/2021 09:51

whatsup32

It would be interesting to know your thoughts on the disastrous Whitbread buyback I posted about in post 8808 and if and why you don’t think the same could happen with Aviva buybacks.

[bull19] 13/6/2021 09:44

Seems logical to me. I'd be genuinely interested to hear any counter arguments.

[whatsup32] 13/6/2021 09:37

SP valuation £8.70

I know we argue this point all the time but if I was management given 50% discount of valuation (SP £4.18) it makes perfect sense to do a buyback .

[mountpleasant] 13/6/2021 07:46

I don't but this Cevian move, and the market does not either.

They don't have enough influence with 5%, other than a bit of noise and press releases.

[richie1218] 12/6/2021 19:02

interesting article that speculates that AV could make further changes such as selling books of life insurance business closed to new customers. The Canadian unit might also attract buyers...

Activist Cevian takes Aviva stake, seeks 5 bln stg capital return..
Carolyn Cohn June 8, 2021

Activist investor Cevian Capital said Aviva should return 5 billion pounds ($7.08 billion) of excess capital in 2022 after revealing it has built up a near 5% stake in the British insurer, putting new CEO Amanda Blanc under pressure to accelerate changes.

Aviva, which has sold eight businesses since the appointment of Blanc as CEO in July 2020, said last month it had raised 7.5 billion pounds from disposals and planned to return money to shareholders, without putting a figure on it.

"Aviva has been poorly managed for many years, and its high-quality core businesses have been held back by high costs and a series of bad strategic decisions," Christer Gardell, managing partner and co-founder of Cevian said in a statement.

Analysts have said the insurer would have between 3.7 billion and 6.6 billion pounds of excess capital following the completion of the asset sales.

Aviva should have a value of more than 8 pounds per share within three years, and more than double its dividend to 45 pence, Cevian said.

Aviva's shares are currently trading above 4 pounds a share and rose 3.5% on the Cevian statement.

Cevian also said it saw scope for further cost-cutting, totalling at least 500 million pounds by 2023. Aviva outlined a strategy last year including 300 million pounds in cost cuts by 2022.

Aviva is shifting focus to the key markets of Britain, Canada and Ireland since the asset sales.

Industry sources have speculated the insurer could make further changes such as selling books of life insurance business closed to new customers. The Canadian unit might also attract buyers, they said.

"Aviva has made significant strategic progress over the past 11 months and we remain sharply focused on further improving our performance," an Aviva spokesperson said in an emailed statement.

"We regularly engage with investors and welcome any thoughts which move us towards our goal of delivering long term shareholder value."

Cevian bought a stake in rival insurer RSA in 2013 which it built up to 15%, culminating in the completion last week of RSA's sale to Denmark's Tryg (TRYG.CO) and Canada's Intact Financial (IFC.TO).

Cevian started building up the stake in Aviva several months ago, with relations cordial between the investor and Aviva's management, according to two sources familiar with the matter.

Chairman George Culmer and CEO Blanc are "committed to...delivering substantial shareholder value", Cevian said in the statement.

[skyship] 12/6/2021 16:51

RCT2 - yes indeed, kept meaning to get on board, then deciding against as I prefer exposure to REITs & PE trusts. Still, been a good year so far; and hopeful that AV. will contribute to further portfolio growth.

[cjac39] 12/6/2021 10:19

i couldnt remember the sotp so had another go this am. would be great to tempt WBA back on to give more detail to the GI.

OF 25.8
debt 8.3
Life Goodwill (25-50% of OF * 13.7) 6.9
GI (read across from DL) 9
less GI Own funds 2.3
AGI (Jupiter pe * 0.85) 1.2
less AGI own funds 0.5
Savings (AJ Bell * Op profit 119) 4.5
less guesstimate OF 1
Net 35.3

SP equiv £8.7

lots could be wrong with this but not outlandish to throw out £8 targets

[rcturner2] 12/6/2021 06:39

Skyship, you are a bit late to the party! Got mine at the start of January.

[spud] 11/6/2021 23:24

Yep, in the vast majority of cases, buybacks are a complete waste of energy, time and money.

Although I’m sure the Executives who’s bonuses are based upon eps would disagree.

Stock buybacks often benefit big shareholders the most; and frequently that means Executives who hold stock options. When the buyback boosts the stock price, often temporarily, that rise may help the stock hit a target price the managers need to exercise their options. The managers can then quickly resell their stock and pocket their profits. So company management is enriched, while the company’s research and development, marketing, hiring, and other departments are impoverished by the move. Managers may also benefit from a buyback because their bonuses may be tied to hitting a particular earnings-per-share figure. Fewer shares mean a higher EPS number.

spud

[fenners66] 11/6/2021 17:22

Going over old ground but buybacks don't benefit shareholders , i.e. for holding shares , they benefit ex-shareholders for selling them , on the day that there is more demand than supply thus supporting the price of those transactions.
We know that when the buyback demand dries up the share price usually falls and also the Net Asset value of the company has fallen saying goodbye to the cash.

To illustrate the supply and demand equation - we all know when there is a "share overhang" or an excess supply from a large willing seller the share price will fall until they have sold out and then often rises after.

A large buyback just temporarily inflates the price so the company overpays.
Most buybacks are therefore done at the top of the market.

Anyone who is looking to remain a shareholder say for income , gets nothing.

Give us a long term higher dividend , it will support the share price for longer via the dividend valuation model - higher yield ; and anyone that is desperate to sell instead , as if they were looking to sell into the buyback , can just sell into a better market anyway.

Reward shareholders not carpetbaggers!

[oldfellowme1] 11/6/2021 16:04

oggyrocks Agree 100% i was relying on that divi and i too would like to know what become of it,surely it should be paid now!!!!!

[1robbob] 11/6/2021 15:56

oggyrocks
Stop fretting about the lost 2019 Final dividend...I am afraid it is long gone and the cash returned to the communal,now overflowing, pot
......we did get a token 6p of it much later in 2020

[skyship] 11/6/2021 14:48

Hi Ken - glad to be in good company here :)

[oggyrocks] 11/6/2021 14:43

Been some great posts on here recently. Great work everybody. I think that we need to ensure that all the monies are collected before they decide how to reimburse us shareholders.

Does anybody know what happens to the dividend monies that was cancelled last year ? The monies were allocated for payment but was cancelled just before payment (and just after lgen paid theirs). Aviva didn’t need to cancel this but buckled to govt pressure. Surely this could be returned to shareholders now too.

[whatsup32] 11/6/2021 13:59

AB was engaged to provide shareholders with short term share price gains and that’s exactly what she is doing . With so much free money floating it may be we are getting good prices for disposals .

Most directors will want to hold on to money (see dividend not paid),but AB will I think go for primarily special dividend to drive share price up short term .

[careful] 11/6/2021 13:46

The decision depends upon how director bonuses are structured.

How should surplus cash be spent?

To benefit the shareholder, to improve the longterm health of the company, or to temporarily pump up the share price to boost directors incentive bonuses.

It depends upon whether you are a director, a short term shareholder or a long term investor.

[kenmitch] 11/6/2021 13:36

Hi SKYSHIP!

We agree!

I hope you’re right about buybacks being unlikely but what if Cevian push for them or Aviva Management prefer them to special dividends? I fear Aviva doing what Whitbread did when they sold Costa. Whitbread returned all the £2 billion or so cash received via buybacks. The share never again reached the buyback prices so investors ended up not only with no reward at all but a loss on top!

There is a strong case for Investment Trusts trading at a discount buying back shares, though as you know I’m not keen on those either, but there are so so so many cases where shareholders supposedly rewarded via buybacks ended up losing as explained with that Whitbread example. Stuart Rose went on and on about rewarding Marks and Spencer shareholders with his £2 Billion buyback. I was a shareholder and again the share price dropped and then stayed below the buyback prices for years!

With a special dividend investors are at least assured of getting that real cash.

Aviva is one of the few shares I didn’t sell in the crash last year and it’s taken until recently and helped by a small average down at 220p to get back to a profit again.

As long as they don’t now waste the cash pile on buybacks this looks a good time to be holding or buying Aviva.

[1robbob] 11/6/2021 12:17

In a previous post I suggested that AV could start share Buy-backs at any time, as they already have shareholder approval.

However, it may be that they may have to wait until they have made a Statement as to the precise basis of the Return of Capital to all Shareholders. Otherwise they would be guilty of creating a False Market